$7.6M buyout at Hempfield prison site clouds sale
A contract inked more than a decade ago with the Carlisle businessman who submitted the winning bid on the now-closed state prison at Hempfield could drive the cost of shuttering the prison to more than $10 million, records obtained by the Tribune-Review show.
If the $950,000 bid by David Goldsmith's Energy Management Concepts is finalized, documents show the state would pay him $7.6 million for a steam energy plant he built at the site to provide electricity to the prison.
The payout would add to more than $2.5 million spent to maintain the prison, mothballed in 2013 by Gov. Tom Corbett in a move state officials said would save taxpayers in excess of $23 million in 2013-14 and more later.
The revelation has angered local lawmakers who said they were blindsided by the announcement to close the prison and fought bitterly to keep it open despite the state's claims that shutting the 900-inmate, medium-security lockup, built in 1969, would produce significant savings.
“I was shocked upon hearing the state was still going to owe $7.6 million even after the prison was sold. The Department of Corrections hasn't been forthcoming concerning this situation at all, and actually, their numbers never added up from the get-go,” said state Sen. Kim Ward, R-Hempfield.
Like Ward, state Rep. Tim Krieger, R-Delmont, fought to keep the prison open and said that if lawmakers had known a buyout would boost the cost of closing the prison to more than $10 million, it would have bolstered their argument.
“I don't know that we could have changed the governor's mind, but it would have been a much different dynamic,” Krieger said.
Now Krieger wants to know what corrections officials knew about Goldsmith's agreement and when they knew it.
State Rep. Mike Reese, R-Latrobe, said he was surprised when Goldsmith bid on the site.
“This needs to be looked at very closely by the Department of General Services,” Reese said. “We need to take a look at exactly what happened here.”
The General Services Department ran the bidding process and oversees all state properties.
Ward questions Goldsmith's motives for visiting her two weeks before the Feb. 18 bid opening to ask if she could intervene to halt the sale. Goldsmith visited Krieger and Reese with the same request, both lawmakers said.
Ward said that as of the afternoon of Feb. 17, the day before the bid opening, no bids had been submitted.
But when the bids were opened, Goldsmith's company and RCVV Inc. of Steubenville, Ohio, which bid $870,000, were the sole bidders.
RCVV owner Robert Vukelic, a contractor who once operated a construction landfill in Ohio and dabbled in local politics, could not be reached for comment.
Goldsmith declined to offer details about why he wanted to halt the sale, saying only, “We were trying to accomplish our goals.”
Ward said it was only after Goldsmith's visit, when a staffer obtained a copy of the contract, that she learned about the costly buyout.
Goldsmith has said little about the situation, standing by the contract that he penned with the state that calls for a payout if his agreement was terminated before 2024.
An Oct. 30 letter from the Corrections Department to Goldsmith obtained by the Trib informs him that the state would end the contract Feb. 28 and pay him the $7.6 million.
But while corrections officials acknowledge that letter, they have back-pedaled, saying that despite the contract and the letter, they have made no decision about the buyout.
“It is our understanding that DGS (Department of General Services) has not made a decision to accept (Goldsmith's) bid, and the DOC (Department of Corrections) has not decided anything regarding the thermal plant buyout,” DOC press secretary Susan McNaughton said.
Goldsmith is optimistic the state will make good on its promised buyout.
“I'm sure they have every intention of doing that,” Goldsmith said. “I can only give you the answer (that) we are in a very early stage of the process right now. It's obviously quite a complicated process. There are a lot of issues to be discussed.”
Goldsmith's multimillion-dollar buyout was never mentioned during the contentious debate about the prison closing.
Ward said that during a January 2013 hearing in Harrisburg about the closing, she questioned Corrections Secretary John Wetzel about whether he knew what it would cost to buy out the steam plant contract.
Never mentioning a specific cost, transcripts of the hearing show Wetzel replied: “… I don't know that we have to buy it out. There's a potential for us to move it or use it while we still have the building because there will still be utilities going on.”
Goldsmith, who operates a similar facility at SCI Fayette, said he has no specific plans for the Hempfield site.
That too worries Ward, who wants the facility to be returned to the tax rolls and begin returning some of the 360 jobs lost when the prison closed.
“We're just a little fearful that company isn't seeking to develop the property, but more looking to protect its asset,” Ward said.