Time's up.
The city of Williamsport faced a Feb. 7 deadline to repay $1.4 million to the Federal Transit Administration and could face interest charges if it fails to do so.
“FTA will ensure taxpayer dollars are used as intended to protect the federal investment in transit in Williamsport," FTA spokesman Gerard Shields said.
Mayor Derek Slaughter said Friday that FTA's demand remains under review.
The agency's directive follows investigation into alleged misappropriation of transit funds by former city finance director Bill Nichols.
Investigators say Nichols misappropriated more than $500,000 in money intended for the city’s bus system, River Valley Transit, now known as the River Valley Transit Authority.
Nichols was charged last September with theft by failure to make required disposition of state transportation grants and tampering with public records.
He is not accused of pocketing any of the money, but FTA officials and prosecutors allege the money was used for the historic Hiawatha riverboat and other non-transit purposes, including a gazebo.
Nichols is scheduled to appear in plea court in Dauphin County in February.
The FTA began an investigation into the alleged misappropriation in March 2021. On Jan. 8 the agency sent a letter to Slaughter and River Valley Transit General Manager Todd Wright informing them how much was owed and setting a 30-day deadline for repayment.
“We're working through all of that right now, so I don't have a comment yet. ... I don't have any next steps,” Slaughter said. “As of yet, our attorneys are still reviewing everything.”
According to the letter, FTA requests $1,483,706.81, which it says was misused between July 1, 2015 and Dec. 31, 2020.
FTA's findings
FTA examined grant agreements awarded to the city and worked with Maryland-based accounting firm Saggar & Rosenberg to determine how much was owed, the letter said.
“FTA is responsible for conducting oversight activities to ensure that recipients of grants use the funds in a manner consistent with their intended purpose and in compliance with statutory and regulatory requirements,” Shields said this week.
FTA and the accounting firm found the city made $871,370 in drawdowns, but they lacked required documentation:
- $400,000 in planning drawdowns without appropriate documentation of how expenses were calculated.
- $176,516 in planning drawdowns with no documentation on how the funds were spent.
- $294,854 for indirect costs even though the city did not have an approved indirect cost rate.
- The city used money for new siding on a salt building and a police building for $584,519 which were not permitted under the grant.
- Another $27,817 was used for a gazebo at the Peter Herdic Museum, 810 Nichols Place, instead of its purpose for a bus stop.
“These activities were neither authorized in the grant nor are improvements that serve a transit purpose,” the letter stated.
Williamsport faces interest charges
If the money isn’t paid back, the letter states the city will become “delinquent.”
“FTA will charge interest on the delinquent portion of the debt at the Treasury Current Value of Funds Rate published by the Secretary of the Treasury in accordance with Title 31 of the United States Code Section 3717, unless FTA determines that a higher rate is necessary to protect the interest of the United States,” the letter said.
Late payment penalty will charge at a rate of 6% per year on any portion of the debt that is more than 90 days past due.
City Council approved funding on Jan. 30 for legal counsel with Pittsburgh law firm Eckert Seamans Cherin & Mellott, LLC.
“This is for the FTA demand that was made upon the city a few weeks ago. This is for representation in that matter relative to working with the FTA,” city solicitor Austin White said.
The city will continue to review matters with the FTA, Slaughter said on Friday.
