ROCKFORD (WREX) — Below is a letter written by John Phelps, the executive director for the Rockford Local Development Corporation regarding the firing of Jim Ryan from Rock Valley College. The letter was written to 13 WREX on Dec. 10, 2019.
On September 19, 2017 in the wee hours of the morning, I joined Dr. Doug Jensen, Jim Ryan, Todd Cagnoni and Michael Dunn, Jr. on a 3-day trip to eastern Ohio and western Pennsylvania to tour advanced training centers that could be useful models for the planned ATC at Barber Colman. After piling into an RVC van with Dr. Jensen at the wheel, Jim Ryan in the front passenger seat, Todd Cagnoni and me in the rear seat and Michael Dunn in the 3rd seat, I tried to break the ice by introducing myself to Dr. Jensen by describing who the RLDC was and its mission. I felt it was important that he recognize RLDC was a capable developer and reliable and trustworthy partner to complete this project. I told him soon after we left the RVC parking lot that Jim Ryan had been nominated to the RLDC Board of Directors at a meeting of our Executive Committee the prior month and that he would be formally elected at our annual meeting in early October. Dr. Jensen was laudatory to Jim’s election and involvement describing him as knowledgeable and competent. No concerns were expressed about a potential conflict of interest.
Over the course of the next three days, we all spent the majority of the time together including nearly 20 hours in the van and multiple meals together wrapping up with discussions of our findings that day. During these extensive conversations, I continued to try to impress Dr. Jensen with stories of the many successful projects we had partnered with the City including the recently completed and award-winning Turner Police Station, the La Chiquita grocery store on S. Main St., the $13 million Keith Creek flood mitigation project and the redevelopment of the vacant K-Mart property on N. Main St. among other projects including our $70 million small business loan portfolio. Not only did I state that Jim Ryan was joining the board, but I mentioned other board members including Todd Cagnoni confident that the stellar credentials of the RLDC board members would ease any anxiety he might feel with partnering with a small not-for-profit as the developer of the ATC.
Over the course of the following two years, Mr. Ryan attended at least twenty RLDC board and/or committee meetings. These were generally conducted at noon or 4pm but always during the working day. I find it unfathomable that Dr. Jensen who was directly responsible for Mr. Ryan’s activities at the college was not aware of his role on the RLDC board. Moreover, during any deliberations at RLDC concerning the ATC, Mr. Ryan and Mr. Cagnoni always abstained from any vote or action of any kind.
Finally, I am offended with the implication that Mr. Ryan’s role as a board member created an undisclosed conflict of interest. RLDC maintains and adheres to a strict No Conflict of Interest Policy for all its board members and staff. This policy is regularly audited by our independent auditors and the U.S. Small Business Administration which is our federal regulator. Perhaps this baseless charge is intended to convey an impression that RLDC would unduly benefit financially from its involvement as developer of the ATC. For the record, RLDC has spent considerable resources of time, energy and expertise in planning the ATC the past two years with no remuneration. I estimate I have committed 500 hours of my time alone not including the time of support staff. The IGA among the City, RVC and RLDC agreed to a $3.0 mil developer fee to RLDC of which only $300,000 would be paid. The $2.7 mil difference was a forgivable loan from RLDC to the ATC that would be forgiven once the seven-year compliance period ended and RLDC deeded the property back to RVC or the City. As permitted and required under IRS regulations, the $3.0 million developer fee would be considered reasonable upon opinion from independent counsel. Moreover, this “developer fee” would generate cash equity to the
benefit of the ATC of approximately $1.5 mil. In essence, the cash fee paid to RLDC was fully paid by the tax credits leaving a residual of $1.2 mil to benefit the ATC.
It was RVC and the greater Rockford community, especially southwest Rockford, that stood to gain from the ATC at Coleman Village. To RLDC, it was a commitment of resources and investment of opportunity costs towards this end which would never be recovered through the fees being charged. RLDC’s interests were aligned with our development partners, and consistently acted selflessly in their best interests. To presume otherwise is insulting.