Economic Development: Valley Sees $216M in Investment in 2017

Auditor Calls on Youngstown to Repay $4.4M

BOARDMAN, Ohio – Ohio Auditor Keith Faber this morning encouraged Youngstown officials to “step up to the plate” and meet financial obligations from his office’s finding that the city misspent more than $4 million.

This state auditor’s office this morning issued a finding that the city incurred $4,426,662 in “inappropriate expenses” from its water, sewer and environmental sanitation funds. Those funds were used to support economic development projects in the city in the form of loans and grants in 2017, the year covered in the state audit. 

“Those moneys statutorily we do not believe should have been utilized for those purposes and we believe it is appropriated for [the city] to do the adjustment,” Faber said Thursday morning. 

Faber was in Boardman prior to the Youngstown/Warren Regional Chamber’s annual Salute to Business Breakfast. Gov. Mike DeWine was the keynote speaker at the event. 

The state auditor said his office has been negotiating with the city since he took office in January regarding repayment of the funds. The office also proposed repayment plans over 10- and 15-year terms that alone should not move the city into fiscal emergency, he said.

“We ask that Youngstown come forward with a plan that is not less than the terms that we set forth and start to recognize their obligations to make their books and records proper,” Faber said. “If they fail to do that, then we’ll have to look at our other options.” 

Those options include referring the case to the Attorney General’s office and “other tools in our quiver,” he said.   

“We don’t think it needs to come to that,” he continued. “We really encourage the city to step up to the plate and meet their financial obligations without having the extra legal expenses and extra furtherance of this.” 

The city relied on June 2011 legal opinion drafted by its law director at the time, Iris Torres Guglucello, that concurred with the opinion she had sought from an outside law firm regarding the city’s use of water and wastewater funds to support economic development projects 

“I’m not going to question whether their legal opinion was accurate or whether or not they actually relied on an accurate legal opinion,” Faber said. “They had some concerns or should have had some concerns that this was an improper distribution of the moneys. It really wasn’t a very close case in our assessment.” 

The auditor’s office is also working on an audit of the city’s 2018 finances, which Faber anticipated should be finished by the end of this calendar year or in early 2020. He expects a finding for adjustment against the city in that audit as well. 

Mayor Jamael Tito Brown and City Council President DeMaine Kitchen did not respond to requests for comment.

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