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.”

U.S. Senate Majority Leader Chuck Schumer announces broadband access expansion funding for NYS (March 29, 2023)

New York State is receiving $100 million for broadband access expansion.

The new federal investment comes from the $10 billion in the American Rescue Plan’s Capital Projects Fund.

Senate Majority Leader Chuck Schumer said getting the American Rescue Plan act passed was one of his first acts as majority leader and that the fruits of that labor are being realized, “New York will receive $100 million in federal funding to help expand broadband and close the digital divide for communities across our great Empire State. It’ll connect over 100,000 families, homes, and businesses to affordable, high-speed internet.”

Senator Kirsten Gillibrand said investing in the internet can create enormous economic opportunity, “It has lifelong impacts, especially for kids. Research suggests that it leads to business creation, lowers unemployment rates, creates jobs, raises property values, and improves life and health outcomes in our communities. One study found that every dollar invested in rural broadband could generate $3 to $4 of local economic impact.”

New York’s Affordable Housing Connectivity Program is a competitive grant program designed to fund high-speed, reliable broadband infrastructure to and within low-income housing buildings.

CPF funds will be used to upgrade internet access in affordable housing units. New York has submitted its plan to the U.S. Department of Treasury for review.

Last year, New York enrolled a record one million qualifying households in the federal Affordable Connectivity Program, a nationwide subsidy to expand broadband access to low-income households. The federal program, funded by the Bipartisan Infrastructure Law, provides discounts of up to $30 a month toward internet service for eligible low-income households.

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

The vast majority of board members who serve on the Jamestown Local Development Corporation (JLDC) have not received any training that’s required under state law.

That’s according to information provided by the State Authorities Budget Office, which is responsible for making public authorities more accountable to state law.

According to data from ABO, eight of the nine current JLDC board members – including mayor Eddie Sundquist – have yet to participate in the required state training that focuses on a board member’s legal, fiduciary, financial and ethical responsibilities. Under state law, all board members of local authorities like LDCs and IDAs must receive the training within a year of joining a board.

Sundquist said his office has been working with the State Compliance Office on the issue, “Where they’re well aware of the situation and they talked to us about what things need to happen. Number one, they gave us some additional dates for fiduciary training, which we found out is actually required for public authorities. And, unfortunately, with COVID, a lot of that went to the wayside for quite a period of time, but we want to make sure we’re compliant and doing the things that we need to do.”

JLDC serves as the lending arm of city government and, in 2022, the Jamestown City Council authorized it to oversee and appropriate neary $9 million in federal American Rescue Plan Act money aimed at economic development. As a result, the JLDC was given more appropriating power than at any other time in its 42-year history.

Besides Mayor Sundquist, other board members who reportedly have not completed training include the three board members who applied for federal grant money administered by JLDC.

As WRFA reported last week, JLDC board members Pete Scheira and Luke Fodor each applied for and received American Rescue Plan grant money for businesses or organizations they have a material interest in. Additionally, the wife of city councilman and JLDC board member Jeff Russell also applied for and received funding. In all three cases, the board members in question did not vote for their respective grant award, but both the JLDC bylaws and state laws have conflict of interest rules that appear to prohibit JLDC from awarding funding to entities that board members own a material interest in.

Only council president Tony Dolce is listed as recieving training, but that was in 2012 – over 10 years ago.

By comparison, five of the seven members of the Chautauqua County Industrial Development Agency have received state training, with two of those being in recent Pandemic years and two who have yet to receive training, having only joined the board within the past year.

In response to the likely violation of JLDC bylaws, Mayor Sundquist has said it was the city’s legal interpretation that the conflict of interest rules did not apply because JLDC was only acting as a pass-through agency for the federal money and did not receive it directly.

He said the U.S. Treasury Department is who oversees the ARP funds, “They’ve actually gotten rid of their staff that focuses on compliance in the Treasury Department, so it’s been a challenge for us to try to figure out what’s the proper way to do things when it comes to this federal funding. So, we’re working through that process, we’re going to be talking to the JLDC board about what we have found out through this process of working with the state and working with some of our federal partners because we really want to have that public discussion of what happened and where do we go from here.”

The mayor has also said the city is continuing to look into the conflict of interest situation and will work to rectify it should either state or federal officials verify it was not allowed.

Editors Note: A previous version of this article indicated Jeffrey Russell applied for a grant. That was incorrect and it was his spouse who filed the application for her business.