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MVSD director tells judges 'We have enough money for refunds'
mvsd
By Ed Runyan
MINERAL RIDGE
MVSD Info Request Memo
Document
Memo on Mahoning Valley Sanitary District (MVSD) Information Request from Judge D'Apolito & Judge Rice to Attorney Tom Wilson.
The director of the Mahoning Valley Sanitary District says it has enough money available to repair the Meander Dam, repay $5 million to Youngs-town, Niles and McDonald and “has plenty of money for the rainy-day fund.”
Director Matt Blair made those comments in response to a letter from two judges from Mahoning and Trumbull counties this week questioning the appropriateness of the refunds, which the MVSD approved last month.
Among the questions common pleas judges Lou D’Apolito of Mahoning County and Ronald Rice of Trumbull County asked in the letter is: “Other than political reasons, why does it make financial sense to the MVSD to return the funds rather than be prepared for future MVSD needs, like dam repairs, etc.?” They also asked if there was a sufficient rainy-day fund.
The MVSD estimates the cost to update the district’s Meander Reservoir is about $28 million.
“We’ve set aside money for all of our projects,” Blair said, including the dam.
Another question from the judges: “If there are ‘surplus funds,’ is the MVSD over charging for what it does?”
Blair said a reason the MVSD has a financial surplus right now is because projects such as the dam upgrade have not taken place as quickly as expected.
The MVSD considered various ways to use the surplus, such as lowering its rates to Youngstown, Niles and McDonald. “We felt the rebate was the best way to go,” Blair said.
The MVSD sells treated water from Meander Creek Reservoir to Youngstown, Niles and McDonald, which supply it to Girard, Canfield, Lordstown, Craig Beach and portions of 10 townships in Mahoning and Trumbull counties.
The MVSD voted last month to give Youngstown $3.7 million, Niles $1.2 million and McDonald $100,000 in surplus funds in three installments through the end of the year.
But the distribution is subject to approval from the two judges, said Alan Tatalovich, MVSD secretary. It’s the first time in 30 years the district will be distributing surplus funds, Tatalovich said.
The judges faxed the letter Tuesday to Tom Wilson, attorney for the MVSD.
It says before they are willing to give an opinion on the reimbursement, they would need to see a written opinion from the Ohio Attorney General’s office, Ohio Auditor’s office or other governmental agency such as the Mahoning or Trumbull prosecutor as to whether it is permissible to issue the refunds.
The judges questioned: “Why not give every water consumer a break on their bills instead of giving money to the cities?”
It adds that representatives of all communities that use MVSD water should be able to express their opinion at a public hearing on the refund.
Blair said Youngstown, Niles and McDonald decide what rates to charge their customers after factoring in the cost of running their distribution systems.
“We don’t sell water to any resident,” Blair said. “By statute, [Niles, Youngstown and McDonald] are the only customers of the MVSD.”
Blair said there have been public hearings in the past whenever the MVSD sought rate increases. The MVSD had hoped to have a public hearing on the refund, but the judges say no hearing will be held until they are satisfied the refund is proper.
The Ohio Auditor’s office is part of an ongoing investigation into the legality of more than $2 million given by Youngstown from its water and wastewater funds to assist a Youngstown developer.
When Blair was asked whether that should cause him to question whether it’s proper to give Youngstown, Niles and McDonald money that could go for non-water-related issues, Blair said that would be up to Youngstown, Niles and McDonald to decide.
“Does that concern me? In the case of the city of Niles, the money would be refunded to the Niles Water Department,” he said, adding that Niles “is under fiscal emergency. There’s a fiscal commission that I’m sure would ensure that any monies that Niles receives are properly applied.”
He said any money Youngstown receives “would go to their water department as well. But I have no jurisdiction to tell them once it gets back to their two cities how they spend their money.”
He said the fiscal commission and state auditor’s office “watches every penny that Niles spends. I can’t speak for Youngstown, but I would assume they would be doing something very similar.”
He said the company Public Financial Management, which handles MVSD’s financial planning, provided the MVSD an analysis of its finances.
“We asked them to consider all of our financial needs, and they determined that we had surplus funds we could rebate to the cities. We have not been given the opportunity to present that to the court ... at a hearing.”
The judges’ letter also asks whether there are any conflicts of interest among the MVSD board members who voted for the $5 million in refunds. It doesn’t identify any specific board member.
Kate Hanson, public information officer for the Ohio Attorney General’s Office, said the office has not been asked for a formal opinion by the MVSD on whether it can give Youngstown, Niles and McDonald a refund of this type, and it does not provide informal opinions to the news media.
Beth Gianforcaro, press secretary for Ohio Auditor Dave Yost, said the auditor’s office reviewed the judges’ comments and defers to the courts “in the exercise of their discretion.”
The auditor’s office “is following this matter, and we look forward to the opportunity to review the district’s responses to the judges’ inquiries.”