Opponents of house for ex-felons question no-bid contract for repairs

lblackford@herald-leader.comJune 15, 2012 

Critics of a controversial plan to house ex-felons in a Trent Boulevard property say they are worried about a new twist with the project — more than $300,000 issued by the Bluegrass Area Development District to rehabilitate the property without any bidding.

According to records obtained by the Herald-Leader under the state's open records law, Bluegrass ADD paid a company that is owned by a member of one of its subsidiary boards, despite rules for the organization that normally require bidding on any purchase above $2,500.

"I think this opens the floodgates and warrants further investigation because I don't expect it's the first time this has happened," Charles Payne of the Riverpark Neighborhood Association, which has been fighting the project. "We're very concerned that a representative from an agency that represents itself as a state entity would not accept bids, especially to give the work to a surrogate organization."

According to billing records from the former Excepticon buildings on Trent Boulevard, Bluegrass ADD's executive director, Lenny Stoltz II, hired Fayette Heating and Air to rehabilitate some of the buildings. The company is owned by Bret Melrose, a member of the Bluegrass Workforce Investment Board, which was set up by Bluegrass ADD with federal workforce investment funds.

Stolz is its custodian of records, and Bluegrass ADD is considered its fiscal and administrative agent, according to a recent Attorney General's opinion. The chair of the Workforce Development Board, Daryl Smith, serves on the Bluegrass ADD board, and the two groups have the same address.

Stoltz said he did not seek bids for the proposal because he considered it an emergency to secure two of the seven Excepticon buildings in winter. There was no conflict of interest because the project belonged solely to Bluegrass ADD, he said.

"He (Melrose) has no input into the Bluegrass ADD board," Stoltz said, adding that the workforce investment board had not put any money into the project.

"I didn't even know him until we bought the property," Stoltz added. "I didn't have any relationship with him."

Stoltz said someone recommended he ask Melrose to look at the property, but he couldn't remember who it was.

Melrose said that he did not know about the Trent Boulevard project until he was taken to see the property.

"It hadn't been occupied in 10 or 15 years, and it was a cesspool," Melrose said.

Melrose's company started by trying to install heating, but then discovered all the plumbing and electrical lines had been cut.

"It snowballed to the point we had to fix the mechanicals in all seven buildings to make them functional enough to get certificates of occupancy," Melrose said. "I do a lot of humanitarian work, and I said, I'll help you do whatever I can."

Melrose said he discounted probably close to $200,000 for the work. According to billing records, Fayette Heating and Air was paid $313,171 for work between January and March. Another $10,260 was paid to JWalden Inc., for installing downspouts and underground conduits.

Jaqueline Potter, the chief financial officer for Bluegrass ADD, said normal procurement rules were to get three bids for any purchase above $2,500. There was no precedent for an emergency operation. The money came directly from Bluegrass ADD in a reserve fund.

City council member George Myers, whose district includes Trent Boulevard, said he was concerned about the no-bid contract, and the fact the project was deemed an emergency when he was told that no one was scheduled to move in until August.

"Any time you spend a quarter of a million dollars with one entity who has a connection to you and it wasn't bid, to me that is very concerning," he said. "I don't see how you can spend that kind of money without putting it out to bid."

Construction has since been halted. Melrose said he thought another $1 million could be spent on rehabilitation. In April, Stoltz said the halt was because of "so much exaggeration and misinformation about the intent of the project," Stoltz said. "At this point we're halting construction to give tempers a time to calm down."

Stoltz made that comment after two community meetings with neighbors over the project, which they said had been shrouded in secrecy.

In January, the development district, which helps coordinate federal spending among regional entities, bought the 6.5-acre property, including several buildings, at 1393 Trent Boulevard for $600,000 from the Episcopal Diocese of Lexington.

The proposed program is sponsored by the development district in partnership with the Bluegrass Workforce Investment Board and several faith-based organizations. The project is supposed to provide housing and training to non-violent ex-offenders — men jailed mainly for not paying child support, Stoltz said.

Stoltz was traveling and unavailable for a lengthy interview about Bluegrass ADD's procurement policies.

Cindy Lanham, spokeswoman for the state Finance and Administration Cabinet, said ADDs are not considered a state entity; therefore they are not governed by the state model procurement code. However, some ADDs have adopted some state policies.

Lawrenceburg Mayor Edwinna Baker, chairwoman of the Bluegrass ADD board, said the board members had directed Stoltz to do what was necessary for the project, but did not specifically address bids or contract.

"It's not a conflict," she said of the work. "WIB (Workforce Investment Board) is an independent board. Bluegrass ADD provides administrative support."

Baker said she still supports the project because of recent penal reform legislation from the General Assembly, which means early release for many non-violent offenders.

"We need to try to help the counties from having these reentries go back to the county jails and being a drain on the counties," she said.

Linda Blackford: (859) 231-1359 Twitter: @lbblackford

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