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Failed inspection could make Jeannette flood-control project more costly

| Wednesday, April 23, 2014, 12:01 a.m.

Jeannette's flood-control project did not pass an Army Corps of Engineers inspection, which will make it harder for the city to finance work on the second phase, Mayor Richard Jacobelli said.

The failed inspection in March means the city will be required to match any state funding for future work or refinance a $2.9 million bond issued in 1998 that was undertaken to start the project, designed to prevent flooding on Brush Creek in the western end of the city.

Refinancing the bonds could prove difficult because of the city's unstable financial situation, Jacobelli said.

If Jeannette has to match state funds, it could cost the city as much as $1 million, unless it can obtain state or federal grants to offset the dollar-for-dollar matching requirements.

“We really don't know what that figure is right now,” Jacobelli said.

City attorney Scott Avolio said the city hasn't maintained the work done through the first phase of the project, according to engineering standards, and must remove more debris from Brush Creek. The Corps requires municipalities to meet certain benchmarks to stay in compliance.

The second phase of the project will require deepening a levee and constructing a retaining wall along the creek, which flows into Penn Borough.

Last year, a bank rejected the city's attempt to refinance the bonds because of its financial problems.

Jacobelli said the 2013 audit, which is being completed, will offer another bleak picture of the city's finances and question its ability to improve “as a going concern.”

That was the finding in the 2012 audit, which uncovered problems with internal monitoring of money and inaccuracies in several accounts. Jacobelli said improvements in the city's financial practices are under way but won't be reflected until the 2014 audit is performed in early 2015.

If a bank rejects another attempt at refinancing, Avolio said, the city could pursue other avenues. Other options, however, would be more expensive than dealing with a bank.

He said Jeannette could issue municipal debt bonds on the consumer market. That would require hiring a financial consultant and bond counsel.

“It's still doable,” Avolio said.

Jeannette's been trying to avoid being declared a financially distressed municipality by the state. City government has been hamstrung by the lack of a controller and city clerk because Mike Minyon Jr., who serves in those capacities, has health problems.

“Right now, I'm mayor, city clerk and controller,” Jacobelli said. “We will be able to pay our bills and payroll and pension contributions for 2013, but we'll be able to make it by the skin of our teeth.”

Jeannette's $5.9 million budget is based on an increase in revenue projections, and that has Jacobelli worried.

The city had more than $137,000 on hand at the end of March and anticipates the bulk of the tax revenue to flow into bank accounts in April and May.

The city has to come up with $1.3 million this year to pay its mandatory contribution to the police pension fund — known as a Minimum Municipal Obligation, or MMO — plus interest penalties for last year when the city was late in making its annual payment.

“The clouds in the sky are the large MMO that needs to be addressed,” Jacobelli said.

Jeannette needs a new garbage truck but it can't afford it and may have to lease one, Jacobelli said.

The city is renting its unused street sweeper to Hempfield for $350 a week to generate revenue.

Richard Gazarik is a staff writerfor Trib Total Media. He can bereached at 724-830-6292 or rgazarik@tribweb.com.

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