Jamestown Local Development Corporation meeting (March 15, 2023)

The Jamestown Local Development Corporation has released American Rescue Plan funding it had been holding back for two businesses pending counsel on whether the appropriation of those funds had violated federal law.

The JLDC Board had approved a $64,000 Building Expansion & Business Acquisition program grant for It’s Your Day wedding planning service. The owner of that business is the wife of JLDC Board Member Jeff Russell, who also serves on Jamestown City Council.

The other grant is $15,000 from the Downtown Small Business Evolution program for Jamestown Skate Products. That business is owned by JLDC Board Member Pete Scheira.
In these instances, the board members in question either recused themselves or did not attend the voting session. However, the JLDC by-laws state that no funding will be awarded to any business where a board member owns a material interest.

There was a question of whether the awards violated State conflict of interest rules for municipal officers or federal rules.

Jamestown Mayor Eddie Sundquist said his administration had reached out to the U.S. Treasury Department on the matter for guidance, but they had disbanded their Help Desk, so they then reached out to Congressman Nick Langworthy‘s office, “And (they) confirmed that the use of those funds is appropriate. You know, we did it in good faith in order to support these businesses, using funds that were technically not JLDC’s funds. They’re separate federal funds being given for a recovery purpose. And so those funds have been completed and have been given out. We’ve gotten the permission, or the consultation, from his office that those are appropriate uses of those funds.”

Prior to receiving that information, the JLDC board had declined to make any motion to revoke the funding in question.

Jamestown Local Development Corporation meeting (April 19, 2023)

Over a half million dollars in American Rescue Plan funded grants have been approved for eight Jamestown businesses.

The Jamestown Local Development Corporation awarded $500,000 in Machinery and Equipment Upgrades funds as well as $50,000 in New Business Development funds at its monthly meeting.

Ballgame Heroes and Pearl City Cycle will each receive $25,000 under the New Business Development grant fund.

Jamestown Businesses Receiving ARP New Business Development Grant Funds

Department of Development Grant Manager Tim O’Dell said Pearl City Cycle is opening a retail store at 245 Fluvanna Avenue and will use the funds for store signage as well as painting the interior and exterior. He said Ballgame Heroes will use the funds for updating security systems, new displays inside, as well as for store programming and events.

The five businesses receiving $92,000 each in Machinery and Equipment Upgrade grant funds include:
– Colecraft Commercial Furnishings toward a $361,792 total project
– Dawson Metal Company toward a $134,900 total project
– El Greco Woodworking, Inc. toward a $143,952 total project
– International Ordnance Technologies toward a $226,600 total project
– National Wire & Metal Tech Inc. toward a $320,000 total project

Crown Street Roasting was awarded $37,500 for a $50,000 project

Jamestown Businesses Receiving ARP Machinery & Equipment Upgrades Grant Funds

O’Dell said 29 full time and three part time jobs are to be created and 163 full time and five part job positions retained through the funding.

The Machinery and Equipment Upgrades grant has a 25% match requirement for the businesses as well as job creation benchmarks that must be met or funds could be clawed back.

Director of Development Crystal Surdyk said the department reached out to 18 businesses about applying for the Machinery and Equipment Upgrades grant. Included in that list was Jamestown Skate Products, which is owned by JLDC Board member Pete Scheira. Scheira did not submit an application for funding.

Jamestown Businesses Contacted About ARP Machinery and Equipment Upgrades Grant

Surdyk said, when asked why these specific businesses were contacted, said they were businesses that had made past inquiries and expressed interest in grant opportunities.

JLDC Board member and City Council member Kim Ecklund expressed concern that when the grant applications were being accepted in January, businesses had already developed their budgets for the year and might not have had the 25% capital match budgeted that’s required. She added she’d still like to see more and different businesses participate in the grant programs.

While the discussion and decision regarding the ARPA grants awarded to Jamestown Skate Products and It’s Your Day was removed from the agenda, JLDC Attorney and City Corporation Counsel Elliot Raimondo did share that the city was still waiting to hear back from the U.S. Treasury Department, “I spoke to the Congressional representative today on that issue. The Treasury Department has, for lack of a better term, bounced him from person to person to person. So, we’re still waiting on what is the status of state and local fiscal recovery fund guidance, specifically what they mean by violations of ethical rules.”

WRFA has reviewed the federal guidelines for the $28 million in ARPA funding awarded to the city in 2021 and did identify a provision that states “Recipients may not use [the money] in violation of the conflict-of-interest requirements contained in the Award Terms and Conditions, including any self-dealing or violation of ethics rules.”

We also have reached out to the Treasury Department office for clarification to see if any of the grants in question violated the “self dealing” provision found in those guidelines, but have yet to receive a response.

The JLDC also approved $5,100 in Downtown Programming funds for the Juneteenth Festival to hold a free concert event on the Wintergarden Plaza on Friday, June 16 as well as concert at Spire Theatre on Saturday, June 17. These concert events will be in addition to traditional festivities held in Jackson-Taylor Park in celebration of Juneteenth.

Attorney Elliot Raimondo (center) talks with members of the Jamestown Local Development Corporation during its March 15, 2023 meeting

UPDATE: The Jamestown Local Development Corporation will not be discussing the ARPA grants awarded to Jamestown Skate Products and It’s Your Day at its monthly meeting following an update sent this morning that removed that item for tonight’s agenda. 

City officials are expected to offer an update Wednesday afternoon on the question of whether or not the Jamestown Local Development Corporation (JLDC) violated federal guidelines by approving economic development funds for projects tied to sitting board members.

Among the items on the JLDC meeting agenda for this month is a “discussion and decision regarding the ARPA grants awarded to Jamestown Skate Products and It’s Your Day.”

• VIEW JLDC APRIL 2023 AGENDA

Jamestown Skate Products is owned by JLDC Board Member Pete Schiera and was approved for a $15,000 grant in October through the JLDC Downtown Small Business Evolution program. It’s Your Day wedding planning service was approved for a $64,000 grant in February from the JLDC’s Building Acquisition & Business Expansion program. The owner of that business is the spouse of JLDC Board Member Jeffrey Russell, who also serves on the Jamestown City Council.

A third grant was also approved by the JLDC board in February for St. Luke’s Episcopal Church, after the church applied for funding from JLDC Downtown Programming & Events program. That grant application was submitted on behalf of St. Luke’s by employee Rev. Luke Fodor, who also sits on the JLDC board. In all three cases, the board members in question did not vote when it came time to award the funding.

In February, WRFA reported that the JLDC board likely violated its own bylaws and possible even state law by awarding funding to businesses connected to sitting board members, recusals notwithstanding. JLDC bylaws – which govern how the corporation must function – prohibit the awarding of loans or grants for any business in which a sitting board member (or immediate family member) owns a material interest. The JLDC board may have also violated Article 18 of the State General Municipal Law, which prohibits municipal officers from receiving public money they oversee and that “there are no exceptions for when an individual discloses his or her interest, recuses him or herself or abstains from the discussion or vote on a matter.”

Jamestown Local Development Corporation meeting (March 15, 2023)

Two grants approved by the Jamestown Local Development Corporation Board that raised questions of whether the board violated its by-laws are now on hold.

Jamestown Corporation Counsel Elliot Raimondo, who is also now the legal counsel for JLDC, said he is still awaiting guidance following conversations with the state and federal government, “We are waiting for that guidance before I make a final opinion on the federal aspect of it. And as much as the prior votes were concerned, we did follow general municipal law, which is what city council uses, whereby recusals happen and votes were then taken place, so I don’t find that we did anything not above board in that respect.”

Raimondo did issue the opinion and recommendation that St. Luke’s Episcopal Church be allowed to retain the $9,500 they received in Downtown Programming Funds for a fundraising concert as JLDC Board member and Church Reverend Luke Fodor is an employee of the church and not an owner.

The other two grants that Raimondo recommended not be disbursed until federal guidance is received include a $64,000 Building Acquisition & Business Expansion program grant for It’s Your Day wedding planning service. The owner of that business is the wife of JLDC Board Member Jeff Russell, who also serves on Jamestown City Council.

The other grant is $15,000 from the Downtown Small Business Evolution program for Jamestown Skate Products. That business is owned by JLDC Board Member Pete Scheira.

In all three instances, the board members in question either recused themselves or did not attend the voting session. However, the JLDC by-laws are clear in stating that no funding will be awarded to any business where a board member owns a material interest.

Not only did the awards appear to violate JLDC by-laws, but also state conflict of interest rules for municipal officers, and potentially federal rules as well.

Raimondo added that he recommends changing JLDC’s by-laws so that the body operates similarly to City Council under general municipal law.

Following the explanation and update by Raimondo, Mayor Eddie Sundquist, who also serves as JLDC president, asked if any JLDC board member wished to make a motion to revoke the funding for the businesses in question, but none came forward. Most board members in attendance who spoke out agreed that despite what the bylaws indicated, they felt a recusal was all that should have been required, given the ARPA funding was a unique situation for JLDC.

Besides a vote to revoke by the board or the federal agency instructing JLDC that the awards can not be made, the only other way to prevent the awards from moving forward would be if someone brought forward a lawsuit using an Article 78 legal proceeding in State Supreme Court, with a judgement being made in favor of the plaintiff.

Grant Manager Tim O’Dell presents on business grant fund to the Jamestown Local Development Corporation board. (January 18, 2023)

Jamestown Mayor Eddie Sundquist says the city is continuing to look into possible violations of conflict of interest laws, due to the Jamestown Local Development Corporation awarding grant moneys to sitting board members, including one who also sits on the city council.

As WRFA first reported on Wednesday, the JLDC board appears to have violated its own by-laws by awarding federal funding from the American Rescue Plan Act to its own members to assist their personal business interests.

The businesses in question included a $64,000 grant to It’s Your Day wedding planning service from the JLDC’s Building Acquisition & Business Expansion program. It’s Your Day is owned and operated by the wife of city councilman and JLDC board member Jeff Russell. The other business was Jamestown Skate Products, which received a $15,000 grant from Downtown Small Business Evolution program. That business is owned and operated by JLDC board member Pete Scheira. A third violation may have also occurred when JLDC board member Luke Fodor, an employee of St. Luke’s Episcopal Church, applied for and was awarded a $9,500 downtown programming grant for a fundraising concert for the church, scheduled for later this month.

In all three instances, the board members in question either recused themselves or did not attend the voting session. However, the JLDC by-laws are clear in stating that no funding will be awarded to any business where a board member owns a material interest.

Not only did the awards appear to violate JLDC by-laws, but also state conflict of interest rules for municipal officers, and potentially federal rules as well.

The city claims it was aware of the language in the JLDC bylaws, but felt they didn’t apply to grant awards related to ARPA funding since JLDC was only serving as a pass-through agency for that money.

In a statement released Thursday morning, the mayor said all grant awards related to ARPA were made under the knowledge that they were appropriate and legal under state and federal law, and if there are any discrepancies, or actions contrary to state or federal law, the city will work to rectify those issues as soon as possible.

Sundquist also claimed the awarding of the funds were done in “a transparent and public process.” However, while the votes were done in a public setting, they were not 100% transparent.
When it came time for the JLDC board to award the grants in question, there was no advanced notice given to the public, including no mention of the businesses on the official meeting agenda, which does not appear on the city website and is only sent out to media.

Additionally, the official minutes for the respective meetings don’t provide any details on which businesses were awarded funding.

As Sundquist and his staff continue to look into the matter, the New York State Comptroller’s office has informed WRFA it is aware of the situation and is monitoring it as well.

The JLDC Board of Directors during its most recent meeting in February. The JLDC is comprised of elected city officials and community stakeholders and is considered the economic development lending arm of the city.

JAMESTOWN – Last year the Jamestown Local Development Corporation (JLDC) became one of the most powerful government agencies in Chautauqua County when the city of Jamestown charged its board with appropriating nearly $9 million in federal American Rescue Plan Act (ARPA) moneys aimed at economic development, primarily to assist businesses and organizations impacted by the COVID-19 Pandemic. Another $2.9 million in ARPA funds was appropriated to JLDC to assist with residential property improvements and to also update city code.

• REVIEW ALL CITY ARPA SPENDING TO DATE

All that funding is also required to be spent in a relatively short period of time – just under four years and counting. As a result the JLDC is busier now compared to any other time in the 40+ years of its existence.

But in the haste of getting millions of dollars out the door the JLDC board appears to have run afoul of its own bylaws by awarding moneys to businesses directly connected to two of its members.

Jeffery Russell

One of those businesses is It’s Your Day wedding planning service which received a $64,000 grant from the JLDC Building Acquisition & Business Expansion program, funded by ARPA money. The owner of that business is the wife of JLDC Board Member Jeffrey Russell, who also serves on the Jamestown City Council. Russell joined the JLDC board at the start of 2022.

The other business is Jamestown Skate Products. That business is owned by JLDC Board Member Pete Schiera, who was appointed to the board as a city at-large representative in 2020. Jamestown Skate Products received a $15,000 grant through the JLDC Downtown Small Business Evolution program, also funded with city ARPA money.

In both instances, neither Russell or Scheira voted when it was time to award the money for their respective business interests. In fact, neither was in attendance for the respective voting session when the awarding of the money took place. However, JLDC bylaws – which govern how the corporation must function – prohibit the awarding of loans or grants for any business in which a sitting board member (or immediate family member) owns a material interest (Article VII, Section 5).

WRFA looked into the matter and spoke with Jamestown Mayor Eddie Sundquist, who serves as JLDC board president. He was joined by city development director Crystal Surdyk. The two explained that their interpretation of the law is that the JLDC bylaws only apply in situations when JLDC awards grants or loans from its own funding pool. But because JLDC is only serving as a pass-through agency to administer the city’s ARPA money, the bylaws do not apply. Instead, any business can qualify so long as any board member with a conflict of interest recuses himself or herself from the vote.

That explanation was verified by Russell, who informed WRFA via email that he was told that his wife’s business could still apply for funding, as long as he didn’t vote on the matter.

“Like so many other businesses during Covid my spouse’s was decimated by the mandatory shut downs for those deemed to be non essential,” Russell explained. “Upon submission of her application for ARPA funds I asked for an opinion on the matter. I was advised that the ARPA funds are NOT JLDC funds directly and JLDC is acting as a pass through in the allocation of the funds. I was advised she could apply, but I must recuse myself during the voting session.”

Schiera also explained to WRFA that he was unaware of the stipulation in the bylaws and that it didn’t come up during his application process. Again, he was informed that as long as he recused himself, there was no conflict of interest or impropriety.

While it is true that Jamestown City Council authorized JLDC to administer the ARPA money as a pass-through agency, the same can be said for other federal moneys administered by JLDC, including the federal Urban Development Action Grant, awarded to the city decades ago. In that case, the money was also presented to the city of Jamestown, which authorized JLDC to utilize it as part of its low-interest revolving loan fund for businesses. Whenever money from that fund is appropriated by the JLDC board, it’s required to follow the rules of its bylaws.

Also worth noting is that while the JLDC ignored the bylaws when it came to voting on funds for its own members, it followed the bylaws when it came time to appropriate ARPA funds over $100,000 – which require final city council review and approval.

WRFA did reach out to city attorney Elliot Raimondo via email and asked what the basis was for city’s interpretation that no bylaw violation took place, but he did not respond.

Beyond the likely violation its own bylaws, the JLDC board may have also violated Article 18 of the State General Municipal Law, which prohibits municipal officers from receiving public money they oversee and that “there are no exceptions for when an individual discloses his or her interest, recuses him or herself or abstains from the discussion or vote on a matter.”

There’s also the question of if the awards violated federal law, if the terms of the grant award includes language similar to what is in state law.

There was also a third award of ARPA funding that also created a conflict of interest with a board member. During its most recent meeting, the JLDC unanimously approved a $9,500 grant for a fundraising concert at St. Luke’s Episcopal Church. That funding came from the JLDC Downtown Programming & Events program. Luke Fodor is a JLDC board member and also an employee of the church. When it came time to vote on the project, Fodor recused himself. City officials again contend that was all that was required, especially since Fodor doesn’t own any material interest in the church. But city property owner Tom Andolora recently voiced his disapproval of the matter during this week’s council meeting, via a letter that was read out loud by the city clerk.

“How is it possible that a member of the board can sit there, while the rest of the members vote to benefit the organization he leads? Of course Luke recused himself from the vote. Do the rest of you who are on the JLDC board understand how this looks?”, Andalora asked. “How is it possible that a member of the board can be so brazen as to fill out and sign an application himself? This goes beyond ‘conflict of interest’.”

WRFA did speak with other JLDC board members and asked if they were aware of the bylaw provision that disqualified them from receiving public money they oversee. Council president Tony Dolce, who has a seat on the JLDC board, said he was told a recusal was all that was necessary to avoid conflict of interest. When asked if the bylaws were ever brought up, he said they had not.

WRFA also reached out to Councilwoman and 2023 mayoral candidate Kim Ecklund for this story but she was unavailable for comment. Ecklund also has a seat at the JLDC table because she is the council’s finance chair.

WRFA did seek out opinions on the matter from state agencies. The State Authorities Budget Office – which is responsible for making public authorities more accountable – said it could not issue a formal legal opinion on the matter, but did say they do accept complaints for public authorities like JLDC, and do review and investigate those complaints as they come in. The State Comptrollers Office indicated it was aware of the situation and was monitoring, but had no other comment at this time.

The Irish Brothers present their request for downtown event funding to the Jamestown Local Development Corporation (February 15, 2023)

Over $105,000 in grants and loans have been approved for four downtown events.

The Jamestown Local Development Corporation heard presentations from five organizations, tabling one at its monthly meeting Wednesday.

Funding approved includes:

– $9,500 for the Irish Brothers to appear at St. Luke’s Episcopal Church on March 15,
– $10,000 for Roger Tory Peterson Institute‘s two-day presentation of the Banff Centre Mountain Film Festival World Tour at the Reg Lenna Center for the Arts in April
– $49,970 for the 2023 Whirlybird Festival in July that includes $24,900 in grants and a $25,000 loan
– and $35,700 for four Earlybird concerts that includes $10,700 in grants and a $25,000 loan.

A $42,500 request from St. Susan Center to bring in CashCab’s Ben Bailey for a Trivia Night fundraiser was tabled, with JLDC members requesting additional information about the space for the event.

The JLDC Board also approved funding eight businesses under the Business Expansion and Building Acquisition (BEBA) Grant program. City Council allocated $750,000 in American Rescue Plan monies for the program with $749,980 in requests received.

Department of Development Grant Manager Tim O’Dell said the businesses receiving funds have promised to create 40 full time jobs and 18 part-time positions, “To mention as well, the contracts, if approved they would be signing as structured as a 50% grant and 50% forgivable loan. The forgivable loan portion comes into as they will need to meet their employment goal. And if not, they will have until December 31, 2026 in order to obtain that goal. And if they weren’t to obtain that goal, they would pay half of it that was the loan portion if the jobs were not met.”

The eight businesses who were approved funding are:
– The Beer Snob – $60,000
– BW Wholesale Florist – $83,335
– Falcon Acquisitions – $93,480
– Fringe Hair Salon – $58,500
– It’s Your Day – $64,000
– Labyrinth Press Company – $114,855
– Panache – $167,105
– and Summit Wealth Management – $108,705

Building Acquisition & Business Expansion Grant funded Companies

Jamestown Economic Development Coordinator Stephanie Wright shared that 54 businesses were notified directly about the grant program with 19 declining to apply.

O’Dell said they heard from the Small Business Development Center that often businesses don’t have the time to invest in the application process, “And they don’t want to go to a commitment like that, as it’s a very long project in when the American Rescue Plan ends. And we’ve also run into instances where either they’re just not interested, they do not want to participate, as well as some businesses do not want to get involved in government programs.”

O’Dell said the Department is working with SBDC and the Chamber of Commerce on getting out the word on the next set of business grant programs. He said SBDC also will help businesses complete the grant applications.

The grant applications for Labyrinth, Panache, and Summit Wealth Management will now appear under new business on City Council’s voting agenda on Monday, February 27. Any grant that exceeds $100,000 must also receive council approval to move forward.

Grant Manager Tim O’Dell presents on business grant fund to the Jamestown Local Development Corporation board. (January 18, 2023)

Jamestown Local Development Corporation board members are requesting to review Business Expansion and Building Acquisition grant applications.

The American Rescue Plan funded program was allocated $750,000 by City Council with $749,980 in requests received from eight Jamestown businesses.

Department of Development Grant Manager Tim O’Dell said the City will experience a return on investment from the eight businesses who applied for funding, “All of these businesses have acquired property that was prior vacant or was partly vacant. And they will be running business operations there to make use of these buildings that delayed them from further decay and waste. And for this grant as well, many of these businesses are seeking to use these new spaces to create employment and optimize their business strategies.”

O’Dell said most of the work being done at the businesses includes HVAC repairs, roofing, interior work, and remodeling.

JLDC Board member and City Council Finance Committee Chair Kim Ecklund requested to see the business applications given that there were only eight received total, “It’s unfortunate that we only got eight because some of these people have received multiple funding other places too and some have not like Falcon Acquisitions is new, but I know we’ve seen Labyrinth get some funding and we’ve seen Panache get some funding through some other entities. So, they’re not newly getting funding, so I would’ve liked to see some new businesses, not necessarily new businesses, but new applications, if you will.”

JLDC Board member and Council President Tony Dolce agreed that all JLDC Board members should receive the applications to review.

The eight businesses who requested funding are the Beer Snob, BS Wholesale Florist, Falcon Acquisitions, Fringe, It’s Your Day, Labyrinth, Panache, and Summit Wealth Management.

The Jamestown Local Development Corporation Board will vote on the BEBA applications at its February meeting, which is scheduled for 5:30 p.m., Wednesday, February 15.