Dan Horn, and Sharon Coolidge

Cincinnati

It was hard to tell four years ago that the Project Rebuild Foundation had anything to do with sewers.

The group’s founders, including former Mayor Mark Mallory and former City Manager Milton Dohoney, talked about helping high school kids and created a colorful poster with the slogan “for hope, for change, for life.”

Their goal was to turn Hamilton County’s largest sewer construction project into something more – a means to create jobs and build up neighborhoods.

They fell short of that goal. And everyone who gets a sewer bill in Hamilton County paid for it.

An Enquirer investigation has found that the Project Rebuild Foundation, a privately-run nonprofit, relied heavily on public money from the Metropolitan Sewer District to subsidize both its operations and its mission.

The approval to spend hundreds of thousands of dollars in sewer district money on behalf of the foundation came from some of the same people who led the foundation, because top MSD officials also sat on Project Rebuild’s advisory board.

Since Project Rebuild was created in 2012, the sewer district’s ratepayers have supported the foundation and its work by:

Paying more than $500,000 of public money to an engineering firm and a consultant to set up and assist the foundation. The consultant worked on grant applications, power point presentations and the foundation’s articles of incorporation. The engineering firm did research and development on internship and apprenticeship programs. Former MSD Director Tony Parrott, who at the time led both the foundation and MSD, approved the spending.



Expanding an intern academy for high school students that cost sewer and water ratepayers a total of at least $350,000 in wages for the students. Some money went to programs that had nothing to do with MSD’s work. Last year, MSD paid a Cincinnati consulting firm $167,500 to teach interns life skills, such as balancing check books, writing resumes and interviewing for jobs.



Providing the foundation with a leadership team and base of operations. The foundation shared a mailing address with MSD headquarters and all three of the foundation’s unpaid advisory board members worked at the sewer district. Two of them, Parrott and former MSD administrator Margie Anderson, signed documents that allowed consultants to do work for the foundation while getting paid by MSD.

Between 2011 and 2014, records show, MSD invested significantly more money in the Project Rebuild Foundation than the foundation collected from donors.

Despite the help from MSD, the foundation appears headed for dissolution later this year. The intern academy it championed is being revamped and downsized by MSD’s new leader.

“The old program did not provide us with very motivated young people,” said Gerald Checco, MSD’s director since last summer. “Part of the problem is, our people didn’t have time and many of the kids were idle.”

County officials, who oversee MSD’s budget, say their counterparts at the city, who run MSD, never should have used money from the district’s 800,000 ratepayers to help support a high school program and a private foundation.

They have criticized the city's oversight of MSD for years and say The Enquirer’s findings raise questions about the foundation’s structure and MSD’s spending practices.

“It’s about checks and balances,” said Chris Monzel, president of the county’s board of commissioners. “There’s no transparency there. From a good government standpoint, it gets an F.”

The spending related to Project Rebuild occurred while Parrott had near-total authority over a $3.2 billion sewer reconstruction project that began almost a decade ago. Dohoney gave him that authority in 2007, and Parrott used it to approve contracts and purchases totaling about $680 million.

Dohoney’s successor, Harry Black, rescinded Parrott’s authority months before Parrott left to become director of Louisville's sewer district last year. Black has said putting so much power in the director’s hands was a mistake.

“This administration just recently learned of its existence,” Black’s spokesman, Rocky Merz, said of the foundation. He said the city launched an audit this week in part because employees have raised concerns about the “appropriateness of the former project.”

The Project Rebuild Foundation represents a small piece of MSD’s overall spending, but it became entangled in all sorts of MSD projects, from workforce development to helping small businesses.

Despite MSD’s investment in Project Rebuild, it’s unclear how much the foundation contributed to specific MSD programs. Tax records show it spent about $20,000 in 2014 on the internship academy, scholarships and various expenses, but few other details are provided.

The source of the foundation’s money also is unclear. Donors gave about $128,000 to Project Rebuild in its first three years, but tax documents don’t identify contributors. Parrott said he could not recall donor names and Anderson declined to provide them.

Parrott said he was unaware that MSD money had been used to assist the foundation, although records show he signed the paperwork approving it.

“There were no foundation expenses paid through MSD, to my knowledge,” Parrott said.

Parrott said he expects the advisory board to meet soon to formally dissolve the foundation, which Anderson said has about $34,000 in assets.

He said Project Rebuild did important work for the community and for MSD, providing students with on-the-job experience and the sewer district with quality interns.

Monzel, however, said Project Rebuild was a distraction from what really matters at MSD: Managing the massive, court-ordered reconstruction project in a way that doesn’t sock ratepayers with unnecessary costs.

The average annual sewer bill has climbed from about $250 to $1,000 in the past decade, largely because of the big sewer overhaul.

“It’s incredible that ratepayer money is being utilized in that fashion when we should be using it to operate the system,” Monzel said. “Ratepayers are paying dollars to fix sewers, not to provide for a jobs program.”

High hopes, high costs

County officials always have been wary when their counterparts at the city, including Parrott and former Mayor Mallory, talked about the big sewer project as anything more than digging trenches and connecting pipes.

The focus, county commissioners say, should be on completing the work as efficiently and inexpensively as possible.

But since much of the construction is in poor Cincinnati neighborhoods, some city officials saw the project as an opportunity to spur investment and job growth. If done right, they argued, small businesses, workers and neighborhoods could benefit for years without burdening ratepayers with additional costs.

Mallory and Dohoney, who did not return calls seeking comment, are listed along with Parrott as founders of Project Rebuild.

Parrott, however, was the driving force. He appeared in a promotional video, touted the foundation as a national model and discussed it in 2012 at City Councilman Charlie Winburn’s job growth committee.

Parrott started work on forming the foundation as early as 2010 in hopes of supporting the intern academy, which had been running for a few years, and other initiatives.

He signed up Anderson, a long-time MSD administrator, and Biju George, MSD’s former deputy director, to join him on the foundation’s board.

George, now the chief operating officer of Washington, D.C.’s water and sewer system, said the goal was to shift costs for the intern academy and workforce development programs from ratepayers to private sources.

“The foundation was to sustain that for the long term, so ratepayer money didn’t have to be used,” George told The Enquirer.

Almost immediately, however, ratepayer money was used on the foundation.

MSD hired Ribway Engineering Group, a Columbus-based firm founded by Andrew Eribo, to help expand the intern academy and develop the foundation. MSD work orders from 2010 and 2012 show Parrott approved paying the firm $400,000.

The sewer district also agreed to pay Focus Solutions Inc., a Cincinnati consulting firm owned by Zola Stewart, a total of $162,500 to advise the foundation’s board, write grants and draft articles of incorporation.

Anderson recommended hiring the firms, and Parrott approved them. Both companies’ work orders specifically mention Project Rebuild and various tasks that would be done on behalf of the foundation.

“Focus Solutions Inc. will assist … with implementing the Project Rebuild program,” says Focus Solutions’ work order.

“Project Rebuild was established as a 501c3 non-profit entity,” says Ribway’s work order. “The consultant’s scope is extended to provide assistance with marketing, branding, and ensuring that key stakeholders are well informed.”

Subsequent work orders for those companies and others also reference Project Rebuild, but the documents do not make a direct connection to the Project Rebuild Foundation. At times, MSD documents and Parrott’s public statements refer to Project Rebuild as a catch-all initiative for a wide range of programs, from minority inclusion efforts to the Small Business Enterprise program.

The Enquirer’s tally of work on behalf of the Project Rebuild Foundation by Focus Solutions and Ribway includes only work that was authorized explicitly for the foundation.

Eribo could not be reached for comment.

Stewart said she always considered herself a consultant for MSD, not the foundation. She said MSD officials hoped the foundation eventually would play a larger role in running and paying for its workforce development and small business programs.

“The goal was for it to kind of grow into an organization that would bring community benefits without burdening on taxpayers,” Stewart said.

George said that was his understanding, too. But he said he didn’t know MSD had hired companies for foundation-related work.

“There was no discussion at any of the board meetings,” he said. “It was never on the board’s agenda.”

Setup was 'kind of weird'

The Project Rebuild Foundation is what the IRS calls a “public charity,” or one that supports the mission of public entities like hospitals, colleges or, in this case, a government agency.

Foundations organized in this way can work closely with governments. As long as state and federal laws are followed, governments can and do contribute to those foundations.

Project Rebuild, though, is unusual in a few ways. Leslie Lenkowsky, an expert on nonprofits and philanthropy at Indiana University, said the foundation’s structure gives it exceptionally close ties to MSD.

A friendly board is common, he said, but a board consisting of top officials from the beneficiary of the foundation’s work is not.

"It is unusual,” Lenkowsky said. “It would have been much cleaner if there was actual independence in the foundation.”

He said MSD’s hiring of companies to do work for the foundation also is atypical. More commonly, he said, a government would give money to a public charity and the charity’s board would decide how to use it.

“It seems kind of weird,” Lenkowsky said.

Though the foundation set lofty goals, tax records show its contributions were modest. Numbers for 2015 are not available. But in 2014, Project Rebuild paid $3,000 for four college scholarships and about $16,000 for programs at the intern academy, which placed students at both MSD and Greater Cincinnati Water Works.

No more details are provided, but Parrott said the foundation reimbursed MSD about $12,000 for students placed in internships outside the sewer district, which he said sometimes happened when a better fit was found elsewhere.

The rest of the intern program’s costs were covered by MSD ratepayers.

Parrott said an average of 46 students participated in the eight-week program every year, and each was paid $2,160, which comes to about $100,000 per year. If the foundation reimbursed $12,000 per year, MSD spent about $350,000 over the past four years on high school interns.

Former interns give the program mixed reviews. Maria Finnell, of Westwood, said she had a great experience at Water Works in 2012 and mostly just sat around at MSD the next year.

“If anybody would have the same experience as I had the second summer, I wouldn’t recommend it,” said Finnell, now 20.

Nahum Coleman said he had a good summer four years ago when he helped take inventory at MSD’s treatment plants. “We never sat around,” he said. “We were always doing something.”

On Fridays, Coleman said, the interns took part in life skills training. They learned about team building, appropriate behavior in the workplace and how to balance a checkbook. MSD paid $167,500 to Make It Plain Consulting in Cincinnati to run that part of the program last year.

“It was valuable,” Coleman said.

County officials say it’s wasteful. They say the city and MSD should worry more about fixing sewers than developing programs for high school kids.

“The mission of the sewer district is to provide wastewater and storm water service to the community,” County Commissioner Dennis Deters said. “I appreciate efforts to try to grow young adults into jobs, but there’s no place for them in this sewer district. It doesn’t make sense.”