Federal funds used to rehab homes

Bell approves nearly $1M in contracts for niece's firm

She has no construction history; mayor says it's OK

9/19/2011

Shayla Bell’s firm has a contract pending to renovate the house at 3808 Wallwerth Drive.

The Blade/Lisa Dutton
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Since Toledo Mayor Mike Bell took office, the city has qualified his niece’s development company to receive close to a million dollars in federal grants and loans. The same niece, with whom the mayor is particularly close, is also accompanying him on his trip to Asia this week.

Shayla Bell had no prior construction or development experience when, at age 25, she started the company, Fort Industry Development LLC, in early 2010. Her uncle had just taken office and she had recently finished working on his campaign. By March of that year, Ms. Bell’s company had been approved to receive money from a federal housing program intended to stabilize neighborhoods rocked by the foreclosure crisis.

To date, her company has been awarded five contracts totaling almost $656,000. Each was approved by the mayor. Ms. Bell’s company is to receive two more contracts worth $262,000.

The money is used to buy foreclosed houses, hire contractors to renovate them, and sell them to qualified home buyers. Money from the sales is returned to the city, but the developer keeps a construction management and developer fee. Ms. Bell would take home at least $70,000 in those fees, according to city documents.

Ms. Bell refused to speak with The Blade for this story. Her attorney referred most questions back to her.

But the mayor, who said he took Ms. Bell under his wing after her father — his brother — died in 2008, insisted his niece earned the contracts without any help from him.

“Here’s a young lady who chose to be an entrepreneur,” the mayor said. “She’s done all of this on her own. It’s been all on her own initiative, and I’m proud of her for it.”

As for the trip to Asia, Mayor Bell said it would be a vacation for his niece and that no city money would be used for her expenses.

He likened it to when he took his parents with him on his last trip to China this year. The mayor said he is paying for his travel costs with campaign money, and Ms. Bell is paying her own way with possible help from family members.

Ms. Bell graduated from John Carroll University with a degree in business administration in 2006. She spent a year and two summers as a “data researcher” for the Associated General Contractors of Northwest Ohio, updating information in a software program, according to her resume. After that, she worked for five months at Sky Insurance-Huntington Bank as a sales executive and for 15 months at Safeco Insurance-Ohio Casualty Insurance as a territory manager, her resume states.

She joined her uncle’s campaign as a scheduler and campaign manager in March, 2009, and was paid $11,000 through January 2010, when the mayor took office.

Proposal for funds

The following month, Ms. Bell submitted a proposal on behalf of Fort Industry Development to the city to qualify for a federal neighborhood stabilization program. At the time, Fort Industry Development didn’t exist.

The neighborhood stabilization program had begun in 2009, after the U.S. Department of Housing and Urban Development awarded the city $12.3 million to help stem the foreclosure crisis.

The city asked area developers and community development agencies interested in receiving the money to respond to a request for qualifications by April 7, 2009. More than a dozen companies and organizations replied.

A few companies, including Fort Industry, applied long after the deadline. Officials from the city’s Department of Neighborhoods, which oversees the program, said they continued to accept proposals from anyone interested in the program because they needed more people to take on the work.

In her February, 2010, proposal, Ms. Bell called her company a “subsidiary” of Toledo Mirror & Glass, a business run by Paul Pellioni and Jim Nicholson. The pair contributed more than $1,000 each to the mayor’s campaign, and Mr. Pellioni is a college friend of the mayor.

The mayor said his niece met Mr. Pellioni through him, but that the Toledo Glass owners approached Ms. Bell independently about a partnership.

Mr. Pellioni said he wanted to team up with Ms. Bell because he thought she would be a good business person. “She’s bright, ambitious, and very dependable,” he said. “She’s a quick study.”

Mr. Pellioni also said Fort Industry Development is not a subsidiary of Toledo Glass, contradicting Ms. Bell’s proposal. He could not explain the inconsistency.

“I can’t speak to what was said there,” he said.

On March 3, 2010, the city’s neighborhoods department approved Toledo Glass to receive neighborhood stabilization funds. Although the approval letter states that the department received the application from “Fort Industry Development LLC/Toledo Glass LLC,” it names only “Toledo Glass LLC” as the approved company. Still, Fort Industry — not Toledo Glass — received contracts based on this approval.

Tie to larger firm

Officials in the city’s neighborhoods department told The Blade that Ms. Bell’s company was approved despite her inexperience because of her partnership with the owners of Toledo Mirror & Glass. Kattie Bond, the department’s director, said it’s not unusual for less-experienced individuals to team up with established businesses to do work for the city.

The same day the city issued its approval, Ms. Bell’s attorney filed with the Ohio Secretary of State’s Office to formally create Fort Industry Development. The state certified the company five days later.

According to filings with the city, Fort Industry Development has three members. Ms. Bell owns 51 percent of the company, and Mr. Nicholson and Mr. Pellioni own 24.5 percent each. There are no other employees.

So far, the company has received four neighborhood stabilization contracts from the city, ranging from $113,000 to $138,000. Those contracts call for Fort Industry to buy, renovate, and sell four houses in West Toledo and the Scott Park area. Three other contracts are pending.

Altogether, the company has received or is scheduled to receive $139,000 in construction management and development fees. If that money is distributed according to the company’s ownership shares, Ms. Bell would make $70,841. It’s unclear whether she’s receiving a larger share.

Mr. Pellioni told The Blade that Ms. Bell makes profits from the business in accordance with the ownership structure, although he said Ms. Bell does most of the work and her compensation reflects that. He declined to be more specific.

The mayor and other city officials adamantly stated that Ms. Bell has not been given any special consideration because of her uncle’s position and that no laws or ethics policies have been breached.

Adam Loukx, the city’s law director, said federal and city policies prohibit immediate family members of city officials from receiving federal contracts. However, uncles or nieces do not count as immediate family unless they live in the same household, Mr. Loukx said.

A HUD spokesman said the agency’s conflict-of-interest rules don’t define “immediate family.”

Ms. Bond and other city officials said Ms. Bell has done an exceptional job purchasing, renovating, and selling homes. That’s why she continues to receive additional contracts, they said.

“It’s purely based on performance,” said Ebenezer Osei-Kwame, manager of the program, adding that Ms. Bell turned around the houses more rapidly than other developers. “We want to sell the houses as quickly as possible,” he said.

The fact that she’s related to the mayor is “a coincidence,” he said.

The Blade visited four houses that were supposed to be renovated by Ms. Bell’s company. From the outside, they appeared to have undergone significant improvements. The windows and paint looked new, and the landscaping was well manicured.

Grateful for change

Denise Kidder, a neighbor of one of the homes, on Gould Road in West Toledo, confirmed that work had been done. She said the house had been vacant for about two years and she was pleased to see it renovated.

“I was worried about upkeep and rats,” she said. She feared her own home would lose value because of the vacant house across the street. “Now I think there’s hope,” she said.

As for Ms. Bell’s involvement in the neighborhood stabilization program, the mayor said he is confident there has been no breach of ethics.

He added that he has strived to avoid even the appearance of impropriety during his time in office. That’s why, despite his belief in Ms. Bell’s abilities, the mayor said he did not hire her as part of his administration.

“I can tell you as her uncle the reason she’s not working up here on the 22nd floor is I didn’t want to do anything that might look unethical,” he said. “She could help me up here, but I didn’t do that, and she was upset about that.”

He also pointed out that he uses campaign funds to pay for his trips overseas, even though he is on city business and could use city money if he wanted.

The mayor said Ms. Bell’s presence on the trip this week, although for her personal enjoyment, will help strengthen the city’s ties with Chinese investors, such as those who bought the Docks and Marina District this year.

Ms. Bell has been a member of the “greeting party” when those investors visited Toledo, and they consider her family, he said.

As for his own family ties with Ms. Bell, the mayor drew a distinction between his job as the city’s top executive and his role as an uncle.

“I’m not going to deny that I care for her as an uncle. I’m not going to deny that I’m going to watch out for her as an uncle,” he said. “I’m not going to deny she’s part of my family.”

Contact Tony Cook at: acook@theblade.com or 419-724-6065.