Ford City Resurrects Payment to EDA

Ford City Council President Carol Fenyes has written the Economic Development Administration offering to pay $116,200 on a debt that is no longer due.

(EDITOR’S NOTE: In order to understand current events, this article begins with historical information.)

It was a massive plan to grow Ford City’s economy through revitalization of the old PPG Shop 2 building. Senator John Murtha spoke at a groundbreaking ceremony on August 30, 2002 and gave his support. Grant money was funneled through Ford City Borough to the Greater Ford City Community Development Corporation. Loans were secured with the property as collateral and it appeared the town was on its way to reinventing itself.

Among the grants received was one for $581,000 from the Economic Development Administration (EDA). The grant came with the guarantee that Ford City would maintain ownership of the property until 2017.

However, by 2007, the fabric began to unravel of the CDC.  Loans went unpaid and the project was bankrupted after about $10 million in federal and state grant funding was invested into the revitalization of that property.

In December 2009, Council violated the terms of the grant when it gave up ownership of the property to F&M Bank. Council members Terry Tokarek and Tim Malek voted against it. Councilmen Ron Dillard, John Lux, Ray Klukan, and Tom Shaffer voted for it. Mayor Mantini also voiced support for giving up ownership.

Following foreclosure in 2010, the property was sold to BelleFlex Technologies and has now been placed back on the tax rolls, adding to Ford City’s tax base.

Meanwhile, the clock was ticking. Ford City was no longer the owner, and thereby defaulted on their agreement with the EDA.

Council members came and went with each term of office, forgetting or ignoring  the EDA default. And the EDA was not pursuing it, so it was the old idiom, “Let sleeping dogs lie.”

Nearly four years had elapsed when then-mayor (now councilman) Marc Mantini went to Philadelphia and inquired about the grant violation. The proverbial sleeping dog was now awakened.

Former council member Jerry Miklos said he felt the EDA was just wanting to let the issue die.

“The EDA never wanted to sue Ford City Borough, and they told us so,” Miklos recalled. “If they wanted to come after this money, they would have done so long before the Statutes of Limitations expired in April 2016.”

In October 2014, Council was then offered a settlement by EDA Regional Director Willie Taylor. His correspondence read: “Based upon the original grant award of $581,000, and taking into consideration the number of years that the Borough of Ford City maintained compliance with the grant award, EDA will agree to accept the sum of ($116,200) sufficient and adequate consideration to extinguish the grant obligation.”

If Ford City Borough Council makes the first of three annual payments of less than $39,000 by April 15, 2015, a full release from the terms and conditions of the initial grant award would be applicable, Taylor wrote in the October letter.

Ford City Borough Manager Eden Ratliff recommended Council to accept the offer. However, no action was taken. The April 15, 2015 deadline came and went, and so did Taylor and new Interim Regional Director Tonia Williams was in his seat. With media attention and political pressure mounting, Williams took a hard line and demanded full repayment plus interest.

“A reduced debt amount or forgiving the debt in its entirety are not viable options. Therefore, EDA has no alternative but to disallow all EDA project costs and establish a debt with the United States Treasury for the full amount owed,” an October 2015 letter read.

However, no demand note from the United State Treasury was ever received by Ford City. And by April 2016, the length of time had elapsed when it was too late to file a claim against Ford City.

The Borough contracted sole practitioner attorney Bill Bercik of Pittsburgh to defend the Borough in case the EDA or Treasury Department would file suit.

Bercik told Council on September 28, 2015 that he felt the ability for the Treasury Department to collect on the debt was not viable.

“There is no legal issue right now and hopefully there is no litigation. I believe the situation can be resolved if everybody is interested and willing to do so,” Bercik said. “Resolution of a problem is always better than litigation – if you can do it on reasonable terms, you should do that.”

The Borough agreed to pay Bercik a retainer of $5,000 if any legal notice was filed by the Treasury Department; however, Ford City never paid the retainer because Bercik’s representation was never needed.

The saga of financial issues continue in Ford City Borough, with the next page being written far from the eye of the public.

New information surfaced two months ago when former council member Vicki Schaub made a Right-To-Know information request on the topic of current discussions with the Economic Development Administration. Council President Carol Fenyes provided the documents as required by law, but blacked out all information within the documents.

Some of the documents were correspondence between county officials and Fenyes. When the Kittanning Paper requested information from the County, we were denied access to those documents.

The next Right-to-Know request was placed with the EDA itself. Unlike Ford City and the County, the EDA realized its responsibility for transparency in government and released all the documents in their entirety. Because there is not enough space to publish the documents in their entirety in this article, please click here if you wish to view them.

According to an email sent to the EDA on February 7, 2017, Fenyes requested the EDA to accept an offer of $116,200 from Ford City Borough as payment in full of the $581,000 debt.

Fenyes wrote: “By implementing many of the financial recommendations contained within the EIP (Early Intervention Program) and a restructuring of the budget, we believe we are in a position to pay $116,200.00 as quickly as an agreement can be reached between the Treasury and the Borough… We would respectfully request that the initial offer be reconsidered and offered one more time.”

At Fenyes’ request, a letter was sent on February 9, 2017 from Congressman Mike Kelly urging the EDA to allow Ford City Borough to make a $116,200 as payment in full for the $581,000 debt.

An email from EDA Regional Director Linda Cruz-Carnall was sent to Ford City. She wrote: “This email also memorializes the telephone discussion between myself and Council President Fenyes on February 14th in which it was agreed that EDA would honor the proposed settlement offer provided timely payment was received.”

Former Borough Manager Eden Ratliff questioned the justification to pay something for which the Borough was no longer responsible.

“At the end of March 2016, the Statutes of Limitations would have expired. Because the Federal government did not initiate (a law) suit, our understanding was they couldn’t collect on that funding. Additionally during that time frame, Ford City Borough had received $750,000 in Federal grant money towards their water plant. That indicates that the Borough is not blacklisted from receiving any Federal grant money. So the question is: Why do they feel the need to pay any sum of money to EDA?” Ratliff said.

At this point, it is assumed that settlement paperwork is being prepared between the EDA and the Ford City solicitor. As of the last Ford City public meeting, the $116,200 payment was not listed on the list of payables.

Calls to Congressman Kelly, the EDA, and Attorney Bercik were not returned.