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Objection raised on land deal near V&M
By Ed Runyan
GIRARD
Former Western Reserve Port Authority member John Masternick bought 4 vacant acres on State Street in Girard last spring that V&M Star wants to use in a $650 million mill expansion.
The port authority runs the Youngstown-Warren Regional Airport and promotes economic development. One current board member, Don Hanni III, says the purchase is another example of a board member pursuing personal financial interests.
But Masternick says the purchase is what he and his late father have done for many years in the Girard area — “I speculate on real estate” — and said he does “not appreciate being in a position to prove that I did not do something wrong.”
V&M Star is in the midst of a $650 million pipe-mill expansion just north of its current location off of U.S. Route 422 in Youngstown.
Negotiations between Youngstown and Girard took place throughout 2009 that resulted in 191 acres in Girard being annexed into Youngstown for V&M Star.
Masternick said he signed the purchase agreement for the 4 acres on March 2, 2010, “several weeks after The Vindicator announced [Feb. 15] that V&M confirmed that they were going to build the steel mill.” He learned that an attorney representing V&M Star wanted to acquire it for the mill in “late March.”
After about 10 years on the volunteer board, Masternick resigned April 15 in a letter to Trumbull County commissioners, citing increased personal and professional obligations.
His land purchase for $175,000 from private owners became official April 22, according to the Trumbull County Recorder’s Office, though Masternick’s name doesn’t appear on any of the documents. NFM Lands LLC, incorporated 10 days earlier by Warren attorney Tom Nader, is listed as the purchaser on the deed.
Masternick confirmed to The Vindicator that he is the owner and said it is “standard practice” for such purchases to be handled as an “undisclosed buyer.”
Gentleman’s agreement
When he learned V&M was interested in acquiring the land in late March, he entered into a “gentleman’s agreement” with Atty. D. Kim Stefanski of Youngstown, who is representing V&M Star on land acquisition deals, to sell the land “at my cost” — meaning at the same price he paid, he said.
Technically, V&M won’t own the land; Stefanski has asked the port authority to buy it from Masternick with funds provided by V&M, then lease it back to V&M.
Stefanski was also interested in acquiring the former Indalex factory on behalf of V&M Star in late March, according to documents obtained by The Vindicator. The former Indalex property is just north of Masternick’s four-acre parcel.
In August 2010, four months after Masternick left the board, the port authority completed a deal that helped V&M Star acquire the former Indalex site. V&M is now using the former Indalex factory to help with construction of the mill addition and for office space.
Stefanski is still in the process of acquiring Masternick’s parcel, Masternick said recently.
Masternick said Stefanski offered him more for the four-acre parcel than he paid for it, but he declined to make a profit.
“I don’t want there to be any question of the appearance of impropriety,” he said.
Masternick said it’s possible Stefanski will get the parcel for a better price by buying it from him than if Stefanski had dealt with the previous owners.
“I think by me buying it, it is saving them [V&M] some money. I think if the previous owners would have known V&M wanted it, they would have wanted more money than I’d sell it to them. They [the previous owners] are probably going to kick themselves when they learn V&M wants it,” said Masternick, who is also owner of the area’s Windsor House nursing-home chain and an attorney.
Public records
The Vindicator obtained documents after a public records request to learn more about Stefanski’s communications with Rose Ann DeLeon, who runs the port’s one-year-old economic development arm, and the port authority regarding land for the mill expansion.
DeLeon came on board with the port authority in December 2009 and had her first discussions with Stefanski about the port authority helping with land acquisition on March 30, 2010, DeLeon said.
She passed on information about the conversation to board member Rick Schiraldi on the same day, she said, because Schiraldi was chairman of the authority’s economic development committee.
Masternick was a member of the committee at the time and was kept up to date on everything that was happening, Schiraldi said.
An e-mail to DeLeon from Stefanski on April 26, 2010, four days after Masternick’s purchase became official, said Stefanski was aware that Masternick was the owner of the four-acre parcel.
Masternick “is willing to sell to the Port,” Stefanski wrote in the e-mail, adding that Masternick “asked that you have the port’s [attorney] contact Atty. Tom Nader in Warren to discuss terms.”
At some later point, Hanni and fellow port authority member Andres Visnapuu took a drive along State Street to see Masternick’s property.
Hanni remembers seeing an Edward J. Lewis Inc. “for sale” sign there, making Hanni wonder if fellow port authority member Scott Lewis, vice president of Edward J. Lewis Inc., might be also involved in Masternick’s real estate deal.
In October, Hanni questioned Lewis’ involvement in a port authority lease involving the former Davis Air Cargo building on Ridge Road that led to fees being paid to Edward J. Lewis Inc. in 2009. Lewis’ company sold an industrial building and an office building to the local company Millwood Inc., but the company needed a lease agreement from the port authority to make the deal happen. Hanni questioned whether Lewis was too involved, including his participation in a closed-door meeting regarding the lease.
Masternick said Lewis Inc. isn’t representing him in the sale of the land to Stefanski. Lewis represented the former owners of the land, Masternick said. The Lewis sign was removed sometime in October.
Member’s criticism
Hanni said his problem with Masternick’s 4 acres is that he believes it’s illegal for a member of a public body, as was Masternick, to make a profit as a result of his position on that public body.
“When you take these positions [on a public board], you can’t profit from them,” Hanni said. “If you want to be on the up and up, there’s no way you buy that land. Even the perception that something is amiss, you walk away from it.”
Because the purchase of Masternick’s 4 acres is expected to pass through the port authority, Hanni said he plans to vote no “if either one of these guys [Masternick or Lewis] makes a dime on it” and ask the Ohio Ethics Commission to examine the matter.
Hanni says as long as Masternick sells the land without making a profit, presumably nobody will have a complaint. But he adds, “Had it not come to light [that Masternick owned the land], what was [Masternick’s profit] going to be?”
When he left the Port Authority in March, Masternick said Hanni, a recent Ohio Department of Transportation retiree, did not have the background to be a good board member.
In an e-mailed response to questions about the land deal asked by The Vindicator, Masternick said he drove past the 4-acre parcel “every day, and you do not have to be a rocket scientist, or have any special information to figure out that if a $650 million dollar steel [mill] is coming to town, the property up and down 422 should appreciate.
“It is interesting to note that two years ago there were 25 to 30 for sale signs along the 422 corridor from Youngstown to downtown Girard. Today I counted one,” Masternick said.
Tracy Drake, executive director of the Columbiana County Port Authority, chairman of the Ohio Council of Port Authorities and an attorney, said he doesn’t believe real-estate brokers or speculators should be excluded from being members of a port authority.
Business people in general are a great asset because they understand the business of a port authority better than someone without business experience.
Drake said port authority members are allowed to make money off of business deals that relate to their position on the board, but they have an obligation first to offer the deal to the port authority.
Just as with a person sitting on a board of a corporation, “If it doesn’t fit with the port authority, then you’re free to pursue it on your own,” Drake said. “If it is disclosed, then it passes the fairness test.”
Sometime in the past couple of years, Drake gave an ethics presentation to his board based on one he received from the Ohio Ethics Commission, Drake said.
Ethics lesson
DeLeon has been making plans in recent months to give an ethics presentation to the members of the Western Reserve Port Authority, said Scott Lynn, port authority chairman. Lynn became chairman in January, replacing Masternick when Masternick became vice chairman.
Anthony Traficanti, Mahoning County commissioner, said he strongly supports the idea that local port authority members should receive ethics training, especially because of a lot of recent turnover on the board.
Traficanti said he will recommend that someone on the port authority board make a motion that such training be provided.
Perhaps the money can come from the funds Mahoning and Trumbull county commissioners have provided to run DeLeon’s economic development office, Traficanti said.
Jennifer A. Hardin, the Ohio Ethics Commission’s chief advisory attorney, said the commissioners can no longer provide ethics seminars to small groups, so it typically cannot provide one to a port authority. It did give such a seminar about 18 months ago to an organization of port authorities, however, she said.
With regard to Masternick’s 4-acre parcel, Hardin said she cannot comment on a specific situation, but generally a public official “cannot use his position to gain a benefit for himself” and cannot “use [confidential] information [he] secured as a member of a public body” to make a profit without running into issues under Ohio law.
She said if such a person steps down from his position on that board or doesn’t profit from the situation, he “may not have a problem,” but the specifics of a situation would have to be examined.
to know, she said.