It’s no wonder people are questioning how bond money was spent on the development of Hitcents Park Plaza, the commercial wrap of the parking garage adjacent to Bowling Green Ballpark.

No reasonable person would think that spending money to buy food for research and development (tasting) or consulting fees to find an executive chef or the purchases of a Beer Ball table (a bar arcade-type game) and shuffleboard were OK. Yet they were disbursed by a bond trustee that had no fiduciary duty to make sure such expenses were allowed.

Those are sexy things that jump out to anyone who takes the time to review the draw requests for bond money – or at least the ones that were made available through an open records request by the Daily News. Some of those draws were missing for a full two weeks after the initial open records request was filled. Included in those draws initially left out, but otherwise obtained by the Daily News, was an $844,000 draw made by the Warren County Downtown Economic Development Authority. That money was used for construction expenses related to the parking garage itself – an expense the authority said was needed because of the commercial wrap.

The broad category of consulting fees is another, perhaps less sexy, area where we take issue with money being spent.

Hundreds of thousands of dollars fell into that category, including to a restaurant consulting firm in Chicago, where much of the tasting took place. We know that because there were bills for raw foods purchased in Chicago.

Then there is the matter of at least $152,000 paid to CCC Hospitality Group LLC, a firm started by Rick Kelley. Kelley is the former owner of Mariah’s Restaurant, which got into its own financial trouble before Mills Family Realty negotiated a deal for the name and Kelley’s consulting.

That wasn’t the only restaurant consulting fee that was paid, either. That Chicago firm, Creative Hospitality Associates, received more than $188,000 for its efforts in developing the short-lived restaurants. The three fast-casual restaurants closed in late September, and Mariah’s and 6-4-3 Sports Bar closed March 2 after liens totaling $2.4 million were filed against Mills Family Realty.

There was no development needed for Mariah’s menu that was pretty much the same as the original Mariah’s, and 6-4-3’s food was pretty standard bar food, except for the wings, which were excellent.

Apparently no one really paid attention to how the money was being spent as long as such expenses fell within the sketchy parameters of “construction” and “operating expenses.” Now, there is speculation that such language in an agreement with Mills Family Realty wasn’t legal, which likely will be up to a court to decide. Industrial revenue bonds are typically used for the actual construction of a building and fitting it out to industry standards.

The law doesn’t necessarily require governmental entities to have oversight of how such bonds are spent, but maybe that should change. Cities and counties have to be meticulous on how they spend taxpayers’ money.

In this case, taxpayers’ money – either through tax money recovered through Tax Increment Financing District revenues, or because the city or county will have to make up any shortfalls in those revenues – is being used to pay off the bonds. Shouldn’t that mean the same oversight on spending should be in place?

If the county is able to make a deal to bring in someone else to operate the commercial wrap and restaurants, we hope that deal has more transparency than previously has been the case.

As for the settlement agreement reached Friday between the county, the authority and Mills Family Realty, our initial reaction is one of skepticism. It would appear that MFR will have no responsibility to pay off companies that say they are still owed millions for the actual construction of the project.

Did Mills Family Realty’s apparent casual spending on restaurant items lead to the deficit in funds many expected would be used for construction?

Likely.

Was it illegal?

That’s not for us to decide.

We do want the facility to succeed so revenues produced by it, not taxpayers, will pay off the bonds. But we want to ensure the utmost caution and transparency is used in how future bonds are refinanced and with any agreement with the future operator/developer/manager of the commercial wrap.

Ultimately, a dose of hefty scrutiny should be used anytime there is the remote possibility that taxpayer money could be used.

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(1) comment

BGrez

Well said. Keep digging!

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