Politics

Update: Auditor Responds to Youngstown’s Rejection of $3.1M Repayment Plan

YOUNGSTOWN, Ohio — The office of Ohio Auditor Keith Faber said this morning it was “disappointed” that Youngstown officials rejected a proposal for the city to repay $3.1 million over a 15-year period for payments the city made from its water, wastewater and sanitation funds to support community and economic development projects. 

Mayor Jamael Tito Brown announced the rejection of the state auditor’s proposed repayment plan in a news release Thursday afternoon, the day after City Council and Brown’s administration discussed the auditor’s proposal in a special council executive session Wednesday. 

“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,” the city said in a news release distributed late Thursday.

“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 said. “The city cannot and will not agree to place such a burden on its citizens.”

At the focus of the auditor’s office is “always on what’s best for the taxpayer,” said state auditor’s office spokeswoman Allison Dumski in a prepared statement Friday morning.

“Because the Auditor understands the city of Youngstown’s challenging financial position, we have attempted to work through extraordinary efforts to reach a resolution on the repayment of the sewer and water funds. We are disappointed that the city has rejected our proposal,” she continued.  

The office said it would make no further comment until the conclusion the audit.

In June 2011, the city’s law director at the time, Iris Torres Guglucello, authored a legal opinion that concurred with one she sought from the law firm of Calfee, Halter & Griswold LLP regarding the city’s use of water and wastewater funds to support economic development projects. 

Projects that received the funds include The Flats at Wick, the Erie Terminal Building and the Wick Tower, which were developed by NYO Property Group. NYO owner Dominic Marchionda faces charges that he misused those funds. Former Mayor Charles Sammarone and former city finance director David Bozanich also face charges related to the ones filed against Marchionda. 

Other downtown redevelopment projects, however, also received grants from the city water, wastewater and sanitation funds. Among them were the $5 million renovation of the YMCA Central Branch and the redevelopment of the Wells Building by Strollo Architects.

Youngstown officials have been in negotiations with the auditor’s office to reach “the most favorable outcome for the city,” which outlined “the various economic difficulties” it faces and “raised sound legal objections” to the position taken by the auditor, the city said.

“Additionally, the city has 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.” the city continued. 

Despite those efforts, the auditor wouldn’t budge “from forcing the city into an unaffordable repayment option that would jeopardize city services and employees,” the city said.

In the release, the city said it remained hopeful that the auditor’s office would consider the challenges facing Youngstown and “work with the city to resolve this matter reasonably.”

In a text message, Mayor Jamael Tito Brown said he could say nothing further regarding the audit at this time.  

Published by The Business Journal, Youngstown, Ohio.