Category: Local News

Ford City Warns of Bankruptcy in EDA Letter

Council members hope to hear back from the EDA before their next council meeting, scheduled for Monday, September 14.

by Jonathan Weaver

The letter Ford City Borough officials sent Economic Development Administration (EDA) Interim Regional Director Tonia Williams last week has been released.

A copy of the August 21 letter, signed by Council President Kathy Bartuccio, was obtained by the Kittanning Paper.

The letter gives Williams two options of how Ford City is willing to repay the $581,000 grant initially received in September 2000: revisiting EDA’s October 2014 offer of $116,200 paid in three equal installments during the next two-and-a-half years, or the full debt amount paid in $1,000 installments over the next nearly-50 years.

Bartuccio wrote that the three nearly-$38,750 in payments under the first option would begin next month – September 30 – and be made on Tax Day each year thereafter if approved.

If EDA does not consider that repayment option, Ford City Borough is willing to pay the full amount in equal payments until at least 2064.

“The borough will make monthly payments in the amount of $1,000 to the department until the debt is satisfied. Payment will be made on or before the 28th day of each month,” Bartuccio wrote. “Upon EDA being in receipt of $581,000 from Ford City Borough, the borough shall be granted release in full from the terms and conditions of the grant award.”

Bartuccio said Borough officials would “very much” like the EDA to select the first option to close out the grant award terms and conditions due to present economic hardship.

She attached a copy of the June treasurer’s report, 2014 audit and 2015 budget as examples how “the general fund is dwindling significantly.”

“Ford City Borough does not have the financial resources to pay $581,000 and doing so may very well force the borough to enter into Act 47 (considered ‘financially distressed’ in the eyes of the State). Having $336,000 to operate borough government for the next eight months is no easy task and we ask the department to not force the borough into a catastrophic financial disaster.”

“A payment of $38,733.33 will be very difficult for the borough to sustain; however, $581,000 is unimaginable.”

Ford City Borough has met with Dr. Kerry Moyer and Demographics Expert Teran Moyer of Civic Research Alliance since May as part of Pennsylvania’s Early Intervention Program to keep the municipality from reaching Act 47 (or the Municipalities Financial Recovery Act). The Early Intervention Program has a goal of preventing municipalities from experiencing significant financial distress.

A $62,230 grant was received by the state Department of Community and Economic Development in December to prepare a five-year financial management plan with input for employees from all sectors of the municipality.

Act 47 also allows a municipality under certain circumstances to petition to triple the applicable local services tax.

The Act provides for the restructuring of debt of financially distressed municipalities, limits the ability of financially distressed municipalities to obtain government funding; authorizes municipalities to participate in Federal debt adjustment actions and bankruptcy actions under certain circumstances; and provides for consolidation or merger of contiguous municipalities to relieve financial distress.

In the October 3, 2014 letter, then-Regional Director Willie C. Taylor wrote, “We will consider the economic benefits brought about by (PPG) Building #2 and the economic conditions in determining EDA’s adequate consideration” after receiving eight proposals for repayment last summer that expected about $150,000 in revenue at the current businesses on site – Belleflex Technologies and OEM Shades.

However, Williams expressed frustration in her August 13 letter that “no compromise offer has been made to facilitate a resolution, nor, as we had hoped, to renew the $116,000 offer” and no new facts or information was provided to reconsider the determination.

Bartuccio responded to that notion as well in last week’s letter.

“We felt as though EDA and the borough were still in ongoing communications to reach a mutually agreeable settlement based on verbal and written correspondence between both parties. It was our understanding that our Request for Reconsideration would be interactive with the department allowing for dialogue to work together in bringing finality to this matter,” the letter wrote. “The Borough Council had been waiting for you to communicate when your team was available for a meeting or phone conference. We regret that meeting did not take place.”

That statement by Williams also stood out to Ford City Economic Development Committee Advisor Don Mains.

“Technically, what (EDA) is saying, even though it’s going to the U.S. Treasury and may be at the point of no return, Ford City needs to look and say ‘Did we make an offer?,’” Mains said. “I suggest Ford City Council read that very carefully and use that as a base to move.”

Mains was appointed U.S. Deputy Assistant Secretary for Economic Development in 2001 after successful efforts to raise $8 million

Even though the first option was recommended, Bartuccio added that “Whichever proposal the department chooses, the Borough Council will approve at its regularly scheduled council meeting.”

Ford City officials now await further response from EDA before their September 14 regular council meeting at the Ford City Public Library along 4th Avenue.

The letter will be discussed today on the WTYM Morning Show at 10AM. Listen at 1380 AM radio, on the computer at www.wtymradio.com, or on your mobile device by downloading the free “wtym radio” app from your app store.

The two-page response to the Economic Development Administration dated Friday, August 21 was signed by Borough Council President Kathy Bartuccio. Councilman Gene Banks questioned last Monday why he was not issued a copy of the letter prior to sending it to the EDA.