At auditor's prompting, Bluegrass Area Development District votes to seek ownership of its building

lblackford@herald-leader.comMarch 12, 2014 

The Bluegrass Area Development District building at 699 Perimeter Drive in Lexington.

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After a forceful demand by State Auditor Adam Edelen, the Bluegrass Area Development District's executive board voted Wednesday to seek ownership of their current rented office building.

"When I think of the most concrete example that can be implemented quickly to demonstrate that this board and the new leadership of the ADD is serious about reform, it's the ownership of this building," Edelen said at a specially called meeting to discuss the scathing report Edelen's office released on the organization last week. "You have paid for this building a multiple of times, and in my view it belongs to the taxpayers."

The building at 699 Perimeter Drive belongs to the Bluegrass Industrial Foundation, a nonprofit founded by the former director of the Bluegrass ADD, Jas Sekhon. The Bluegrass ADD has paid about $260,000 a year in rent since 1994, when it first moved into the space. An attorney for the foundation said last week the foundation would consider Edelen's request, a comment to which he took exception.

"Let me be crystal clear," he said. "It is not a request, it is a demand. I fully expect and hope this board will find the opportunity to record its opinion that this property ought to be under the ownership of this organization. It ought not be used to finance anyone's mission that is extraneous to this one."

The board quickly found the opportunity, voting unanimously to explore ownership options. Jon Gay, an attorney retained by the Bluegrass ADD, said he was hopeful the transfer could be consensual.

The foundation apparently bought the building because entities such as a development district cannot hold a mortgage. The Bluegrass ADD did put up collateral for the loan. But in that case, Edelen has said, the building should have been eventually vested to the Bluegrass ADD, which has paid at least the $1.4 million purchase price.

Gay also spoke of larger reforms planned by the new officers of the executive board, who were installed in January.

Gay said reform started last summer, when the board put then-director Lenny Stoltz on administrative leave following problems with a felony re-entry program he had started.

"That started moving us in a very deliberate path forward to get our house in order," Gay said. "We are on the same page with the auditors."

The auditor's report found a host of problems at the Bluegrass ADD, ranging from shell organizations such as the Bluegrass Industrial Foundation to excessive spending and possible misuse of federal funds. Edelen's office forwarded his report to the Kentucky attorney general, the Kentucky State Police and the FBI.

The executive board continued its cleanup Wednesday, voting to explore better options for reimbursing travel. According to the report, Stoltz used all three possible options — an organizational credit card, a $750 monthly stipend and reimbursements.

The board is also looking at all of its bylaws to clear up any conflicts of interest and focus its mission. The auditor's office found that Stoltz would circumvent the executive committee by getting things approved by the finance committee instead.

"We've got to get in the process of making sure the committees and the boards actually mean something." Edelen said. "We need a 360-degree review of programs to make sure they align with your mission."

Also at the meeting, the board voted to stop paying dues to the regional planning group, Bluegrass Tomorrow, and to have current director David Duttlinger step down from its board because of possible conflicts.

In addition, Winchester Mayor and vice-chair Ed Burtner said he was exploring the relationship between the Workforce Investment Board and the Bluegrass ADD, which has a contract to administer federal workforce grants.

However, the auditor's exam found that the Bluegrass ADD was trying to control too much of that board's work.

Edelen applauded the board for its work so far, but he said he would keep an eye on it as its survival was at stake.

"Don't let me down, don't let the taxpayers down," he said. "This is an extraordinary opportunity to build something significantly better in its place ... one that demonstrates real value to the taxpayers. Do not waste this crisis."

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

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