Hillendale Drive Watermain Project

Background:

In June of 2021 and again in June of 2022, the City of Muskego received from the Federal Government funds totaling $2,630,006.78, as part of the American Rescue Plan Act (ARPA).  On May 9, 2023, the Muskego Common Council passed Resolution #036-2023 acknowledging receipt of these funds and appropriated them for the Hillendale Drive Watermain Project and any remaining funds to the Tess Corners Bridge Project.

The Hillendale Drive Watermain Project commenced work sometime in late 2023 and concluded in late 2024 or early 2025.  The total project cost was $3,764,499.75.

While doing the 2024 Budget, city staff made an error in the accounting of the funding distribution for the project, and this error resulted in a budget error of $2,764,499.75, but a project shortfall of $1,134,492.97 (once all ARPA funds were applied).  (The project as approved in the 2024 Capital Budget authorized $1 million in ARPA funding, zero funds for total project cost/expense, and no inclusion of the Tess Corners Bridge Project, thereby resulting in the $2,764,499.75 budget error. 

However, with the application of the remaining $1,630,006.78 of ARPA money, the project shortfall was $1,134,492.97.)To make up for the project shortfall of $1,134,492.97, the following funding sources were used at the direction of the mayor, but without Common Council approval.

The Dispute:

Please note that the facts surrounding the preceding sentence, “To make up for the project shortfall. . .” are hotly disputed by the mayor, city attorney, and at least 3 aldermen.

In an email to me dated October 10, 2025, the mayor stated the following:

“This project was thoroughly discussed and acted upon in closed session last April.  The Council voted to use Water Utility funds to cover the remaining costs—funds specifically intended for such purposes.  While we generally prefer open-session actions, in this case, it was legally proper and necessary to proceed in closed session due to the discussion involving employee performance.  That context made it impossible to separate personnel-related discussion from the funding decision without compromising confidentiality.  Our City Attorney has confirmed this approach was both lawful and appropriate.”

However, just 11 days later on October 21, 2025, in an email to one of the Baker Tilly principals (city auditor at the time), the mayor contradicted his claim of “legally proper and necessary”:

“Evidentially (sic), the action we took in closed session last April isn’t proper, but I’m not sure how to move forward since this current common council is made up of different members from when this error and when explanation of what happened was given to them.  The money has also been spent.  The project was approved and discussed numerous times through discussions, resolutions, awarding of bids and finally via vouchers before payments.  But no budget approval or amendment for the Water Utility where the money came from.  Clearly, I’m not pleased how the whole thing was handled and we wouldn’t do it this way again, but I would like to see if you have advice on the best path forward.”

In another email to me dated November 13, 2025, the mayor stated the following as he made his argument to support a proposed resolution to address the project funding shortfall:

“Paragraph 8 appropriately documents that a closed session was held on April 8, 2025, to discuss the funding shortfall and that a consensus of the Common Council supported the Mayor’s proposed funding approach.  This statement can be verified by five aldermen present at that meeting.”

I very strongly dispute the mayor’s assertions regarding the April 8, 2025, closed session meeting.

Reason 1:  Both prior to the 4/8/2025 Common Council meeting and during the meeting itself, a few aldermen, including me, expressed concern regarding the suitability of notice given on the topics designated for discussion during the closed session.  This accounts for the divided vote going into closed session shown in the meeting minutes, with 4 voting for and 3 of us voting against.

The aldermen understood the sensitivity of the employee matter with regard to the budget error and the requirement that discussion thereof be in closed session.  However, there was no discussion of the funding to address the budgetary shortfall and no vote by resolution in closed session or open session to authorize funding.  While the employee matter needed discussion in closed session, a funding resolution needed to be executed in open session, at least in a subsequent meeting.  This did not happen, despite multiple requests by aldermen to get the matter onto a meeting agenda.

Reason 2:  No record was made of the closed session proceedings, as required by state law.  Quoting from page 19 of the “The Conduct of Common Council Meetings,” a manual from the League of Wisconsin Municipalities:

“(5) Records of Closed Session Proceedings.  Those decisions of the council rendered in closed session must be recorded.  The record must show all motions made, who initiated and seconded the motion, and how each member voted on all votes taken by the body.  Sec. 19.88 (3), Stats.”

Reason 3:  Though the mayor claims in his October 10th email that “The Council voted to use Water Utility funds to cover the remaining costs. . .”, he appears to back off that statement somewhat by stating on November 13th “that a consensus of the Common Council supported the Mayor’s proposed funding approach.”  However, he contradicts this with the statement from his Baker Tilly email of October 21, 2025, “But no budget approval or amendment for the Water Utility where the money came from.”

Please note that the meeting minutes for April 8, 2025, contain no mention of discussion or action occurring in closed session or afterwards in open session.

The Outcome:

Since at least late summer/early fall of 2024, Alderperson Deb Schroeder, with support from the former city Finance Director and Alderpersons Rob Wolfe and Dennis Decker, pushed diligently to get a proper and timely funding resolution before the Common Council, but inexplicably encountered stiff resistance from the mayor for over a year.

To Baker Tilly on October 21, 2025, the mayor finally acknowledges, “Clearly, I’m not pleased how the whole thing was handled and we wouldn’t do it this way again”, and to the Common Council in a memo dated November 10, 2025, he reflects, “Looking back, I should have included the Common Council earlier in the search for a funding solution when the issue was first identified, and this is something I regret.”

Nevertheless, when Resolution #077-2025 was presented to the Common Council for action on December 2, 2025, it was a resolution to merely “recognize” the funding sources used to make up the project shortfall, and not to authorize the funding.

The rationale justifying the wording “recognize” versus “authorize” came from the city attorney with these words:

“. . .I cannot advise Council to reopen a budget passed in 2024, especially in this case, where risk of returning ARPA funds is a possibility should the City be audited on how the funds were utilized, the date of the acceptance of the funds, and the timing of utilization by a Common Council. . . .This is why I continually stress for Council to simply “recognize” the funding and not re-open the 2024 budget.  Staying away from re-opening the 2024 budget is the advice I was given by the City’s auditor, as well as the Waukesha County District Attorney’s Office in this matter.”

When contacted to confirm what advice she may have provided the Muskego City Attorney, the Baker Tilly principal replied:

” In late October, I spoke with the Mayor and Jenny (finance director) and advised that, from an audit perspective, a 2024 budget amendment would have no effect on the audited financial statements. I didn't and can't speak to a possible amendment beyond that perspective, and I don't believe I ever spoke with Jeff Warchol directly, though I did advise the Mayor and finance director that I was not an attorney, that I couldn't provide legal advice on an amendment, and that they should seek legal counsel on other aspects of a potential amendment.”

Since words are important, I must note the distinction between “recognize” and “authorize.”  “Recognize” means an acknowledgement and acceptance, and in this case, of the mayor’s action.  In effect, the Council is saying, “We see that the mayor took this action, and we are okay with it.”  The Council is surrendering its authority to the mayor, which violates state law.

“Authorize” is needed because it asserts the Common Council’s right to approve an action.  In this particular instance (with the funding of the project shortfall), the Council had the right and authority to approve this action over a year ago.  However, even at this late stage, it is still the Council’s right and prerogative to “authorize” this funding, and not merely to “recognize” it.

Consequences of Challenging Power:

I have never understood why, when confronted with the Hillendale budget error and project shortfall, the mayor would respond with such resistance.  One would expect from leadership at least some level of appreciation for bringing the matter to their attention and a willingness to work together on a timely basis to find a solution, while being mindful of our respective governmental roles and prerogatives.

Instead, my colleague and I have been subjected to a form of “lawfare” designed to bully us.  In my case, the mayor filed suit against me when he felt I did not fully comply with an open records request he made.  In the case of Alderperson Schroeder, the mayor appears to have used an anonymous proxy to harass her with an open records request, and now a frivolous claim is being pursued in regard to the same matter.

This isn’t leadership; it’s retaliation.