Economic Development

Officials Assess How Marchionda Indictment Impacts City, Projects

YOUNGSTOWN, Ohio — The city law department is reviewing the indictment of downtown developer Dominic Marchionda and his related companies to determine what counts or paragraphs might involve city officials, including Finance Director Bozanich, Mayor John McNally said.

McNally said Monday afternoon he had not been advised ahead of time that the indictment would be issued Monday. He requested law department attorneys review the document.

“I asked them to go through the entire indictment and make sure and let me know what counts and what paragraphs include any city employee, including Dave, so we’re aware of any and all allegations, and we’ll go from there,” he said.

When he took office in 2014, McNally said, he met with economic development and finance staff to make sure paperwork regarding city incentives was being reviewed properly and reimbursements being made were appropriate.

Last year, following the release of the city’s 2014 audit by Yost, which found discrepancies in the sale of a city fire station to Marchionda, the city hired retired architect Paul Ricciuti to verify completion of work and reasonableness of costs related to payments from the city’s grant programs.

The mayor did not anticipate any longer-term impacts from the indictments. The frameworks of the deals are the same as those used with other successful projects. The city just has to ensure steps are in place to make sure dollars are properly spent and requests for reimbursements are properly reviewed, he said.

The mayor noted that loans made to Marchionda and his affiliated companies by the city for the Flats at Wick, Erie Terminal and Wick Tower projects have been repaid and he expects Marchionda’s current project, the conversion of the Stambaugh Building to be completed successfully as well.

“It’s a good project for the city,” he remarked. City incentives for the Stambaugh project include a 10-year, 75% abatement of real property taxes; a term loan of up to $700,000 for 120 months; and a $2.05 million bridge loan for 30 months.

Sixth Ward Councilwoman Anita Davis said she found the charges “deeply disturbing.” She said she expected Marchionda “to be prosecuted to the fullest extent of the law” and “expects him to be fully vindicated” if he’s innocent.

“We have to do our due diligence about giving away this money,” Davis affirmed. “These are our tax dollars that we’re dealing with and people have a right to know that we’re doing due diligence.”

News like this “certainly doesn’t do anything to enhance the perception of our community,” said John Moliterno, executive director of the Western Reserve Port Authority. “But everyone is innocent until proven guilty.”

The port authority, through its Northeast Ohio Development and Finance Authority, assisted Marchionda’s NYO Property Group with assembling the financing stack for the Stambaugh project and provided $11.5 million in bond financing through a capital lease deal toward the $32.1 million project, which also received state and federal historic preservation tax credits totaling $9 million.

It also is in the process of purchasing the Harshman Building downtown from NYO.

Neither deal is mentioned in the indictments, Moliterno said, and he hoped neither would be affected.

“We know just as much as anybody else knows at this point in time,” he said.

Pictured above: Work continues on Marchionda’s $32.1 million project to transform the landmark Stambaugh Building downtown into a hotel and restaurant.

Published by The Business Journal, Youngstown, Ohio.