Veon Brewster Delta Group Connection

Veon Brewster Delta Group Connection

Posted in the McKeesport Forum

Delta Dawn

New Castle, PA

#1 Feb 16, 2012
P1
Report: McKeesport faces big future deficits

By Patrick Cloonan, MCKEESPORT DAILY NEWS
Wednesday, October 13, 2010

A financial plan commissioned two years ago by the city indicates McKeesport may have a multi-million-dollar debt in five years, and end this year $950,000 in the red.

Mayor James Brewster disputed that Tuesday, saying the city should end the year with a fund balance of $500,000 to $1 million.

"If the city's annual revenues remain at about $18 million and the operating expenses are estimated to be over $20 million, there will inevitably be a gap that can no longer be filled with one-time cash deposits or debt restructuring," Delta Development Group said in a draft document dated Aug. 20.

It covered three of six steps in an early intervention plan for the city, one Brewster requested and council approved in March 2008. Two of the other three steps have been delivered since then.

Delta found "no imminent financial crisis" but "in the absence of any action ... the city will exhaust all reserves and begin calendar year 2011 with at least a $950,000 deficit."

Delta projected that city expenditures, such as those for pensions and medical insurance, will rise from $18.8 million this year to $23.5 million in 2014, while revenues will drop to $16.8 million next year and remain around $17 million in the following four years.

That would mean deficits of $3.9 million in 2011,$4.7 million in 2012,$5.3 million in 2013 and more than $6.7 million in 2014. Delta also suggested ways to avoid that, including higher taxes and changes in personnel and benefit policies.

"This mayor has never raised taxes and will never raise taxes," Brewster reiterated. He also said the city had to deal with contracts with five bargaining units.

The Delta document was made public by city controller Raymond Malinchak, who felt he had an obligation to do so.

"This report identifies some serious challenges," said Malinchak, who is recovering from injuries sustained in a recent vehicle-pedestrian accident. "If they're 75 percent wrong (with their projections), we still have a $5 million problem."

The city controller said he sought for months to get Delta to release the report and thought he had a commitment from Delta to make a presentation to council before the end of August, but no such presentation was made.

"That was about the 10th chance I gave them," Malinchak said.

In the meantime, Delta sent invoices to the city.

"They sent bills that (city administrator) Dennis (Pittman) and I will not pay," Malinchak said.

Delta officials did not return calls requesting comment.

Brewster criticized Malinchak for making the document public, calling it an irresponsible act.

"Why would you have a document that is not completed and is in draft form?" the mayor asked. "Mr. Malinchak clearly overstepped his bounds."

"My job is the watchdog for the citizens," Malinchak said.

http://www.pittsburghlive.com/x/pittsburghtri...
Delta Dawn

New Castle, PA

#2 Feb 16, 2012
P2
Brewster disputed that claim, saying that role in the city is that of its CEO, the mayor.

"That's my job," Brewster said. "I've kept the city out of bankruptcy, attracted new business and improved the infrastructure."

Malinchak cited the city's Home Rule Charter.

"It is the intent of this charter to convey on the city controller the responsibility of fiscal 'watchdog' for all current operations of the city government," Article XIII, Section 1301, reads in part. The quotation marks around "watchdog" were included by those who instituted that charter in 1976.

No such role is listed for the mayor, though it is said in Article VII, Section 701, that the mayor "shall have such further authority as may from time to time be delegated to him by ordinance."

Brewster said he asked state officials to fund the study in a bid to get $100,000 to improve the city's computer system.

"Indirectly this systems upgrade will help us solve and prevent some future problems with regard to public service," the mayor said.

Malinchak said it was one of three reasons why the city hired Delta in March 2008.

Pittman said the city paid $24,000 toward the study, with the remaining $58,000 coming from the state Department of Community and Economic Development.

The city administrator said part of the fourth step was distributed 10 days ago to the police and fire chiefs, with the rest of that fourth step turned over to other department heads last week.

"That stuff was supposed to be here to help me with the budget," Pittman said. "We still don't have the final section."

Under the city's Home Rule Charter, the mayor is to have a budget proposal ready for city council by Nov. 15.

http://www.pittsburghlive.com/x/dailynewsmcke...
Delta Dawn

New Castle, PA

#3 Feb 16, 2012
P3
Pittman said the department heads will review their documents for accuracy, after which the city will get back to Delta with any changes.

"We need to use those statistics as a barometer to guide us," the city administrator said.

Delta also recently was hired to provide an early intervention plan for North Versailles Township.

Brewster acknowledged he hadn't fully read the document, but neither had council had a chance to review it.

Still, the mayor said, "this report should be viewed as a success story because seven years ago the state asked me to file for bankruptcy."

Delta focused on deals between the city and Municipal Authority of the City of McKeesport, the sanitary sewer system serving the city and some nearby communities, which last year purchased the right to directly bill city residents.

"Without the cash flow generated by the sale of the sewer interceptors (2006), collection and conveyance system (ongoing) and receivables (2009) to the Authority, the city would be running huge structural deficits in its operating fund," Delta said.

Delta noted that "MACM has over $30 million of repairs" needed to meet state Act 537 mandates. So "there are no additional assets or cash reserves available for support for the city's operating revenue."

It also found that since 2005 the city budgeted for $2.5 million in tax revenue but only received $2.2 million. That apparently was based on the city receiving $2.49 million in 2002.

Overall revenue increased from $15.23 million in 2002 to $18.07 million in 2009.

Delta said total revenue rose on average by 3.19 percent a year, but annual rates went from a 19.09 percent increase in 2005 to an 8.32 percent drop in 2007.

Remaining steps will be released separately, including "a multi-year plan (that) must be evaluated, adjusted and adopted" annually.

"It is apparent that the city has been operating with a structural deficit for a number of years when adjusting for proceeds from loans, sale of city assets and one-time cash deposits from other funds," Delta said.

Delta urged "conservative estimates of projected revenue collection (and) millage rates at a level that will provide the necessary revenue to cover all expenses." In short: "Do not avoid tax increases when necessary."

According to Delta, the median tax bill of $888.83 in McKeesport is less than half to one-third of similar bills in such towns as Monroeville ($2,327.55) and West Mifflin ($2,064.15).

It is about a sixth of the median in Upper St. Clair ($5,518.08) and, except for Duquesne ($733.59), is lower than all its neighbors.

Delta also urged the city to "pursue an aggressive code enforcement program," to explore with state and Allegheny County agencies "the redevelopment of key areas," and to be assertive in collecting delinquent taxes and pursuing tax incentive and vacant property strategies.

It also urged tenant registration and efforts to update files regarding taxpayer contact information and property sales.

Brewster said there are "50 to 60" recommendations, and many of them already are being used by the city.

Delta also found that city collection of more than $300,000 in parking fees and another $100,000 in a tax on privately-owned spaces "is a major and relatively stable source of revenue (that) may provide an opportunity for raising rates or fees."

http://www.pittsburghlive.com/x/dailynewsmcke...
Delta Report

Mckeesport, PA

#4 Feb 16, 2012
Yes there were rumors that some how there was a connection between Delta and Mr. Veon. I do not know if he had any direct interest or some relative had an interest in Delta.

Delta was selected on Brewster's watch so there could be a connection. I think the point is moot. Brewster most likely tried to control the report, but Delta said it like it is.

I contend they did a remarkable and accurate job given what they knew at the time. They did fine without editing by JB.
Delta Dawn

New Castle, PA

#5 Feb 16, 2012
Former lawmaker Veon faces corruption charge
March 25, 2009

PITTSBURGH (AP)— A former lawmaker, already under criminal indictment, now faces charges of siphoning millions of dollars in state grants from a nonprofit organization he founded.

New charges filed against former House Democratic Whip Mike Veon and an aide are the latest corruption case to hit the Capitol, rocked last summer by the arrests of a dozen people accused of using state resources for political gain.

According to Corbett and the grand jury, Veon directed BIG to award contracts to consultants for little or no work, including more than $1 million to Delta Development Group, a Mechanicsburg firm which donates to Democratic campaigns.

In 2004, Veon arranged for his brother, Mark Veon, to get a job at Delta that paid him $160,000 a year. Mark Veon kept the job until 2007.

Eric Clancy, Delta’s executive vice president, disputed that.

“We categorically deny the representations of the eyewitnesses to the grand jury,” he said.“We did have Mark Veon in our employ and that hiring was not arranged by anyone outside this firm.”

A message left for Mark Veon at his home was not immediately returned.

Veon also directed that his former legislative chief of staff, Jeff Foreman, be paid $4,000 a month as a retainer for the BIG, according to court records. He was paid $145,000 between 2004 and 2006.

Foreman testified before the grand jury that the retainer, which he called “excessive,” was Veon’s way of “saying thank you” for his legislative and political work.

Former state lawmaker Terry Van Horne testified under a grant of immunity that he received a check for $5,000 from BIG in 2003, despite doing no work for them. Van Horne said he had submitted invoices to Veon in hopes of being paid for campaign work.

Veon also used BIG’s bank account to reward his legislative staff, Corbett said. The grand jury found $20,000 of the state money that went to the agency in turn was used to pay about a half-dozen of Veon’s legislative staffers bonuses for campaign work.

The investigation into BIG overlapped with another high-profile investigation by Corbett’s office, although the two are separate, Corbett said.

In the other case, Veon, Rosepink and 10 other people with connections to the House Democratic caucus were charged last summer with running a scheme to award taxpayer-paid bonuses to legislative employees for campaign work and divert other public resources to win elections.

http://articles.dailyamerican.com/2009-03-25/...
Report results

New Castle, PA

#6 Feb 16, 2012
Delta Report wrote:
Yes there were rumors that some how there was a connection between Delta and Mr. Veon. I do not know if he had any direct interest or some relative had an interest in Delta.
Delta was selected on Brewster's watch so there could be a connection. I think the point is moot. Brewster most likely tried to control the report, but Delta said it like it is.
I contend they did a remarkable and accurate job given what they knew at the time. They did fine without editing by JB.
Brewster mentioned the mayor was to be the watchdog. The HRC revealed the controller was primarily the city watchdog.

The Veon trial is still ongoing. Brewster tried to suppress the report. Cherepko wanted to review the report before public release. Malinchak asked several times for the report from The Delta Group. Ray eventually received the report, which was never called a draft from Delta. The report was considered complete by the Delta Group.
City Failures

New Castle, PA

#7 Feb 17, 2012
McKeesport seems to like the report.
Delta Blues

Mckeesport, PA

#8 Nov 9, 2013
Brewster criticized Malinchak for making the document public, calling it an irresponsible act.

"Why would you have a document that is not completed and is in draft form?" the mayor asked. "Mr. Malinchak clearly overstepped his bounds."

"My job is the watchdog for the citizens," Malinchak said.
-
The McKeesport Police Pay Scam records were sealed. James Brewster broke his promise he made to reveal the results to the public.

Brewster, none of your promises are forthcoming! No one believes the Delta report takes several years to complete, and the report was released complete.

Now Cherepko claimed the $900,000 remaining surplus, by council. Daryl Segina was against the non designated money at the mayors disposal. I think the money will be mis-appropriated.

The Delta report covers 2014, with a bleak outcome. McKeesport is using the $900,000 without exact record keeping.

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