Pictured, from left, are City Council President Anthony Dolce, R-Ward II, councilman Jeff Russell, R-At Large, the Rev. Luke Fodor and ARPA grant manager Tim O’Dell.
Mayor Eddie Sundquist responded Thursday to questions over possible conflicts of interest regarding how the Jamestown Local Development Corp. granted American Rescue Plan Act funding to organizations closely associated with board members and relatives of board members.
A report published Wednesday by WRFA notes that the JLDC board had “likely violated” its bylaws by awarding funding to It’s Your Day and Jamestown Skate Products. It’s Your Day is a wedding planning service that is owned by the wife of City Councilman Jeff Russell, R-At Large, while Jamestown Skate Products is owned by JLDC board member Pete Scheira. WRFA reported that while Russell and Scheira did not vote on the grant funding awards, the JLDC bylaws “prohibit” the board from awarding grants and loans to businesses owned by board members or immediate family members.
Recently, the JLDC approved $9,500 for an upcoming Irish concert event at St. Luke’s Episcopal Church. While the Rev. Luke Fodor recused himself from the board’s vote regarding the concert event, the decision to award funding to St. Luke’s event received criticism from Tom Andolora, who submitted written comments that were read during Monday’s City Council voting session.
Despite concerns regarding the way the JLDC board awarded grant funding, the city administration believes JLDC’s decisions were legal.
In a statement released Thursday, Sundquist explained that the JLDC was “tasked” with administering “unprecedented” funds provided to Jamestown by the federal government.
“Grant funding made available to local businesses to support COVID recovery operations were made under the knowledge the funds awarded were appropriate and legal under state and federal law,” he said. “We thank the members of the public that brought these issues to our attention, and if there are any discrepancies, or actions contrary to law, we will work to rectify those issues as soon as possible. The awarding of these funds were done in a transparent and public process with awards being made for the benefit of local businesses and the public good.”
Sundquist told The Post-Journal that the JLDC board acted in a way they believed was “proper,” following state and federal guidelines. He added that the city “appreciates” the media questioning how the JLDC board awarded funding and said the city is taking steps to ensure that the JLDC board acted in proper compliance.
“We’re working with our state and federal partners to make sure that what we did was correct, but there was no ill will done,” he said. “We did what we thought was correct at the time, we got a legal opinion and we operated on that.”
According to Sundquist, the city viewed the JLDC as a “pass-through organization” for distributing funds allocated by the city, rather than managing its own funds. Sundquist said the JLDC typically provides its own loans and grants to local businesses and invests in additional businesses through the interest charged through its loans; however, from the city’s perspective, the JLDC’s task of administering ARPA funding was a different process.
“Once we get back the opinion from our state and federal partners, certainly we’ll take any corrective action that we need to if there is any, but in the meantime, we were all operating under the assumption that this was a process that we could do and it didn’t conflict with state and federal law, but we’re reaching out to some additional partners, just to confirm and we’ll go from there,” he said.
Sundquist told The Post-Journal that the “only oversight” of the American Rescue Plan funding currently being administered is directly through the U.S. Treasury Department. While many communities received funding through the state on behalf of the federal government, Sundquist said the city received a “direct allocation” because it is considered an “entitlement community.”
While Sundquist believes the JLDC board acted in compliance with state and federal guidelines, he said the city has already taken steps to address the controversy.
“We’ve reached out to our consultant that helps us with the Rescue Plan funds to ensure that we’re in compliance with Treasury regulations,” he said. “We’ve tried to reach out to the Treasury Department, but they’ve recently closed their heap center due to lack of funding. We’re trying to figure out how to best get an answer for that. We don’t believe there’s any penalty, but certainly funds have not gone out on those votes, so there’s certainly the opportunity for us just to claw those back.”
Asked if the JLDC Board or the city would change the way it awards funding due to the controversy, Sundquist said neither the JLDC board nor the city council have “had that discussion.”