The niece of a high-ranking Pima County Sheriff’s Department employee has been operating restaurants at headquarters and the jail rent-free and with taxpayer-purchased equipment, an Arizona Daily Star investigation has found.

Nikki Thompson ran her two Off the Record-The Exclusive Café sites without a contract with the county, which is required for outside vendors. Thompson closed the jail location last week after the Star learned she did not have a mandatory health department permit. The department ordered her to limit her service to food prepared elsewhere, but she opted to shut down.

Thompson, who also owns the downtown restaurant Nook, opened Off the Record at Sheriff’s Department headquarters, 1720 E. Benson Highway, three years ago, serving made-to-order meals to deputies and staff workers. The jail location opened last year.

The county has spent nearly $20,000 on equipment for the two locations. In addition to free rent, Thompson does not pay for utilities, and county staffers handle clean-up duties.

“I’m not going to make a million dollars over there,” Thompson said. “But we get between 10 and 30 people a day at the station.”

The Sheriff’s Department has brought in vendors for the past 20 years because there aren’t many restaurants near the south-side main station and employees are sometimes hesitant to go out to eat in uniform, said Capt. Harold Janes, the department’s administrative services director. The jail cafe provides a similar service to corrections officers, who aren’t allowed to leave the jail during their shifts.

The Sheriff’s Department has not had formal contracts with outside vendors, Janes said. However, County Administrator Chuck Huckelberry said the county requires a contract with vendors it conducts business with regularly. The county procurement office is now drawing one up, Huckelberry said. Thompson still will not be required to pay rent.

Problems with Previous vendor

The arrangement with Thompson came about after the department had problems with the previous vendor and needed to find a replacement.

When that vendor moved out, she took her refrigerators and restaurant equipment with her, so department officials decided to buy their own so they wouldn’t be in the same position when future restaurant operators left.

Within days, the department ordered and installed nearly $12,000 worth of restaurant equipment, receipts show. Officials initially said the equipment was paid for with RICO dollars, which is money seized from criminals and given to law enforcement agencies, but they later said the money came from the general fund.

Since the department was looking for a new vendor, Chief Deputy Christopher Radtke suggested his niece, who is a professional chef and was already known by numerous members of the department.

“I offered them up to the sheriff and, recognizing the conflict, backed out of the process because of our relationship,” he said.

Although Thompson opened her cafe without entering into a contract with the department, “in hindsight, it would be advantageous to us,” Radtke said.

Jail equipment cost $5,500

Equipment for the jail cafe cost $5,500, receipts show. Not included on those receipts were a refrigerator, two microwaves and an espresso machine seen during a visit to the cafe last week.

A records search of the Health Department database found no health permit for the jail cafe. After being alerted by the Star on Nov. 13, the Health Department’s consumer health and food safety program director, David Ludwig, called the owners.

“They stated to me all (food preparation) was done at the Benson Highway location,” Ludwig said. They told him they didn’t know they needed a separate permit for the jail cafe, he said.

The cafe was limited to only pre-ordered deliveries to the jail until a restaurant plan and permit were in place with the county. But Thompson opted to shut down, at least for now.

Sheriff: A necessary service

Sheriff Chris Nanos said the cafes provide employees with a necessary service.

“We just said, ‘This is what we want: inexpensive, hot and quality food,” he said. “Here’s my take: Relatives involved and all that, I’d be more concerned if someone in the department was making money on this deal.”

Because the department wasn’t looking to make money from the cafe, Nanos said officials didn’t see the need to seek bids from various vendors.

The county procurement office requires departments to go through a public bidding process when selecting vendors, but that rule does not apply to the sheriff’s headquarters and the jail because they are 24-hour, seven-day-a-week operations and the restaurant is considered a service to employees.

Although the department didn’t violate procurement policies, there are other problems with the situation, Huckleberry said.

“There were definitely some deficiencies, including the health permit situation and lack of contract, but you never know until something like this happens,” he said.

A Phoenix-based group that works to defend constitutional freedoms says it has concerns about the way the county set up the cafes and the use of taxpayer dollars or federal drug money to cover costs associated with providing sandwiches and espresso drinks to county workers.

“Public money has to be used for a public purpose, so the agency has to get its value back,” said Jon Riches, director of national litigation for the Goldwater Institute.

By not charging rent, the county isn’t recouping its expenditures and could be violating the state’s gift-clause provision, which says Arizona cities, counties or the state itself cannot give money or credit to a private individual or business. Also, Riches said, allowing Thompson to take home all of the cafe’s profits could pose a problem for the department.

“The agency might be spending money to benefit a private group, which is also not allowed under the law,” he said. “The purpose of a public position is to maintain the public’s trust. They’re there to serve the public, not private, interests.”

Contact reporter Caitlin Schmidt at cschmidt@tucson.com or 573-4191. On Twitter: @caitlincschmidt