(The Center Square) – The federal indictment of a developer involved in a downtown revitalization project in Rocky Mount has raised questions about the city's spending habits.
North Carolina Treasurer Dale Folwell is calling for an investigation into the project after arrest records revealed lead developer, David Hunt, was charged in an illegal bid rigging scheme in Mississippi.
"In light of the serious nature of the indictment, a prompt and thorough investigation is warranted before any taxpayer money is approved to pay for this project," Folwell said.
The federal indictment, released Sept. 3, alleges Hunt and the other suspects involved in the scheme coordinated their bid submissions to the Mississippi Department of Education and shared contracts' earnings. Hunt received a portion of more than $650,000 from Mississippi, including federal funds granted by the U.S. Department of Education to the state.
Hunt was scheduled to be arraigned in federal court Thursday, while the Rocky Mount project, which includes a hotel, parking garage, housing and retail spaces, is on hold.
Folwell gained knowledge about the project as the chairperson of the Local Government Commission (LGC), which oversees public debt.
The LGC was reviewing Rocky Mount City Council's application for $18.4 million for a parking garage when the details of Hunt's indictment were released. Rocky Mount City Manager Rochelle Small-Toney since has rescinded the application and suspended the project.
After receiving more than 200 complaints regarding misconduct by Rocky Mount city officials, State Auditor Beth Wood launched a financial probe in May into the city.
"[The Office of the State Auditor] focused its primary efforts on fraud, waste and abuse allegations," Wood said.
The state audit found multiple downtown development managers did not follow program guidelines, which led to $32,400 in uncollected loans and $28,000 in improperly awarded funds.
Officials also stopped the city from collecting more than $47,700 in utility bills owed by a council member, the audit said. The city manager also spent more than $1,500 on unauthorized travel expenses, the audit revealed.
"In light of this troubling situation, it would be natural for the LGC to question whether the city followed appropriate procedures in previous financing decisions, such as bond financing of up to $44.5 million that the LGC approved at the city's request in 2016 to build the downtown Rocky Mount Event Center," Folwell said.
The news comes as the North Carolina Department of Commerce announced a record number of private-public investments into its rural downtown development program with the Main Street and Rural Planning Center.
The state saw a $100 million increase in investments from the rural center in fiscal year 2020 despite the economic downfall caused by the response to the COVID-19 pandemic.
The Main Street program awards grants of up to $200,000 for local governments with populations of 1,615 to 92,067. Private organizations and other government entities must match the grant $2 for every $1 from the state.
During the last fiscal year, more than 1,311 new jobs and 267 new businesses were created and more than $372 million in investments were made through the program.