POINT TOWNSHIP - A Point Township supervisor is considering resigning as chairman of the county planning commission over a dispute involving the state Department of Community and Economic Development (DCED).

DCED has ordered the township to repay $381,000 by June 29 because municipal officials failed to adequately track how a developer spent a grant that was to be used to build low-income housing eight years ago.

Although he maintains supervisors have done nothing wrong and are contemplating taking legal action against the developer if he fails to pay back the money, Montie Peters told The News-Item Tuesday that he may resign as chairman of the county planning commission.

Before making a decision, Peters said he plans to consult with the other eight members of the commission ahead of its next meeting, which is Tuesday. Peters, who has served as chairman since January 2006 and was appointed to the commission - a volunteer position - in October 1998, plans to remain on the commission even if he resigns as chair.

The case has overtones to the HOME program fiasco in Shamokin that led to federal charges against the former city manager. Also, it has created further tension between county Commissioners Vinny Clausi and Rick Shoch, whose service as solicitor for Point Township and its municipal authority has been questioned by Clausi as a potential conflict of interest with his commissioner post.

To repay or not repay

According to reports in The Daily Item, the DCED grant problem was revealed last year when state auditors discovered the township had not overseen the spending or provided the state with required progress reports.

Peters, who serves as vice chairman of the board of supervisors, and township supervisor chairman Randy Yoxheimer have different opinions about repaying the money to DCED. But both say the money is actually owed by Bob Yoder, of The Yoder Group, Turbotville.

In 2003, Yoder told supervisors he wanted to build 16 low- to moderate-income townhouses in a project named Kings Pointe. According to supervisors, Yoder told the board about DCED's HOME Investment Partnership Program and how the township could receive a $500,000 grant for the project, the Sunbury newspaper reported.

Supervisors agreed with Yoder's recommendation and held a public meeting for interested contractors. Yoder, the only contractor to attend, was awarded the contract.

Over the next two years, 16 homes were built. In 2004, Point Township received the grant from DCED and issued a check to Yoder for $500,000 without making him sign a contract or reading the HOME Investment Partnership Program documentation, according to the newspaper.

Peters said supervisors don't have any written contracts explaining how the deal was supposed to be managed and "trusted" Yoder to follow state guidelines.

Yoder sold four of the homes to low- to moderate-income families before the real estate market began to collapse. With 12 houses vacant, Yoder decided to sell the homes to anyone who was interested, according to the newspaper.

But that decision violated the terms of the DCED program and put Point Township at risk of being liable for the funds.

Supervisors said they received a letter from DCED in January 2011 after an audit was conducted and state officials couldn't find any explanation for how the money was used.

DCED then demanded payment from Point Township. Peters and Yoxheimer called Yoder and explained they needed documentation to provide to the state showing how the grant money was used. Supervisors said Yoder initially refused to cooperate.

Peters said he refuses to have the township pay back the money, while Yoxheimer said he understands the board made a bad decision by not asking for a signed contract.

"Ultimately, we are responsible for this," he told The Daily Item.

Meanwhile, Peters said in a phone interview Tuesday that Yoder has taken responsibility for not abiding with the grant guidelines.

"Mr. Yoder told me he was going to the bank in an attempt to make the contract whole," he said.

Clausi's questions

In a press release issued Monday afternoon, Clausi called for Peters' resignation.

"In light of this major leadership failure, I have concerns over whether Mr. Peters should continue to serve on the planning commission," Clausi said. "The taxpayers of Point Township may be forced to bear a significant increase in their taxes. ... How can you just give away government grant money without anything in writing or in a contract? It is outrageous."

Clausi also questioned why the issue was kept from township residents until recently, a point he made in directing attention toward Shoch.

"Who advised these supervisors to try to keep this from the public? I hope their solicitor, Rick Shoch, informed them how ill advised it was not to bring this to the attention of the taxpayers who may now have to bear the burden of all this in increased taxes and in increased legal fees to be paid to their solicitor," his statement reads.

Clausi suggested an "outside investigation" be conducted.

Peters - who spoke publicly against the May 8 decision by Clausi and Commissioner Stephen Bridy to remove Shoch as chairman of the board of commissioners, a high point in tension that has been building among the commissioners since Bridy and Shoch were elected in November - said the township issue has nothing to do with the planning commission.

"No one kept it a secret from anyone," Peters said by phone Tuesday. "I can't believe the supervisors are taking a beating like this. This is absolutely ridiculous.

"We did nothing wrong," he added. "The money is owed by Mr. Yoder. The taxpayers aren't paying this money back."

Peters said township supervisors have had multiple conversations with DCED officials for six months. "When we became aware the train had come off the tracks, we jumped right into the fire in an attempt to resolve the issue," he said.

Shoch replies

Clausi previously called for Shoch to resign as township solicitor, arguing he can't fairly represent all of Northumberland County if he has to abstain from votes that could impact Point Township. Shoch said serving in both posts doesn't constitute a conflict of interest, and said the Pennsylvania Ethics Commission and County Commissioners Association of Pennsylvania have told him no conflict exists.

Shoch, who was appointed Point Township solicitor in early 2005 after the township received the grant, said DCED enters into a contract with municipalities, not developers, when dealing with grant money through HOME.

Although DCED has requested the township pay back the $381,000 in HOME funds spent on the project, Shoch said $284,652.25 was the actual amount of funding determined by a DCED audit to be ineligible and returned to the state. Shoch said DCED closed out its account audit in 2010, but the township didn't receive it until June 2011.

"The supervisors, myself and Mr. Yoder met with DCED in January in Harrisburg to discuss this issue," Shoch said. "Mr. Yoder said he knew he sold the units to non-qualified buyers and would take responsibility for that. There was an ongoing dialogue with DCED over this issue and we assumed the problem would be rectified with Mr. Yoder. But then, without warning," came the letter from DCED.

But DCED spokesman Edward Jordan said Wednesday that Point Township was notified in June 2011 of the issues and the need for documentation to support the costs.

"After unsuccessfully working for a year to obtain the requested information, we have requested repayment in 10 days," he said.

Shoch said he is not in favor of having the township pay the money, although he understands DCED must go after the municipality.

'Temper tantrum'

As for Clausi calling for Peters' resignation, Shoch said, "I don't think Montie should give up being chairman. Vinny is going after the supervisors because they are connected to me and supported me."

He said the commissioners appoint people to the planning commission, but they can't remove them without just cause.

Shoch added, "When my 5-year-old throws a temper tantrum, I don't give in, and when Commissioner Clausi throws a temper tantrum, I don't give in either."

Shoch said because supervisors were working behind the scenes with Yoder and DCED to rectify the issue, the issue didn't need to be made public.

He said the five-member board of supervisors has instructed him to discuss the issue with Northumberland County District Attorney Tony Rosini to determine if criminal charges are warranted if Yoder refuses to pay back the money.

"The supervisors have nothing to hide," he said. "If the township is not made whole on this, supervisors will be looking at both civil and criminal remedies."

Shoch, who earns $110 per hour as township solicitor, said he was billing the township for his time. He didn't say how many hours he has worked on the problem.

Yoder did not return a phone call seeking comment.

Culver helping

State Rep. Lynda Schlegel Culver (R-108) of Sunbury said Peters and Yoxheimer called her two weeks ago seeking assistance. Culver said supervisors were under the impression DCED was corresponding with Yoder to resolve the problem before receiving the payback letter.

"I'm sure Point Township supervisors will do everything in their power to make sure their taxpayers don't have to pay anything," she said by phone Tuesday.

At the time the township received the grant money and Yoder built the 16 homes, the Wiest law firm of Sunbury was the solicitor for Point Township. But Yoxheimer doesn't blame the firm for not requesting a contract with Yoder, saying it was the board's responsibility, he told The Daily Item.

Ala Shamokin's mess

Shoch said an audit performed by the Office of the Inspector General on DCED in 2005 states that the state is not adequately monitoring its localities to ensure HOME funds are expended correctly, and is improperly allocating staff time for administration. Shoch said the audit also says the state did not develop or implement an adequate monitoring program.

The city of Shamokin is paying back $504,495 to DCED and the U.S. Department of Housing and Urban Development (HUD) for misappropriations of funds dealing with the Community Development Block Grant (CDBG) program in 2003, 2004 and 2005, and the HOME Program in 2003. The debt is connected with former Shamokin city clerk and treasurer Brian Jeremiah, of Shamokin, being charged with misappropriating more than $8,000 in federal grant money from HUD.

Jeremiah was sentenced in March 2011 in federal court to two years probation and to make restitution to HUD. Jeremiah, who pleaded guilty, was also ordered to make $8,100 restitution and pay a $1,000 fine.

Federal attorneys reported in an indictment that Jeremiah used the grant money and income derived from the home sales to rehabilitate commercial properties under the auspices of the Shamokin Redevelopment Authority, for which he served as executive director, and also cut two checks to himself.

The day after his indictment, Jeremiah was fired from his job with DCED.