DDN INVESTIGATES: These documents reveal what feds are looking at in Dayton-area probe
The Dayton Daily News has dug into allegations from federal prosecutors that a “culture of corruption” exists in Dayton-area politics since indictments were unsealed April 30 of Williams and three other prominent local men. This story examines what CityWide is and how it might have been caught up in the federal investigation.
CityWide receives public and private funds. Even though it was once part of the city of Dayton, it doesn’t face the public oversight mandated for governmental entities, the Dayton Daily News found. For example, agency officials say they are not subject to state public-records laws.
CityWide President Brian Heitkamp declined repeated requests for an interview, and responded to a list of submitted questions by email saying the organization itself doesn’t have answers to many questions about what happened.
“The vast majority of what we do know has been pulled from the indictment and reported by the Dayton Daily News,” he wrote.
Asked by the Dayton Daily News which contracts might be the ones referenced in the indictment, Heitkamp wrote in an email, “We know nothing more than what has already been reported and what is contained in the indictment.
“The allegations that have been made are very serious and, as the legal proceedings move forward, we want to respect that process and not speculate on matters outside of our knowledge,” he said.
Complex organization
CityWide is a complex organization with 20 affiliated entities. It owns The Neon movie theater and Tech Town business park. It administers U.S. Small Business Administration Loans. And it oversees community development efforts such as the Phoenix Project to redevelop the area around Good Samaritan Hospital.
CityWide announced on May 23 that one of its affiliates, the Dayton Region New Market Fund, received an allocation of $35 million in New Market Tax Credits from the U.S. Treasury. The tax credits help encourage development in low-income communities.
CityWide’s most recently filed IRS forms say it took in $3.7 million in revenue in 2017 and had $1.7 million in expenses. It listed $25.4 million in assets. Most of its revenue comes from rental income, according to available financial statements.
RELATED: Some targets of Dayton corruption indictments faced bad debts
It’s unclear from its financial documents how much funding it gets from the city or other government agencies. Neither Heitkamp nor city officials responded to questions about its public funding.
Heitkamp took the agency’s helm in 2017, replacing former long-time director Steve Budd. Budd declined to comment.
The April 30 federal indictment of Williams refers to CityWide as a “component unit of the city of Dayton.”
“In its financing and development capacity, CityWide routinely awarded thousands of dollars in contracts to private companies for the demolition of certain homes within the city of Dayton,” the indictment says.
The indictment says Williams, as city commissioner, had the ability to exert influence over CityWide contracts.
It says in early 2015, Williams and a person identified in the indictment as “Individual A” had discussions about difficulties the individual had in securing city contracts. Williams solicited bribes from Individual A worth more than $50,000, the indictment alleges, including cash payments and construction of a patio at his home.
FOLLOW DAYTON DAILY NEWS INVESTIGATIONS ON FACEBOOK AND TWITTER
The indictment of Williams was unsealed the same day as charges against former state lawmaker Clayton Luckie, Dayton city employee RoShawn Winburn and businessman Brian Higgins. All four have pleaded not guilty.
Federal prosecutors say the arrests are part of an ongoing public corruption probe. Williams’ indictment was the only one that mentioned CityWide. The prosecutor’s office declined to comment.
The indictment says in exchange for free benefits provided by Individual A, Williams exerted influence with employees from the city of Dayton and its affiliated entities, causing them to award contracts from the city and CityWide totaling more than $150,000.
Williams’ attorney didn’t respond to requests for comment.
CityWide splits from city
It’s unclear what influence Williams could have had to steer such a contract. CityWide has its own 18-member board. Chairman Rick Stover has not returned calls seeking comment.
But that board was subordinate to the city of Dayton until 2014. That year, CityWide amended its articles of incorporation to make it independent from the city. That change was made so it would qualify for certain grants and loan programs it was ineligible for as a governmental entity, its leaders said in previous interviews.
CityWide first filed the standard IRS forms for nonprofits in 2016. In that form, it wrote that it didn’t file previously because it was a “reporting entity to the city of Dayton” until Jan. 1, 2016. Heitkamp, though, has maintained to the Dayton Daily News that it ceased being a public entity in 2014.
It’s not uncommon for a city development agency to be a nonprofit divorced from the city, according to Rob Baker, political science professor at Wittenberg University.
RELATED: What we know now: Latest on federal investigation in Dayton
“By being a separate entity, it can focus solely on trying to respond to economic development opportunities that become available,” he said. “That provides flexibility. It also raises all kinds of questions as far as, ‘What’s going on there? Can we see your budget even though you’re not required to? Are you willing to share as much as possible?’”
“Whenever there is a lack of transparency there’s always a chance that something’s going on that’s malfeasance, but we don’t know,” he said.
On the state level, JobsOhio operates without the oversight typical of state agencies. Columbus and Cincinnati both have independent development agencies that do similar work to CityWide.
The Cincinnati Center City Development Corp., commonly referred to as 3CDC, isn’t beholden to public-records laws but tries to be transparent, spokesman Joe Rudemiller said. They have faced accusations of opacity.
“Sometimes when we’re criticized, it’s a little more perception than reality,” he said. “I think we’re out there trying to do our best, and sometimes people don’t really see that.”
Heitkamp said CityWide is overseen by a diverse board that ensures they act in the public interest, and is regulated by multiple governmental, banking and regulatory agencies.
“While CityWide firmly believes in the principle of transparency, we also know this obligation must be balanced against a need for privacy under certain circumstances,” he said.
“Many of the most important developments which have occurred in our area over the last several years would not have happened if CityWide was unable to preserve the confidentiality of information shared by businesses and investors who want to locate in the Dayton region.”
Phoenix Project
In addition to serving as a city commissioner, Williams served on the board of trustees for the Phoenix Project from 2003 through 2017.
The Phoenix Project was established in 2003 to revitalize the neighborhood surrounding Good Samaritan Hospital. CityWide managed the project with funding provided primarily by the city of Dayton and Premier Health. The Phoenix Project was replaced by Phoenix Next when the hospital closed last year.
Premier has provided $13 million to the Phoenix Project since 2003.
“Premier Health has had — and continues to have — a long, productive relationship with CityWide Development,” Premier officials wrote in a statement when asked if the indictment raised any concerns about how CityWide is spending its funds.
“We currently contract with CityWide for certain services (property maintenance such as landscaping, for example); however, the demolition phase of the Phoenix Project has run its course. We intend to continue our existing contracts with CityWide,” the statement says.
Heitkamp said CityWide has a competitive bidding process that awards contracts to the lowest responsive bid.
“We have reviewed the contracts related to the Phoenix Project and believe that all of those jobs were correctly awarded with no substantive issues with the work performed,” he wrote.
Pulled permits show vendors
Dayton city officials also have not identified which companies might be referenced in the indictment. The city has provided contracts, bid documents and other records from 2015 in response to public-records requests from the Dayton Daily News.
CityWide declined to provide contracts or the total amounts spent on demolition in recent years.
The Dayton Daily News acquired from the city a database of all demolition permits pulled in 2015 by anybody, the year mentioned in the indictment. The newspaper then cross-referenced the addresses on those 188 permits with county property records to find eight properties owned by CityWide or its affiliates where a wrecking permit was pulled that year.
RELATED: Corruption probe linked to demolition contracts
Five of those properties had the permit pulled by the city of Dayton’s nuisance-abatement program to demolish buildings near the intersection of Valley and North Keowee streets to create a possible park as part of CityWide’s DaVinci Project. The properties are currently owned by a CityWide affiliate called Dayton Progressive Development.
Heitkamp said CityWide owns these properties and the city managed the project, including hiring contractors and paying for the demolition. The Dayton Daily News submitted a records request with the city for copies of any contracts related to that work. The request is being processed.
The other three properties where wrecking permits were pulled are on Salem Avenue in the Phoenix Project area. Two are owned by CityWide Projects and one by Dayton Reserves, another CityWide affiliate. Wrecking permits for those three were pulled by contractor United Demolition.
Heitkamp said CityWide spent roughly $77,600 for demolition and removal of the three properties. He said CityWide contracted with United Demolition for two of the properties and a company called Disposable Solutions for a third.
United Demolition officials could not be reached for comment. A Dayton Daily News investigation published May 19 found United Demolition continued to receive city contracts after red flags, including several lawsuits.
RELATED: Dayton hired contractor despite red flags
Heitkamp said the eight projects identified by the Dayton Daily News were their only demolition contracts that year.
“We have reviewed these contracts and we believe that these jobs were correctly awarded with no substantive issues with the work performed,” he wrote in an email.
Dayton city officials say they hired the outside law firm Green and Green to review its processes and upcoming projects for potential problems. Heitkamp did not specify any changes or reviews made in light of the indictment.
“Like any responsible organization, we are always reviewing our internal procedures to ensure compliance and promote best practices,” he said. “This is an ongoing effort that applies to all of the relationships we have with both our private and public sector business partners. We will continue to monitor developments with respect to the recent indictments and respond appropriately to any issue that might arise.”
Josh Sweigart is a member of the Investigation & Community Impact Team for the Dayton Daily News whose stories have focused on government waste, fraud, abuse and accountability. He's won several awards for investigative reporting, including an Emmy Award and numerous awards from the Associated Press Society of Ohio and Society of Professional Journalists. Contact him on Facebook or Twitter.
CONTACT US
If you have tips or any information on this investigation, please call or email Josh Sweigart at 937-328-0374 or at josh.sweigart@coxinc.com
About the Author
