Mayor blasts Controller on negativity
Posted in the McKeesport Forum
#1 Mar 8, 2012
McKeesport Mayor Michael Cherepko said he feels like an angry pit bull guarding his home from the city's self-proclaimed watchdog, controller Ray Malinchak.
"I am tired of talking about the past," Cherepko said during his mayoral report at Wednesday's council meeting. "I am tired of talking about the same issues, and certain individuals continue to thrive off of this negativity that does nothing but tear down this city."
Cherepko's frustration reached its peak when he read a news report that shared Malinchak's thoughts on a recent investment.
"I can't even begin to tell you how irate I was," Cherepko said of the article. "I felt like an angry pit bull protecting the house at that point, because this is our city. At some point the negativity has to stop."
Malinchak commented on the management of funds that entered city coffers when the Municipal Authority of the City of McKeesport pre-paid a $24 million mortgage on the purchase of its sewer lines from the city.
"We had no choice in the matter," Cherepko said. "The money was coming."
Of those funds,$10 million was used immediately to eliminate a portion of the city's debt service. The remaining $14 million was invested shortly after Cherepko and new city administrator Matt Gergely took office.
"This was an absolute home run for the sewage authority and the city alike," Cherepko said.
Cherepko noted that he heard many complaints about sewage fees during his campaign for mayor. Helping to put the sewage authority in a good financial position can help to ensure that those rates would not increase further.
"I want to clarify that the city did not lose money on this investment whatsoever," Cherepko said.
The city's net savings with respect to this transaction amounts to $1,776,884.39 $794,809.39 in cash flow savings and $982,075 in insurance premium savings.
"It even goes further than that," Cherepko said. "A part of it that wasn't even explained when these numbers were talked about."
Malinchak previously described an approximate $1 million loss in reference to the municipal authority's scheduled payments that included 4 percent interest to the city.
Cherepko argued that it is key to understand the transaction allowed the city to decrease its $31 million debt, on which it was paying nearly 6 percent interest.
"The other half of the equation wasn't told," the mayor said. "We are not receiving the 4 percent, but we aren't paying the 6 percent."
Questions have been raised as to why the administration chose to invest the $14 million that remained after the city's debt service was reduced.
"If we were to put that in the bank and draw minimal interest ... four or five years from now ... your city is out of business ... Act 47, as some individuals have encouraged us to do for years now," Cherepko said. "That is not an option under my administration, and I want to make that very clear."
Cherepko stood firm in his opposition to Act 47 municipal bankruptcy.
"We put us in a much better financial situation for the future of this city," he said.
The mayor said he is offended by criticism of this transaction.
"Last month, our controller made a big spectacle about money that was lost because it was sitting in an interest-free account," Cherepko said. "Mr. Malinchak was absolutely correct on that. We lost money over six months, but once again, a half story."
Cherepko said the previous administration, with Malinchak's support, would not sign the agreement needed to complete the investment. Council voted in August and again in December with no action by former Mayor Regis McLaughlin or former city administrator Dennis Pittman.
"Just to explain and demonstrate how quickly the investment could have been made, from the day that I signed it when I took office, it went into an interest-bearing account immediately and within three weeks, the money was totally invested," Cherepko said. "I can't answer the question for sure on why this money wasn't invested."
#2 Mar 8, 2012
Cherepko said the previous administration was in favor of risky investments with better yields a move not permitted by third class city code. The funds must be invested in treasury bills and notes.
Cherepko publicly asked Malinchak to stop behavior that is destructive to the city.
"I really can't figure out why our controller continues to be negative, continues to embarrass this city, continues to try to reach that goal of Act 47," Cherepko said.
The mayor told the controller to stop conducting unauthorized investigations and to stop seeking negative results.
"I find that extremely hypocritical," Cherepko said as he turned the investigative eye on Malinchak for attempting to acquire the 23-acre Palkovitz property that the city researched options in 2010 for Penneco Pipeline Corp. to conduct surface drilling.
"This city, just a few years ago, was looking for a new source of revenue," Cherepko said.
"The gas industry is what many say is the modern-day gold mine.... The question I have is why our controller, who sat in meetings about this with our former mayor (now state Sen. James Brewster) and knew we were trying to do this.... Why would he try and purchase this property before the city could do it?"
Cherepko encouraged Malinchak to stop putting so much effort into working against the city and turn his energy toward the administration and council's goal to build a better community.
Malinchak did not offer a response during the public meeting but stayed after to talk with Cherepko.
When asked if he had any reaction to the mayor's remarks, the controller said he does not disagree with Cherepko's presentation.
Malinchak seemed to be in a pleasant mood when he left council chambers.
"Look at us. We're fine," he said, smiling at the mayor.
Council president Darryl Segina offered to mediate relations between the mayor and controller during a meeting to iron out any problems that exist.
Read more: McKeesport mayor blasts city controller on 'negativity'- Pittsburgh Tribune-Review http://www.pittsburghlive.com/x/dailynewsmcke...
#3 Mar 8, 2012
BANG!!!! Shut up and Sit Down Malinchak!! Can you believe this guy tried to scoop the city on gas wells?
#4 Mar 8, 2012
BOOOMMM!!!! Goes the Dynamite! Malinchak has now made the whole Elash thing a moot point, Not even on the radar now. If this is indeed true, he needs to resign effective yesterday!
#5 Mar 8, 2012
#6 Mar 8, 2012
I never heard any of this stuff before today. Glancing through that.. and sifting throught he crap stories and liberal spin.... this guy should be in Jail!! Wow... This is all about Malinchak trying to undermine the city cash flow, toss iti nto Act 47.. and have 5 or 6 of his own Marcellus Shale wells that the City now owns. It had nothng to do with the Mayor and schools. The District is seperate.. and did their due dilligence on the viability of the Palkovitz land for a school. When they discovered the city used it for a trash dump back in the 50's... the removal was too costly and the school plan scrapped. This guy has huge balls.
#7 Mar 8, 2012
You may be surprised who bought land on EDEN PARK BLVD. IN 2007
#8 Mar 8, 2012
you gotta be negative when so much bad and mismanagement and shady dealings have happened in the port
#9 Mar 8, 2012
This is just a deflection, and perhaps a libelous one, to make the Controller look bad. He had poi9nted out how they cost the city THOUSANDS of dollars in interest on $14 Million and this is the thanks he gets for being forthright with the public. Elash and Cherepko have brought shame to the city and are looking to deflect criticism elsewhere. Its one of the oldest political tricks in the world. The Controller was interested in that property long before the city and was actually the individual who brought the Marcellus opportunity to then mayor and council. Good thing he doesn't do business at Eddie's Cleaners. He'd be down the County Jail and police would be searching for a gun.
#10 Mar 8, 2012
Once again, pay attention and do your own homework!
>>>>>The argument about the 27-acre Palkowitz property the city obtained late last year spilled past the meeting's adjournment into issues that ranged from allegations of a squatter there to Malinchak's claim that the city never considered a bid he made for it in July 2008.
The city obtained it for $5,200 through the vacant property review process from the city's redevelopment authority.
"My wife and I applied for it," Malinchak said. "It got lost. The city bought it 14 months later. Why was I passed over?"
City solicitor J. Jason Elash did not respond on the record to Malinchak's claim about his bid.
Read more: Residents air concerns over animal control contract - Pittsburgh Tribune-Review http://www.pittsburghlive.com/x/leadertimes/l...
#11 Mar 8, 2012
Did the school solicitor undermine the school district and aquire the property for the city when he was supposed to aquire it for the district? And get paid twice. Who was that?
#12 Mar 8, 2012
This is most revealing and interesting. I heard this before from some school directors who speculated this happened. They had a mole in their mist and on the MASD payroll when the Palkowitz site became a serious location.
And I know the controller was fully aware of this because I told him. He quickly connected these dots back to RACM and a possible conflict of interest.
I think the old guy kept quiet on this one when boy mayor was reaming out his rectum. Watch out boy mayor that his pleasant demeanor reported by the Daily News might just be to disarm you.
Could this be a cause for action including libel? Why was the old guy so reluctant to refute the harangue by the bit bull? In my opinion, he has a covert plan and he let the boy mayor play right into his plan. This may be over for the pit bull but, the old grey fox is scheming up something.
And, the old fart may not be alone with the disparaging false allegations against Mr. McLaughlin and Mr. Pittman.
Boy mayor may have excited a real hornets nest?
#13 Mar 8, 2012
I believe you are exactly correct. The controller gave the young mayor enough rope and he hung himself. He obviously slandered the controller, Mayor Regis and Pittman. Yeah, Pittman wanted to invest in high risk investments prevented for municipal investment. He better have a memo with Pittman's John Hancock on that one. Maybe if he had a better attorney around, he wouldn't make such monumental errors.
#14 Mar 8, 2012
The GReat Brayne must cross the bridge and return to save the city and the schools.
#15 Mar 9, 2012
Mr. Segina should call for a complete investigation of how and why the new Mayor and the drunken solicitor rushed the Council to an uninformed vote on the sewage prepayment. Not only did the move cost us taxpayers thousands of dollars in unrealized interest on the $14 Million, it cost us the 4.5% interest the Authority was paying on the original $24 Million. That amount is easily in the hundreds of thousands. The contract had no prepayment clause so the city likely had no obligation to accept it. I wonder who the attorney was that drafted the contract and negligently left out a prepayment clause to protect the city and the authority.
#16 Mar 9, 2012
Here is the "how" .......http://www.mckeesport.o rg/council_minutes/2011/august _11.pdf
Can't help you with the "why".
#17 Mar 9, 2012
Interesting reading. As I suspected, it was a rush to judgment forced through by the tyranny of the council majority. I Congratulate Malinchak, Segina and Tedesco being on the right side of the issue. Had their due diligence been permitted, I doubt the taxpayers would have been negatively effected by the transaction and subsequent investments or lack thereof.
Why? The city lost money on it. Public funds were compromised by someone's mistakes. That's all the why in the world. The young Mayor made public comments assigning blame to others. I believe this opens the door to an investigation of what really happened to cause the financial loss and true blame to be determined and the appropriate surcharges assessed.
#18 Mar 9, 2012
No question Segina , Fawn and AJ should call for an investigation. The controller might not be maligned by the mayor and McCall this time.
The whys are simple?
1. Replenish all the vendors coffers to contribute more to the machine candidates shush fund.
2. To create many new unnecessary new jobs at MACM to feed nepotism and cronyism.
3. To earn gratuities from vendors to attend pro football games.
4. To GIVE M & T free use of $14.6 million. They will never forget a gift favor.
5. To create work for Attorney Elash.
This is criminal and Segina could be cast in a dim light if he does not consider a hands off investigation into the stupid costly transaction..
#19 Mar 9, 2012
Keep watching the mayor he is a smooth talker and a waste of time!!!!!!!!!!
#20 Mar 9, 2012
You got it right. Surcharges are possible and should be investigated by the SEC or AG.
Coming out of the gate the "presenter" may not have the achieved a level of Standard of Care" that a reasonable person would implement under similar circumstances. This is permitted a rush to judgment forced through by the tyranny of the council majority coached by the inexperienced mayor. This could be the basis for a complaint to an interested law enforcement agency.
This may be the reason for controllers silence and jovial demeanor as he watched the inexperience mayor slander former mayor McLaughlin and former City Administrator Pittman. And, the boy mayor walked right into his self made trap with his mouth wide open and brain wide shut.
The mayor said it is all over others may not agree and believe it has not even started. Also, Veon thought it was over and then he appears at a second trial and loses again. More time for Mike that is Veon Mike.
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