State probe in Youngstown adds to the area’s negative reputation

On the side

A belated note of appreciation to the Austintown Fourth of July Parade committee for having me serve as a judge and allowing me to participate in the event I’ve watched annually since moving to the township in 1995. I never thought throwing candy and waving to people could be so much fun. Readers of this column know how much I’ve enjoyed watching the parade over the years. A special thanks to township Trustee Jim Davis who asked me to participate. It wouldn’t be a parade if Davis didn’t pelt me with candy – even though he did it moments before the event started.

On another personal note, I turned 50 today. I came to The Vindicator from New York when I was 27 years old. I never imagined spending nearly half of my life here though I’m very happy with my career choice – there always seems to be a lot of big news in this area – and to call the Mahoning Valley my home.

A state investigation into the legality of more than $2 million given by Youngstown from its water and wastewater funds to NYO Property Group, a prominent downtown developer, is certainly troubling to an area that is known for political corruption.

Search warrants were execute March 16 at NYO’s downtown Youngstown office and at the Poland home of Dominic J. Marchionda, its managing member.

That was followed by searches July 6 of the home and office of Stephen Garea, NYO’s attorney on the three projects under investigation, and the homes of Youngstown Finance Director David Bozanich and his girlfriend, Panzy Eldridge.

Numerous documents, including financial records and tax returns, as well as several computers, a safe and $66,700 in cash were taken from the four locations.

The investigation, led by the Ohio Auditor’s office, should wrap up in the fall.

The probe focuses on three projects done by NYO subsidiaries that received $2.27 million from the city’s water and wastewater funds.

The most significant project is $1.2 million given from those funds to U.S. Campus Suites LLC in November 2009 for the Flats at Wick student-housing project.

Marchionda’s company then paid $1 million to the city for a fire station property on Madison Avenue for the project, netting the company $200,000.

At the time, the city was projecting a general-fund deficit for the end of 2009, but the influx of $1 million in part helped avoid the city’s shortfall. Without the transaction, the city would not have been able to move $1 million from the water and wastewater funds to the general fund.

U.S. Campus Suites is leasing the station back to the city for $10 annually.

The city originally agreed to sell the fire station for $10 in May 2009 to the NYO subsidiary, according to a city ordinance from that time. That sale price increased in November to $1 million, according to a board of control contract.

The city also gave Erie Terminal Place, an NYO subsidiary, $350,000 in water and wastewater funds in 2011 for its Erie Terminal Place apartment project, and then $220,000 two years later for improvement work at that downtown property.

Also, $500,000 in those funds went to Wick Properties LLC, also an NYO subsidiary, in 2015 for the apartment/extended-stay Wick Tower that opened in November of that year.

Among the items seized from Garea’s law office were files about the Flats at Wick and Wick Tower.

Four Youngstown water customers filed a lawsuit last year to stop the city from using water and wastewater funds for economic development.

City council lately has backed away from giving wastewater funds for such projects because Youngstown already charges very high sewer rates, largely to pay for the $150 million in upgrades to the city’s sewer system as ordered by the U.S. Environmental Protection Agency.

Also of note is those who oppose fracking in the city are gathering signatures yet again to ban the practice along with other fracking-related activities. For the record, there is no fracking in the city, but the proposed charter amendment goes much further than that.

Unlike the six previous Community Bill of Rights charter amendments that have failed since 2013 – the November 2016 results were by far the closest losing by 2.5 percentage points – the one that could be on the upcoming November ballot calls for the prohibition of water and wastewater funds to be used for economic development projects.

With the ongoing state investigation that should be finished before the general election, this ballot issue could finally resonate with city voters.

Those wanting to get the amendment on the ballot need at least 1,259 valid signatures from city voters.

City officials insist the longstanding practice is allowable and have a legal opinion to back it up.

But if indictments are unsealed before the election – or if residents are tired of the city giving water and wastewater funds for economic development projects – this charter amendment could have its best chance of being approved.

Even if it fails, backers of the proposal will likely be back again and again as they have done many times before.

Don't Miss a Story

Sign up for our newsletter to receive daily news directly in your inbox.