State auditor wants 15-year plan in place
By David Skolnick
Mayor Jamael Tito Brown said the city “rejects” Ohio Auditor Keith Faber’s “demand” it repay about $3.1 million over 15 years from its general fund to the water, wastewater and sanitation funds for economic-development projects.
In a Thursday statement, Brown said the city proposed a “series of reasonable ways to resolve the dispute through a proposed structured payment plan, a proposed long-term payment plan and a commitment to stop the grant/loan program.”
He added: “Despite the city’s best efforts, the auditor would not budge from forcing the city into an unaffordable repayment option that would jeopardize city services and employees. The city cannot and will not agree to place such a burden on its citizens.”
The city’s decision could lead to several options including the auditor’s office putting Youngstown in fiscal emergency or a court battle between the two sides.
The city has been negotiating with the auditor’s office and “outlined the various economic difficulties facing the city and raised sound legal objections to the auditor’s position,” Brown said.
“Despite the city’s reliance on a legal opinion that the grant and loan payments were acceptable under Ohio law, the auditor chose to take a different position without clear legal authority to support its position.”
Allie Dumski, an auditor’s spokeswoman, told The Vindicator that the office would have a response today to Brown’s statement.
The mayor said city officials were “hopeful” the auditor would “consider the various challenges facing the city and work” to “resolve this matter reasonably.”
Council members Julius T. Oliver, D-1st; Nate Pinkard, D-3rd; and Basia Adamczak, D-7th; said they support the mayor’s decision.
“The state auditor hasn’t been reasonable,” Pinkard said. “I’m comfortable with the mayor’s letter.”
Oliver said: “I don’t think it’s fair for the state auditor to bully the city. We did the right thing. I appreciate the mayor stepping up.”
Adamczak said: “I support the mayor’s decision in rejecting the offer. The city can’t afford what the state is asking.”
But Councilman Mike Ray, D-4th, said, “We shouldn’t let the aggressive-sounding nature of the press release interfere with an amicable solution.”
Brown along with Law Director Jeff Limbian and attorneys with Roetzel & Andress, a Cleveland law firm hired by Youngstown to represent it in negotiations with the auditor’s office, met for about 90 minutes Wednesday with city council in executive session to discuss what to do about this situation.
Several options were considered, but no decision was made, Adamczak said.
That is, until Thursday when Brown decided to reject what the auditor wanted.
Though city officials met in an executive session Wednesday, per Ohio’s Sunshine Law, no decision could be legally reached or agreed to by the council in a closed session. Such a decision must be approved by council in an open session. However, city officials maintained that Brown made the final decision Thursday, despite a news release that said “The City of Youngstown rejects Auditor Faber’s demand.”
The auditor’s office first contacted Brown in a May 4, 2018, letter informing him that using $4,462,662 in 2017 from the water, wastewater and sanitation funds for economic development “may violate” state law and the Ohio Constitution.
The audit of the city’s 2017 finances has been occurring for well over a year. It’s expected to be finished in a few weeks.
The $4,462,662 amount was lowered to about $3.1 million likely because of a loan repayment scheduled for December by the owners of the downtown DoubleTree by Hilton hotel.
The no-interest loan for $2,050,000 is to have $750,000 of it forgiven as long as it’s paid back by December.
Also, the auditor’s office has asked about the nearly $1 million spent in 2018 from the water, wastewater and sanitation funds for economic-development projects. The city has stopped the practice with Limbian and Brown previously questioning the legality of it, which was done by prior administrations.
The city has used close to $10 million from the three funds since 2010 for economic development, but the auditor’s office has only reviewed the practice since 2017.
The issue came to light after the city in March 2018 settled a class-action lawsuit that questioned the legality of the practice of using those restricted funds for economic-development purposes.