More than a year and a half since a scathing audit of the development formerly known as Hitcents Park Plaza was made public, the issues surrounding the start of that project are likely to soon be hashed out in a courtroom.
Last month, the Bowling Green City Commission in a 4-1 vote approved allowing the Keating Muething & Klekamp law firm of northern Kentucky to file a civil action related to the wrap’s development.
Voting no was Commissioner Brian “Slim” Nash, who questioned whether the city could ever recover any money through the suit.
He also expressed concerns about the suit potentially hampering continued downtown development. Nash said the city has already spent about $120,000 on professional services related to investigating the wrap development and the cost of litigation could be another $185,000.
Information obtained through an open records request filed by the Daily News showed the city having made about $32,000 in payments to the Kerrick Bachert law firm related to the case, but with other invoices pending. The city and Warren County each also paid $50,000 to the state auditor’s office for the special audit.
That review conducted by then-state Auditor Adam Edelen and released in December 2015 concluded that there was overspending on the project of $9.7 million, resulting in a $4.5 million deficit; poor oversight on the project by elected officials; and numerous, often contradictory, agreements between the developer, Mills Family Realty, and other parties.
The issues with the development of the wrap surrounding the downtown parking garage became public when contractors filed more than $2 million in liens in February 2015 on the almost-complete development, saying they were not being paid for their work.
Restaurants in the building also closed and a series of lawsuits followed. Ultimately, the county issued a $30 million bond to pay contractors and finish the project with a new developer.
The particulars of the pending lawsuit, such as who would be sued and the basis for the action, will now be developed by the Keating Muething & Klekamp law firm, Mayor Bruce Wilkerson said after the August meeting.
In an interview in 2015 with the Daily News, Edelen said three key elements waylaid the project: “Rick Kelley worked every angle available to him; the Millses were out of their expertise” and the development was plagued by a lack of oversight by government agencies, a theme that permeated the report.
Kelley, the former owner of Mariah’s restaurant before it moved into Hitcents Park Plaza, was hired by Mills Family Realty as a consultant for the development.
At the time of the audit, Kelley said he felt parts of the audit were “unfair” and painted a false picture of his involvement; Clinton Mills of Mills Family Realty acknowledged that MFR “was not the right pick” to act as developer, but said that the company was hampered by the complexity of the project.
The Kentucky secretary of state’s website last week showed Mills Family Reality’s status as “Pending Dissolution.”
Wilkerson said when the audit was released that he was “disappointed” in one aspect of the audit: “They didn’t tell us what we were asking for.” Namely, if there was an illegal use of bond funds.
“It was well established that many resources were used outside their scope. If there were any criminal aspects uncovered, we could have made a referral to a law enforcement agency,” but that wasn’t the case here, Edelen said in 2015.
Warren County Commonwealth’s Attorney Chris Cohron said his office is reviewing the audit, but no other updates on that investigation’s status have been provided.
With no criminal proceedings, the pending civil action is likely the next venue for the issue to be hashed out.
Nash last week reiterated his opposition to the city’s pursuit of the case.
He said while he acknowledged that “clearly, mistakes were made” in the process at the time, he doubted the city would be able to recover any funds. He said he formed that belief after asking an attorney from Keating Muething & Klekamp whether the law firm would spend its own money on litigating the case if it was to receive half the money recouped. The answer “was no,” Nash said.
He said he received the same negative response when he asked whether the law firm would pursue the case with its own funds if it were to keep all of the money recouped.
“When I’m talking to a lawyer and they’re not willing to spend their own money ... I don’t believe it’s a wise financial” decision for the city, Nash said. “If we are getting the money back, sign me up.”
His second basis for objecting to a lawsuit was that at a time “when a lot of good things are going on to move downtown forward,” the lawsuit casts a “black cloud” over that progress, Nash said, adding he believes the suit has the “potential of scaring off” developers.