ODCD freezing funding to city until debt repaid

Chris Dunham

October 9, 2012

Frank Lewis

PDT Staff Writer

Portsmouth Mayor David Malone says the the Ohio Department of Community Development is withholding all funds to the city until some $11,400 of a grant is repaid.

“Council approved the $29,000 for that particular item in the CIP,” Malone said. “Originally the request was for $43,000 which would cover the $11,400 plus. The Department of Community Development has given us a mandate that they are holding all pending funds to the city, even the 2012 funds totaling all the funds the city is working on between the funds that were approved between 2012 and earlier funds that come up to about $950,000. They are holding all of those funds until repayment of that $11,400 is made. They are waiting for our answer. Their legal department with the (City) Solicitor have agreed that we would make up the funds with a payment plan. Seeing that we don’t have any money in the operating funds, and we approved the $29,000 through the CIP, Community Development, I would ask that Council would approve the $11,400 for the repayment of that particular 2007 Formula Grant Fund, so that the other monies that we would have, that we would be using, not be on hold any longer.”

That grant repayment item came up at Monday night’s Mayor’s Conference session during the Portsmouth City Council meeting despite not being on the agenda, and no copy of that proposal being made available to the media.

It is assumed the repayment is for a grant the city utilized to pay Jack Vetter (Vetter Construction) for work he performed for the city, which was controversial, and involved a change order, though the circumstances surrounding the payment for the work remains unclear.

Malone said he would prefer not to make installment payments.

“I would request that the Council would approve this from the regular CIP funds through Community Development,” Malone said.

Fourth Ward Councilman Jim Kalb asked about approaching the contractor.

“This is repayment for money that was paid to Vetter Construction for improper work, or work not up to par on the (here Malone speaks over top of Kalb),” Kalb said. “If we’re paying that money back, aren’t all the contractors bonded contractors - wouldn’t we have the opportunity to go after the bond, the contractor, and also maybe the people that authorized it?”

City Solicitor Mike Jones said the issue with the payment was not just for the quality of the work, it was that they didn’t submit a change order.

“We appealed that. It has been ongoing for the last year,” Jones said. “The bottom line is that the Department of Development says we have to repay the entire $41,000 ($43,000). What basically their last response to me was, ‘we will give you an opportunity to pay this off over a period of 12 months, but it has to be repaid.’”

Jones acknowledged that it is an option to go after the contractor’s bond, but that it would cost money.

“What my concern and the Mayor’s concern is that I would like to be able to tell them that we are going to repay this money back so that we’re not going to jeopardize our current and future grants,” Jones said.

Sixth Ward Councilman Steve Sturgill asked how the funds would be repaid.

“Do we pay it back with other grant funds or do we have to pay it out of the General Fund?” Sturgill asked.

Malone responded it would come out of Capitol Improvements (CIP).

Third Ward Councilman Nick Basham asked if Jones would actively explore going after the bond.

“We will look at our options,” Jones said.

It was then that President of Council John Haas asked if the subject should be discussed in executive session, where most legal matters are discussed.

“What I would ask is if Council will at least allow me to send an email to the Department of Development saying that Council was in the process of putting together legislation to repay these funds,” Jones said. “I can’t obviously guarantee that you will approve it, but I think that would be enough to at least not put an immediate halt to our grants.”

By voice vote Council voted to have the Solicitor prepare legislation to pay the remaining balance on the Formula Grant Fund for 2007.

Frank Lewis may be reached at 740-353-3101, ext. 232, or at flewis@heartlandpublications.com