It Could Take Years

It’s been over a year since the City of Warren filed suit against GRO-Warren in an attempt to recoup $500,000 in state grant funding the economic development entity squandered in a failed arts center project on Liberty Street.

If Mayor Maurice Cashman’s estimate is correct, that case might linger for a long time.

The lawsuit, filed Jan. 24, 2013, is the result of the failure of the Allegheny Center for the Arts building project, which was the subject of a $500,000 Anchor Building Grant provided by the state Department of Community and Economic Development in May 2009. While the money was given to the city, it was to be provided, in turn, to GRO-Warren as a loan.

GRO-Warren was to use the money to rehabilitate and develop properties on Liberty Street in downtown Warren as an arts center, repaying the city from rents generated by the building after its completion. The city would then use those repayments to create a revolving loan fund that could be used for subsequent economic development projects.

“The Contract…expressly restricted the use of the grant money to specific purposes, namely building renovations,” according to the complaint. “GRO-Warren had a obligation to ensure that the grant funds were expended in accordance with the contract. Despite these obligations, GRO-Warren did not ensure that the grant funds were expended in a manner consistent with the contract.”

The suit alleges that very little of the grant money was used in accordance with the contracts between the city and the state, and the city and GRO-Warren. Of the $500,000, the complaint identifies $417,057 as “impermissible expenditures.”

Things haven’t really changed.

“It is in discovery,” Cashman said of the lawsuit during a town hall meeting on Wednesday night. “You gotta pierce the corporate veil to get to the directors. You could see potentially this suit going on for five to seven years before there is adjudication.”

The discovery period includes documents being subpoenaed, witnesses deposed and other information gathered.

Cashman estimated the situation could “probably” be resolved in three years.

“It is a long process,” he added. “Is the process right or wrong? It is what has happened in America today.”

Cashman noted that the intent of the suit is to “recover the $500,000 (and we) would put that back into a loan fund with the Redevelopment Authority. If we’re successful, that’s what would happen. If we’re not, we’re obligated to pay that ($500,000) back to a fund. (We will) try to get that process stopped and move forward.”

Main Street President Dan Ristau estimated that discovery “could go on for at least another six months to a year.” Main Street’s other manifestation, Warren Business District Coalition, Inc., is a party in the suit.

“(We are) hoping to move the ACA building (225-227 Liberty St.) to sale,” Ristau said.

He estimated that a deal could be closed in as little as a month and “would beat the taxing deadline. (I am) hoping for a very optimistic outcome on that end, too.”