$500K private loan aids Munhall

| Thursday, Feb. 13, 2014, 11:30 p.m.

Relationships matter in Munhall. At least to Joe Leonello, they do.

“The people I grew up with, to this day, after 30 or 40 years, we're still friends,” said Leonello, 45, who grew up in West Homestead and lives in Harrison City.

Those relationships are why Leonello, his brother Frank and local business owner Christian Stein loaned $500,000 at a 5.25 percent interest rate to the borough's government this week. Munhall failed to file financial audits with the state in 2011 and 2012, and the ramifications hit the budget hard.

Missing audits meant Munhall could not receive state-appropriated Regional Asset District funds, losing out on as much as $360,000 a year. It also could not secure a tax anticipation note from a traditional lender this year, leaving it unable to meet payroll.

Leonello said his lifelong friend, Munhall police Chief Pat Campbell, “must've called him 50 times” while the borough was seeking private loans to avoid layoffs.

“He looked at me and said, ‘We have to lay off 10 policemen. I can't do it as the chief of police. These are my guys,' ” Leonello said.

Leonello and borough officials are hopeful the loan will bridge the gap between the cash-flow problem and completing audits to get the borough back on track.

The reason the audits are missing is a mystery, but some Munhall council members and Mayor Raymond Bodnar have said they blame former manager Matt Galla for the borough's financial woes.

Galla, who resigned abruptly in June, was borough manager when the audits were missed. Borough officials soon turned over a computer to Allegheny County District Attorney Stephen Zappala when they discovered payroll irregularities.

Spokesman Mike Manko could not say what materials the office is reviewing. He said it was “premature” to say an investigation is under way.

Galla has released multiple online statements on a local news blog, defending himself and saying he would talk with investigators.

“If, as they claim, they were so concerned about the borough's general annual audits, why didn't any of them — seven councilors and a mayor, along with other officials — ever ask to see one?” Galla wrote.

Munhall, a 2.4-square-mile borough along the Monongahela River, has about 11,380 residents, census figures show.

Bodnar has been Munhall's mayor for 28 years.

“We never had anything like this,” he said.

Auditor General Eugene DePasquale announced on Thursday that his office soon will begin audits of the borough's two pension funds. Previous audits show the borough failed to make $200,000 in payments to the police pension plan from 2010 through 2012. The plan for non-uniformed employees was underpaid about $10,000 in state aid as a result of understated payroll, DePasquale's office said.

The audit will look to ensure compliance in those areas, among others, he said.

Councilman Robert Falce said he welcomes the audit.

“If there's something that's not going right, they're going to let us know,” he said.

The borough sent out tax bills last week ahead of schedule and offered a 3 percent discount on bills paid before Feb. 28. Falce said hundreds of taxpayers have taken advantage of the discount.

Leonello said he's confident he, his brother and Stein would be repaid within the six-month term.

“We gave them the bridge to get to that point that now they'll be able to get back on their own and solve the matter, and I believe it,” Leonello said. “They'll be back on their feet.”

Melissa Daniels is a staff writer for Trib Total Media. She can be reached at 412- 380-8511 or mdaniels@tribweb.com.

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