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Youngstown council to consider $1.45 million settlement of water lawsuit
YOUNGSTOWN
City council will consider legislation Wednesday to settle a lawsuit that questions the legality of using water and wastewater funds for economic development projects.
The ordinance would authorize the board of control to issue $1.45 million in credits to its water customers or transfer that amount from the general fund to the water fund.
It isn’t clear how the credits would work, but if the money is divided equally among the city’s 52,000 water accounts, it would be about $28 per customer.
With the city’s general fund facing a $2.5 million to $3 million deficit by the end of next year, a transfer from that fund to the water fund is unlikely. The water fund has a $13 million surplus.
The choice between the two options is to be made by the city, according to the ordinance.
City Law Director Martin Hume and Bryan Ridder, the lead attorney for the plaintiffs on the case, declined Monday to comment to The Vindicator about the tentative settlement. But Hume said he expects a joint statement will be issued when the settlement is finalized.
The ordinance that will be in front of city council Wednesday states other provisions include “that any water grant shall be granted per and subject to a written policy and procedure as agreed to by the parties,” the city will pay all court and litigation costs and “reasonable attorneys’ fees” from the water fund, the complaint will be dismissed, and “there is no admission of liability by either party, and neither party is to be considered the prevailing party.”
Four water customers filed a lawsuit in 2016 in Mahoning County Common Pleas Court contending the city was violating state law and the city charter by using water and wastewater “surplus revenues to issue grants and payments to private parties involving projects unrelated to the purposes and activities necessary for providing the water and sewer utilities to its customers.” Specifically, the lawsuit sought to stop the city from using water and wastewater funds for economic development projects, primarily downtown. Since 2009, the city has provided about $10 million in those funds to development projects.
City officials have pointed to a June 2, 2011, legal opinion from Calfee, Halter & Griswold, a Cleveland law firm, and a short June 10, 2011, legal opinion from then-Law Director Iris Torres Guglucello that Youngstown could use that money for water and wastewater expenses for economic development.
Meanwhile, council will consider a resolution Wednesday urging Mayor John A. McNally “to refrain from all hiring, filling or promoting any nonessential positions that are funded by the general fund” through the end of his term, which expires Dec. 31.
Despite the general fund’s $2.5 million to $3 million deficit by the end of 2018, The Vindicator reported Nov. 19 that McNally had approved the promotions of four law-department employees – including three with raises of more than 10 percent – and the promotion of Abigail Beniston to wastewater construction engineer with a 15 percent raise.
“I don’t think we should be doing any new hires or giving out raises at this point,” said Councilman T.J. Rodgers, D-2nd, who is sponsoring the resolution. “It doesn’t make sense to hire someone and turn around and lay them off in 2018, and we shouldn’t be giving anyone raises now.”
Councilman Mike Ray, D-4th, said he supports the resolution and hopes his fellow council members unanimously approve the nonbinding resolution.
In response, McNally said, “I appreciate council’s concern, but there’s a good chance two or three positions will be filled that are essential” in the police and fire departments.
He added that he doesn’t expect any further promotions of employees during his final weeks in office.
Also on council’s agenda is a proposal to lend up to $2.5 million to Roadkill McGillicutty LLC of Canfield, which is seeking to film a movie in Youngstown. Council is expected to refer the proposal to committee to discuss it further, said T. Sharon Woodberry, the city’s director of community planning and economic development.
The proposal would require the filmmakers to guarantee the loan with an irrevocable letter of credit from an accredited bank. The loan includes 0.25 percent interest and must be repaid in 18 months. The request is for the entire production budget of $2.5 million.
The film is a drama set in a small town in Virginia, Woodberry said.
The company plans to hire 299 state residents with production occurring in the latter half of next year.
This request comes a few months after a Los Angeles company filmed “Them That Follow,” a coming-of-age dramatic thriller in Youngstown and the surrounding area.
That film’s production company received a $1.25 million loan from the city.
Council will consider an ordinance Wednesday to have the board of control enter into an agreement with the U.S. Department of Housing and Urban Development to borrow $4 million from the city’s Community Development Block Grant funds for the proposed downtown Youngstown Foundation Amphitheater and riverfront park. The Youngstown Foundation announced last week it would donate $3 million to the project for the naming rights.
The project is expected to be finished by spring 2019.