City Council members approved the settlement Monday night. Negotiations, which Law Director Pat Riley called, “long, protracted and difficult” began in April and concluded last month. The settlement involved 11 demolition contracts, valued at $164,675, that were awarded to Lorain contractor Don Buchs between April 2005 and March 2008 during the administrations of Mayors Craig Foltin and Tony Krasienko.
The federal taxpayer money for Lorain’s Community and Economic Development Department came from the U.S. Department of Housing and Urban Development’s Community Development Block Grant program. The investigation led to the resignation last month of Howard Goldberg, Lorain’s community renewal director.
In a March 2008 Board of Control meeting, Krasienko asked Goldberg if competitive bidding had been done before one of the contracts was awarded to Buchs. Goldberg said no because the city got a “package deal,” according to Board of Control minutes. Neither Buchs nor Goldberg have been charged with any wrongdoing although police and city workers raided one of Buchs’ properties in June seeking evidence of possible illegal dumping.
In November emails to the city, Zachary Simonoff, Goldberg’s attorney, said Goldberg was following the orders of Sandy Prudoff, the disgraced former department director, when he awarded the contracts.
Simonoff wrote that Goldberg testified before a federal grand jury against Prudoff who is serving two years imprisonment on federal corruption charges after being sentenced in August.
The U.S. Attorney’s Office of Northern Ohio, which negotiated for HUD, had sought $615,000, according to Riley. He said he stressed the bigger the financial penalty, the more it would hurt Lorain residents who had nothing to do with the contract awards. The settlement will be paid out in four installments between now and January 2015 to minimize the damage to Lorain’s anti-blight efforts.
Riley said he’s satisfied he got the best deal he could for the city, but the settlement is bittersweet given the limited amount of money Lorain has to deal with blight. Lorain, which has a far higher foreclosure rate than the rest of Ohio or the nation, has been on fiscal watch by the state since 2002.
“These are dollars which are very important to the city as it goes about remedying some of the problems it has in its neighborhoods,” Riley said. “We’ll have to find other ways to get accomplished what we need to get done in this city without these dollars.”
Contact Evan Goodenow at 329-7129 or firstname.lastname@example.org.