March 6, 2018; Pittsburgh Post-Gazette
In Duquesne, Pennsylvania, Nikole Nesby is the first African American woman to hold that position. Nesby is part of what seems like a groundswell in the state of increased representation by women. Nesby won the mayoralty uncontested after defeating a sitting councilman in a primary earlier in the year.
Just days before the new mayor was sworn into office, the city’s Redevelopment Authority took the very strange step of transferring its entire revolving loan fund to the Duquesne Business Advisory Corporation (DBAC), a nonprofit organization. Now, according to a report in the Pittsburgh Post-Gazette, the city of Duquesne is suing its own Redevelopment Authority.
Duquesne is a community of about 5,500 residents southeast of Pittsburgh that has seen a lot of stability in its leadership. The former mayor, Philip Krivacek, held the office for 15 years. The city manager, Frank Piccolino III, held that office for 13 years but resigned in November of 2017, about two months before the new mayor would be sworn in. Mr. Piccolino is on the DBAC Board, serving as treasurer, and is married to Mr. Krivacek’s daughter, Alison.
DBAC and the Redevelopment Authority have been working hand-in-glove for quite some time on the revolving loan fund and other projects. On the authority’s home page, DBAC is listed as “the city’s nonprofit development corporation.” The website is not entirely up to date, however, as the board page still lists former Mayor Krivacek as president. It was created in 1996 under the Urban Redevelopment Law with a goal to promote development in the city by purchasing and refurbishing blighted properties, among other initiatives.
DBAC was created in 1978 as a voluntary committee of business leaders who were asked to help think through and design initiatives to redevelop the city’s West Grant Ave. business district. It incorporated the following year, and then received its 501c3 designation as a nonprofit in 1985. DBAC has been very active in a number of redevelopment projects over the years.
According to the lawsuit, $1.3 million was diverted from the Authority to DBAC as of December 31, 2017. A motion was made and passed by the Authority to transfer the funds and all accounts, records, and documents related to it to DBAC. No explanation is included in the resolution, other than the Authority “desires” to make the transfer. According to the Post-Gazette article, no further comments have been made explaining this action.
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The lawsuit’s claim is based on a number of items that essentially boil down to the fact that the Authority did not have the right or the power to make this transfer, claiming that it was done to undermine the ability of the incoming mayor to do her job in redeveloping the somewhat-depressed city. The lawsuit claims that the transfer of 90 percent of the Authority’s Assets amounts to a de facto dissolution, which can only happen by act of the City Council. The lawsuit also questions whether it is legal to authorize a private nonprofit like DBAC to take on urban redevelopment, which is a public concern according to the Urban Redevelopment Law.
Finally, the lawsuit claims that there is nothing in the Urban Redevelopment Law, under which the Authority was created, that allows for the transfer of public loan funds to a private corporation. According to the lawsuit, the Urban Redevelopment Law only allows for a public authority to manage this kind of revolving loan fund. Although the Authority has been managing the fund in partnership with DBAC for some time, it has held the final authority. The mayor is the chair of the Authority. Thus, transferring the funds to control by DBAC removes an element of the mayor’s authority, which leads to the claim of her being undermined.
There is significant overlap between the Authority and DBAC. According to the lawsuit, Starrett and Associates served as the administrator for both the Authority and DBAC, and Ronald Brown served as attorney for both at times relevant to the complaint. The DBAC Board consists of several people closely associated with the city government including former mayors and, as already mentioned, the former City Manager.
Exactly why this action was taken remains entirely unclear. The lawsuit is asking for the return of the more than $1.3 million that was transferred. Although the lawyers and the authority were contacted, no comment has been made. According to one lawyer, members of the Authority were aware of the lawsuit but had not yet been served.
The lawsuit claims that former Mayor Krivacek serves on the DBAC Board, although he is not listed as such on the website. The lawsuit also claims that this transfer was done for no reason other than “unjustified concerns regarding the city’s new administration, specifically as they pertain to Mayor Nikole Nesby.”
Ira Weiss, an attorney for the city, is quoted as saying he has concerns about this because the people involved are private and have no oversight. He suggests they did this as “their last hurrah.” Is this meant to suggest that these men, who have worked together for 13 years, are protecting their fiefdom and preserving some sense of what they have been, even though their service has concluded?—Rob Meiksins