News From Terre Haute, Indiana

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June 18, 2014

UPDATE: Rift widens over TIF, city payroll

Documents show city transferred $600K from Redevelopment account a day before May 16 payroll

TERRE HAUTE — City officials transferred $600,000 from a Department of Redevelopment bank account to “City of Terre Haute Payroll” on May 15, one day before a Friday payday, according to documents obtained by the Tribune-Star on Wednesday.

On May 21, Leslie Ellis, city controller, said money from the Redevelopment Commission was not used to meet the city’s payroll.

Ellis said on Wednesday night she misunderstood a Tribune-Star question in May about the money and further defended its use as appropriate and legal under Indiana law. Cliff Lambert, executive director of the Department of Redevelopment, said, after a Redevelopment meeting on Wednesday, that the city’s actions were illegal.

 Through a public records request, the Tribune-Star on Wednesday sought documents provided by the City Controller’s office to the Department of Redevelopment earlier the same day. Those records included a First Financial Bank statement dated May 31 for the Department of Redevelopment Allocation Account.

That bank statement included a photocopy of a debit receipt showing a $600,000 transfer to city payroll on May 15, one day before the May 16 payday.

Lambert accused the city on May 21 of using tax increment finance (TIF) and other Redevelopment Commission money to meet immediate expenses, including payroll. That’s against the law, he said.

In a Tribune-Star interview that evening in her office, Ellis was asked whether the transfers were used to meet payroll.

“No, no,” she replied in that interview. “The timing was just the timing. We have bills that we pay every week.”

In light of Wednesday’s new information, Ellis was reached late Wednesday evening and asked about the bank statement showing a transfer to payroll and about her earlier statement.

She may have misunderstood the original question, Ellis stated, noting there is a difference between “funds” and cash. Redevelopment “funds” refer to specific areas of spending within the city’s budget, such as the “park fund.” Those were not utilized to meet the payroll of non-Redevelopment staff, she said. If the cash transferred was used for payroll, that is a cash management function of the controller’s office and is perfectly allowable under Indiana law, she said.

“I thought the question was [referring to] funds,” Ellis said in a telephone interview. “Everything I have done is appropriate” under Indiana law and according to the State Board of Accounts. Pooling money, even Redevelopment Commission money, into a single account for day-to-day expenses, is “nothing new,” she said.

Lambert, meanwhile, still disagrees. He told reporters outside City Hall Wednesday afternoon: “We now have learned what I feared,” in reference to the transfer to payroll. If the money went directly into payroll, that is what he called a “felony” under Indiana law, he said.

Asked to comment shortly after Lambert’s comments to reporters, Ellis said, “That [transfer] has to do with the pooling of funds. We’ll wait to comment until we’ve heard from the State Board of Accounts. It’s our understanding that it is appropriate to pool funds.”

Charlie Pride, a State Board of Accounts official, told the Tribune-Star Friday the SBA is considering the question of whether it is allowable to use tax increment finance or other Redevelopment money to meet immediate city expenses. It was unclear how soon a decision might be reached. Pride was unavailable for comment Wednesday.

Earlier Wednesday at the Redevelopment Commission’s regular June meeting in City Hall, the commissioners passed a resolution asking three local banks holding Redevelopment bank accounts to give Lambert and the Redevelopment Department “read only” access to commission accounts. Learning the account balances through the Controller’s office has proven to be too difficult, Lambert told the commissioners.

During the 30-minute meeting, Lambert outlined millions of dollars in pending or currently under way projects being undertaken by the Redevelopment Commission downtown and on the city’s east side. Some of the projects require that the commission be assured it has available cash before it can solicit bids from contractors, Lambert said.

“We need to know where we stand,” said Rhonda Oldham, attorney for the commission, stating further that the commission remains the legal owner of the money in its accounts.

“We just want to know what’s in our accounts,” said Troy Helman, a member of the commission, speaking shortly after the meeting. “We can’t make any business decisions unless we know.”

It was unclear Wednesday whether local banks can act on the resolution without approval from Ellis, who may be the only person with authority to direct action on those bank accounts.

Ellis said Wednesday she was unsure whether any other names were on the bank accounts’ signature cards and would check today with the local banks. The three local banks holding Redevelopment accounts are First Financial Bank, Old National Bank and Terre Haute Savings Bank, Lambert said.

Asked whether the resolution might be purely symbolic, Lambert said he believes it to be more than that.

“I think [the resolution] is more than symbolic,” Lambert said. “I think it states that this administration is not being transparent.”

Lambert said in the meeting he has been requesting bank statements concerning 19 Redevelopment Commission bank accounts from the city controller for several weeks and has not received them. However, Wednesday afternoon, he received some information, including the bank statement showing the transfer to payroll.

“I don’t have 19 account [statements],” Lambert said in the meeting. “I’ve got four ‘quasi’ bank statements here.” Most of the information is “mumbo jumbo,” he added. “I want to see the actual bank statements.” That’s the only way to know whether the commission has the money available to undertake projects it has planned, he said.

Ellis, speaking Wednesday afternoon, apologized if the bank statements — she believes there are 17 accounts, not 19 – were not included in information emailed to Lambert Wednesday afternoon from her office. In meetings all day, she did not see the email, she said.

“It is my understanding that the 17 bank statements were sent this afternoon,” Ellis said. “Next month we do hope to have them to [Lambert] sooner. … If they only received four, I apologize.”

Reporter Arthur Foulkes can be reached at 812-231-4232 or arthur.foulkes@tribstar.com.

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