Toledo to pay nearly $220K back to HUD

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Director of Neighborhoods Bonita Bonds

The city will pay back nearly $220,000 of grant money to the federal government for mistakes made years ago.

Toledo City Council Tuesday reviewed using $218,573 from the city's general fund to repay Community Development Block Grant “Recovery Federal Stimulus Operating Grant” money. The city used that money for purposes that were “deemed ineligible in a 2013 audit of spending from July, 2009 to June, 2012 ,” according to city records.

The Hicks-Hudson administration negotiated down the initial amount owed but unsuccessfully tried to pay the money in three annual installments, city officials said.

“This request was recently denied and full payment is now required immediately,” said legislation before city council.

The program was a stimulus grant authorized under the American Recovery and Reinvestment Act of 2009 . It appropriated $1 billion in Community Development Block Grant money to states and local governments to carry out eligible activities.

The city neighborhood's department got $2,141,045 from the U.S. Department of Housing and Urban Development as an “entitlement city” for the program.

The money was used to pay for six activities, the legislation said. About “90 percent of the funds were utilized successfully toward infrastructure, foreclosure activities, rehabilitation of rental units, construction of a senior center, weatherization, and roof activities,” the legislation said.

The 10 percent incorrectly used was not detailed in the legislation.

Neighborhoods Director Bonita Bonds told council the mistakes involved "income eligibility and procurement requirements" for a roofing program.

Councilman Larry Sykes said he was initially disturbed by the findings of the audit, which included sloppy record keeping by the neighborhoods department.

Ms. Bonds said the neighborhoods department was not able to give federal auditors all the records on the roofing program that they wanted to inspect.

The city also could not confirm some recipients of the grant money for roofs were income-eligible, she said.

Councilman Tom Waniewski pressed for more specifics on the roofing program.

Contractors fixed or replaced 158 roofs in 2009 through 2012, said Veronica Burkhardt, the city's commissioner of housing.

"They came back and said some of the bids may not have been in the cost-reasonable range," she said. "They consider reasonable within 15 percent of what our in house team says it will cost to repair."

Councilman Yvonne Harper said: "Lesson to be learned, we need to keep better records."

The Hicks-Hudson pointed out the mistakes were a “result of activities pre-dating this administration.”

Council Tuesday also reviewed legislation to move $3 million from the city’s general fund back to its capital improvement fund — which would reverse a year-ending 2016 transfer.

The Hicks-Hudson administration left $3 million in Toledo's general fund at the end of 2016, hoping it would help the city get a better bond rating and save with lower interest rates, City Law Director Adam Loukx told city council in a written statement last month.

Council President Steven Steel on Aug. 14 said the city closed the books on 2016 with a $3 million transfer from its capital improvement fund to its general fund. He questioned whether the move was necessary and said it should be moved back.

It was among the issues Wade Kapszukiewicz, the county treasurer challenging Mayor Paula Hicks-Hudson in the November general election, used to criticize the incumbent mayor. He said it was not needed to keep the fund in the black. The city's 2016 Comprehensive Annual Financial Report showed the general fund balance at $15,754,000 at the end of 2016. Of that, $1,158,000 was listed as "nonspendable;" $3,814,000 was listed as "restricted, and " $4,754,000 was listed as "committed," which means it is the city's so-called rainy day fund money. That left $6,028,000 as unassigned.

In other business, council reviewed a request to sell two South Toledo buildings near where Southwyck Shopping Center once stood for $1.

The Hicks-Hudson administration wants to waive the required competitive bidding process and sell 5355 Southwyck Blvd. and 5405 Southwyck Blvd. to Olympic Real Estate Group LLC.

The properties are former Stautzenberger College buildings that were acquired by the city in 2015 from the Lucas County Land Bank.

“The prospective buyer, Olympic Real Estate Group LLC, wishes to acquire this property from the city and redevelop it as commercial office space for its ‘sister company,’ Rahe & Company CPA’s LLC, a accounting and tax services doing business as ‘Financial Express and Payroll Express LLC,’” the request read.

The company plans to raze the building at 5405 Southwyck and redeveloped the 19,904-square-foot office building at 5355 Southwyck.

“The building at 5405 Southwyck Blvd. is dilapidated from years of neglect and water damage,” the council ordinance said.

“There are liabilities attached to the property so the buyer will carry the burden of the liability – demolition and asbestos,” city spokesman Carrie Hartman said. “We expect this project to bring probably a dozen jobs.”

The company has three offices in the city that it wants consolidate at the new location. 

Contact Ignazio Messina at imessina@theblade.com, 419-724-6171, or on Twitter @IgnazioMessina.