LAWRENCEBURG, IN (FOX19) - In May 2010, a property owned by Greendale's mayor and town attorney received a $400,000 taxpayer grant to turn a house into a restaurant business.
The property is located in the town where both men hold office. In September 2014, it appeared the pair lost the property at a tax sale after taxes on the property went unpaid for more than a year.
A FOX19 investigation into the deal found the $400,000 gambling tax grant directly benefited then-mayor Doug Hedrick and Greendale town attorney Richard Butler. The grant was intended to turn the property the officials own into a restaurant business.
The mayor and attorney owned the property through a Limited Liability Company named, Dobel House, Corporation. Mayor Hedrick is listed as the president and Butler owns a majority stake in the property, Butler confirmed to FOX19 during our initial investigation.
On Sept. 8, 2014, Lawrenceburg leaders decided to purchase the property from the sheriff's office for $121,000, county records show. The move, according to former Lawrenceburg Mayor Bob Carr, was to ensure Lawrenceburg could recoup some of the $400,000 in tax dollars from the grant.
Lawrenceburg awarded Greendale the grant and expected the restaurant, the Dobell House, to provide tax revenues for both towns. Neither town received the benefits of their investments as the restaurant was only open a few months and later closed.
The Dobell House is still closed today.
County records show, on Sept. 18, 2015 a new LLC, registered in Richard Butler's name paid $17,632.17 to redeem the Dobell House property, saving the property from being owned by the City of Lawrenceburg.
The Dearborn County Tax Assessor's Office did not show the property was officially redeemed until Nov. 10, 2015 when a personal check from R.A. Butler Company, LLC was written to the county, saving Butler and Hedrick from losing the Dobell House.
THE DOBEL HOUSE DEAL
In March 2010, Lawrenceburg businessman Tim Denning filed an application for the grant to renovate the Dobell House property along Ridge Avenue in Greendale. Denning wanted $400,000 to turn the historic home into an "upscale restaurant business."
In the application, Denning told Lawrenceburg, "The proposed renovation will directly improve the real estate tax base and improve the aesthetics of the area around the Dobell House," the application shows. Denning goes on to explain in his argument for the grant, "…it is well recognized that improvement begets improvement."
The restaurant was to employ 24 people and take the property value of the Dobell House from $174,000 to $500,000, according to Denning's application. Denning wrote in the application that he had no private sector partnerships contributing to the project.
Denning went on to promise Lawrenceburg's grant committee, 82 percent of the grant will be "immediately recaptured in the local tax base," according to the March 2010 application.
Lawrenceburg and Greendale signed the grant in May 2010, approving the $400,000 to renovate the Dobell House. The agreement also required Greendale to maintain a "complete accounting" of the spending, as well as, mandating the "chief executive or the top elected official of the 'grantee'(Greendale)" certify the spending.
The top elected official in this case would have been Doug Hedrick, Greendale's mayor.
Denning's application shows the project was supposed to be completed within one year of receiving the $400,000. The restaurant would not open for another three years and three months.
FOLLOWING THE MONEY
In 2014, FOX19 submitted multiple open records requests for access to spending records associated with the $400,000 grant. Those requests were filed with Lawrenceburg and Greendale's administration. Both agencies turned over all the records each had on the Dobell House project to FOX19.
Our review found that when the $400,000 grant was awarded in May 2010, the Dobell House property belonged to the 305 Ridge Avenue, LLC. Ohio Secretary of State records show the registered agent is Richard Butler, Greendale's town attorney.
The first dollar spent out of the grant happened August 9, 2010 and went to Mayor Doug Hedrick. Hedrick submitted a $232.71 invoice for downspouts that went up at the Dobell House. Hedrick submitted another $3,165.43 for reimbursement on Feb. 19, 2013. That reimbursement went to pay for a $25 sign permit from the city of Greendale, a $1,300 char broiler, $30.43 in supplies from Lowe's, $510 in refrigerator work, $400 in plumbing work and $900 for "used wooden chairs" Hedrick bought.
State records show that in November 2011, Richard Butler changed the name of the 305 Ridge Avenue, LLC that owned the Dobell House to "Dobell House Corp." Butler told FOX19 he changed the name for "tax purposes" and explained that it was a "reorganization." The new corporation filing lists Greendale Mayor Doug Hedrick as "president."
Before the reorganization, the owners spent $24,379.93 of the $400,000. That spending happened between August 9, 2010 and August 31, 2010. The corporation didn't spent another dollar from the grant over the next 16 months. The remainder of the $400,000 happened under the reorganization and happened between Dec. 20, 2011 and March 26, 2013.
After a two year delay in opening, officials began questioning the Dobel House Corp. leaders about why the restaurant wasn't open. In August 2013, Denning announced to the Greendale Redevelopment Committee that he was opening for business on August 18, 2013. At the time, Denning told Greendale redevelopment officials he had 29 employees working in the restaurant.
The restaurant is located in a district Butler told FOX19 Greendale's designated as historic. A review of the Dearborn County property records show Hedrick also owns a commercial property on the corner across from the Dobell House. County records show Hedrick and a Mary Elizabeth Hedrick are co-owners of 211-217 Ridge Avenue.
Hedrick also owns a rental property one street over from the Dobell House at 12 Kansas Street.
Dearborn County records also show Hedrick and Denning also share ownership of another piece of property behind the Dobell House. That property, according to the county GIS mapping department, is a likely a mobile home. The department could not confirm where the property is located when contacted by FOX19 in November.
The Dobell House created a Facebook page promoting its menu and live music acts in August 2013. The page posted its last update on Feb. 10, 2014. It's believed to be around the same time the restaurant closed for business.
The Dobell House is still closed today.
BUTLER, HEDRICK LOSE DOBEL HOUSE TO TAX SALE
On Sept. 18, 2014, Hedrick and Butler lost the Dobell House property to a Dearborn County tax sale. County records show unpaid taxes on the property totaling $7,732.69. The City of Lawrenceburg paid the tax lien, effectively purchasing the property. Hedrick and Butler had 18 months to redeem the property before the sale to Lawrenceburg was finalized.
In an interview with Richard Butler on Jan. 5, 2014 outside his Lawrenceburg law firm, Butler told FOX19, "It's not lost at a tax sale, the taxes have been paid." We checked with the Dearborn County Treasurer's Office the following day and found out nothing had been paid on the property since the tax sale on Sept. 18, 2014.
We also checked with Dearborn County's Auditor's Office to make sure there was no redemption made on the property. The Auditor's Office also had no record of anyone making a payment on the unpaid tax lien at that time.
"We need to try to recoup some of the money we lost on the deal," former Lawrenceburg Mayor Dennis Carr told FOX19. Carr is no longer Lawrenceburg's mayor after being defeated in November 2015.
Carr said because of the Dobell House project, the town is finished with granting money to restaurants and the city has changed who and what economic development projects the city's gambling revenues go to.
Dearborn County's Treasurer's Office told FOX19 penalties and interest is added to the tax lien each day the taxes go unpaid.
GREENDALE ATTORNEY DEFENDS DOBELL HOUSE PROJECT
On Dec. 1, 2015, FOX19 sent Richard Butler and Doug Hedrick an email, requesting time for an interview on the Dobell House project. Both men responded three days later, denying our interview request – both explaining their lack of trust in journalists.
"To be totally honest, I don't trust reporters," Hedrick continued. "In my experience, reporters are more committed to advancing their own careers with salient "gotcha" stories rather than to telling the truth," Hedrick wrote in an email from his official town email address.
"Now, if you wish to report that I declined to be interviewed, please also include that I did so based upon a lack of trust in the journalistic integrity of a report of this kind. If I am incorrect in my assessment of your intentions, than I'm certain that you would not want anyone to get the wrong impression about why I declined your invitation."
On Jan. 5, we found Butler outside his Lawrenceburg law firm office. Butler defended the grant, telling FOX19 that the project created jobs. "We bought an old, dilapidated building and it's been dilapidated for years before we even got into it. Now it's fixed up," Butler explained.
Butler went on to say neither he nor the mayor had plans to personally finance the renovation, "It sat and it sat and it sat and it didn't make sense to reach into our own pockets and put money in that building. That building's sitting empty right now; it's hard to fill them up. Makes it hard to justify spending money on them," Butler said in the Jan. 5 interview.
"It's not scandalous, it's not unethical," Butler said.
We spent weeks trying to track Butler and Hedrick down at their offices in Greendale, including attending council meetings in an effort to interview them for this report. Hedrick did not attend two separate council meetings we showed up at to interview him.
On Jan. 5, calls to Hedrick's cell phone and a visit to his house were not responded to. We got a tip that Hedrick would be attending a drawing for a $6,000 prize at the Lawrenceburg Eagles social club at 8 p.m. Jan. 6, 2015.
We found Hedrick leaving the club with an unidentified woman. Hedrick, when asked about the grant said, "No comment, I told you." Hedrick got into his truck and drove away.
LAWRENCEBURG PLANNED INVESTIGATION INTO SPENDING
Lawrenceburg Mayor Dennis Carr was not the mayor when the Dobell House grant was issued in 2010, but told FOX19 his city is out of the restaurant business after the experience with the Dobell House. "I don't' think the grant has performed, myself," Carr said.
Part of the original agreement between Greendale and Lawrenceburg required strict accounting for the spending. The deal mandated Greendale provide "complete accounting" for the spending to Lawrenceburg every six months.
On Nov. 25, Lawrenceburg opened its files on the Dobell House grant to FOX19. Inside, the city only had invoices and receipts on $24,379.93 of the $400,000 spent from the grant. Carr did not know how the rest of the money was spent, "Like I said, the past administration made this grant. We didn't. It has to be accounted for. We make everybody else accountable, they're (Greendale) going to have to be accountable, too," Carr said.
Lawrenceburg's changed its granting rules, according to the city's economic development head, Grant Hughes. Hughes told FOX19 the only entities allowed to receive the gambling tax grants is industry. Hughes went on to say the city is finished with restaurant grants and will not approve applications for restaurants any longer.
Carr said he was forming a committee to investigate the Dobell House project spending following our investigation, "We need to go back to redevelopment out there and find out what they've done with the money and the accountability for it and see what's going on with it."
The problem for Carr, he explained, is the apparent conflict of interest by Greendale's mayor and town attorney benefiting from a grant that required authorization from the town they hold the power in.
"I can't speak for their (Greendale) attorney, but if my attorney (City of Lawrenceburg) did it, they'd no longer be my attorney," Carr said when asked about the appropriateness of grant and the conflict of interest he believes exist with it.
Carr told FOX19 in May of 2015 that the city never formed the Dobell House investigative committee and did not formally investigate the Dobell House spending. Lawrenceburg officials, according to Carr, did request copies of Greendale's Dobell House spending records following our investigation.
"That was the end of it," Carr told FOX19 in May.