State
Auditor Concludes City Broke Several Laws
For HNN by Art
Harvath
West Virginia State Auditor Glen Gainer III issued a summary Friday of
a special examination of the City of Huntington and the Huntington Sanitary
Board relating to the issuance of bonds for a sewer project and other
matters.
Since the issues here involve decisions made by former Huntington Mayor
and Sanitary Board Chairman Jean Dean, HNN contacted Dean for comment.
“First of all Glen Gainer has not seen fit to provide me with a copy
of that (report), and second of all I don’t talk to HuntingtonNews.Net,”
Dean said.
Cabell County Prosecutor Chris Chiles did not answer HNN’s request
for comment on the matter. Part of the report involves former Mayor Dean
and members of the last city council who voted for the allegedly illegal
$3 million bonds. If the charges are substantiated in a court of law,
then Dean and any member of the council that voted for the bonds may be
found personally libel for the money. Also, any citizen or group of citizens
in the district involved may sue to recover the money.
Gainer’s report, and the State Codes that apply to his findings are
on the HNN site under “State Auditor Releases findings on Huntington.”
The following is a list of the preliminary results of their investigation:
1. City Council did not approve the $3.6 million Inwood/Shockey/Miller
Road sewer project. City Council had, in fact, directed that the project
not proceed. However, $3 million in bonds were issued without the required
approval of City Council and the project did illegally proceed. Also,
this sewer project was not included on the Sanitary Boards approved list
of priority projects. According to the auditor’s report, Former Mayor
and Sanitary Board Chairman Jean Dean had been advised of this requirement,
but went ahead with the project anyway, because she said it was the “only
way to get the project done.”
2. HSB did not comply with state law in not allowing competive bids for
the architectural and engineering services for the Inwood/Shockey sewer
project. This is in violation of State Code 5G-1-3. The legal consequences
for this violation are outlined in 11-8-26 through 11-8-31 of the State
Code.
3. The city used HSB money to complete the project, and then applied for
federal grant money to pay for the project. The procedures and regulations
for grant money generally require justification for the project. The Inwood
project was not on the HSB list of priority projects, and the it was complete
before grant money was applied for.
4. The original minutes of City Council meetings indicate that a fee was
not to be charged for connection to the sewer line. However, the official
record of the minutes of the August 22nd 1994 council meeting were altered
after the minutes were filed. It was decided at this meeting that a tap
fee was not to charged, but an asterisk later added to the minutes indicate
a tap fee charge of $150.
5. The Inwood/Shockey project was funded originally from the HSB’s
own funds. The city then issued $3 million in bonds at 3% interest rate.
The proceeds from the bonds were invested at various interest rates of
return which exceeded the amount allowed by the Internal Revenue Service.The
IRS must now rule on whether the city is liable for any rebates to the
IRS.
6. The city illegally used a fire truck for collateral on a line of credit
from Sun Trust Leasing to pay the city’s part of a new election system
purchased by the Cabell County Commission.
