State auditor has reservations about MVSD refunds

WARREN — The Auditor of State has reservations about some $5 million in refunds the Mahoning Valley Sanitary District is scheduled to give to the cities of Youngstown and Niles and the village of McDonald.

In a letter dated Aug. 25 to the two judges charged with overseeing the MVSD, state Auditor Dave Yost said he questions the wisdom of giving out rebates.

“We are writing to apprise you of certain reservations which we have about the wisdom of effecting the proposed distributions,” Yost wrote.

Under consideration is a letter Yost’s office received in December 2016 from MVSD secretary / treasurer Alan Tatalovich. The correspondence notes several financial obligations that Yost noted were relevant to his questioning the rebates.

In his letter, Tatalovich pointed out:

• The district has more than $38.7 million in outstanding loans and some $9.15 million in unpaid bonds.

• The district continues to experience “major and ongoing expense to its water purification plant built in 1926 and the rehabilitation or replacement of obsolete infrastructure vital to the purification of water is a major challenge to management.”

• MVSD anticipates the “probable designation of critical non-discretionary capital improvement to the very important dam and spillway project.”

“Fiscal year 2017 should prove very interesting as to how the district will be able to solve just how to fund and set a timeline to start and then complete this very difficult project.”

Yost said Tatalovich’s letter also noted a five-year fiscal forecast that does not include a projected distribution of $5 million in refunds.

Meanwhile, a planned Aug. 29 hearing that was scheduled for Trumbull County Common Pleas Judge Ronald J. Rice’s courtroom was postponed. In that hearing, both Rice and the other judge charged with overseeing MVSD, Mahoning County Common Pleas Judge Lou A. D’Apolito, were expected to receive answers on why the MVSD board approved the rebates.

At the end of June, the MVSD board unanimously agreed to refund surplus money, with Youngstown receiving $3.7 million, Niles getting $1.2 million and McDonald getting $100,000. The money was to be distributed in three increments, with the first $2 million being held up because of questions by the judges.

The judges wanted MVSD to invite representatives from each entity that buys water from them. The jurists also sought minutes of MVSD board meetings in which the rebate topic was discussed. They also wanted copies of receipts and disbursements.

Yost in his letter stated legal counsel for MVSD had solicited an opinion from the auditor about the propriety of such rebates. However Yost declined, writing the “responsibilities and permissible prerogatives” of his office do not include legal analysis or advice on such matters.

Attempts to reach MVSD attorney Thomas Wilson for comment on Friday were unsuccessful.

Kristina Klecha, bailiff for Rice, said no new hearing date has been set and is not expected to set for a few weeks.