Three of the Danville City Commissioners who voted in favor of purchasing the BISCO warehouse said Thursday they had no idea that the father of a city commissioner has an alleged financial interest in the building.
Commissioners James “J.H.” Atkins, Kevin Caudill and Gail Louis all expressed surprise that Mitchell Barnes, former owner of the BISCO building, alleges that Commissioner Ryan Montgomery’s father, Mike, expects to receive a significant “finder’s fee” from the sale of the building.
Barnes supports his claims through surveillance video and audio tapes that recorded a Sept. 5 meeting between him and Mike Montgomery in Barnes’ Lexington office.
Mike Montgomery told Barnes on the tape that he is entitled to 50 percent of any amount over $1 million from the proceeds of the BISCO building sale. The building sold at auction for $1,237,500 on Aug. 10, and the city cut a check for $123,750 to Rector-Hayden Realtors the same day — three days before the City Commission publicly voted 5-0 to approve the purchase.
Mike Montgomery has asked Barnes for money several times since the Sept. 5 meeting, including as recently as Oct. 19, Barnes said during a recent interview.
The city had leased the warehouse before the sale and sent rent checks to Mike Montgomery’s corporation, Barnes said. Montgomery cashed the rent checks the city sent to his corporation and took 10 percent of the proceeds to act as a property manager for the BISCO building, Barnes said.
Mike Montgomery acknowledged on the surveillance tape that he received free rent for his business, M&M Electric, for at least seven years.
Commissioner Ryan Montgomery voted in favor of purchasing the building but did not initially disclose that his father was a longtime business associate of Barnes. After several residents raised concerns during commission meetings, starting with the Sept. 10 commission meeting, Commissioner Montgomery began recusing himself from votes having to do with the BISCO building.
“… even though there’s no financial interest at all for me or any other family member, I’m just going to recuse myself …,” Ryan Montgomery said during the Sept. 10 meeting.
When contacted by a reporter Tuesday, Mike Montgomery initially called Barnes’ claims “laughable.” When told about surveillance videos and audios of his meeting with Barnes, Mike Montgomery abruptly said “no comment” and accused the reporter of trying to “wreck” Ryan Montgomery’s chances for re-election Tuesday. Atkins, Caudill and Louis are also up for re-election.
Atkins and Caudill specifically asked Commissioner Montgomery during executive sessions, they say, if he or his father had any financial relationship — past or present — with Barnes. Atkins and Caudill said if the allegations are true, they think Commissioner Montgomery has betrayed not only their trust, but the public's trust.
“(Commissioner Montgomery) made a statement behind closed doors that there was no conflict (of interest) ...,” Atkins said Thursday. “... I had no knowledge of the fact that Mike Montgomery was getting 10 percent of the rent being paid by the city.
“... I want the entire community to know that James Atkins has not violated their trust.”
Caudill said he was disappointed that he found out about Mike Montgomery's financial ties with Barnes after voting to approve the city’s purchase of the warehouse for its public works department.
“All along, I had defended the purchase of the BISCO building and the manner in which it was done,” Caudill said.
In response to an open meetings complaint by The Advocate-Messenger, the state attorney general ruled that the commission’s “consensus” regarding purchasing the BISCO building at auction during a July 23 executive session was illegal. The city has appealed the decision to Boyle County Circuit Court.
“In my mind, the executive sessions were necessary to assist the city's chances of purchasing a needed facility at the lowest cost to the citizens of Danville,”¿Caudill said.
Louis said she knew Mike Montgomery “looked after” the BISCO building but was as “surprised as anybody else” at the allegation that he expects money from the sale and was getting free rent and money for years.
“(When voting), I don’t look at people’s personal lives,” Louis said. “I knew Ryan worked for his dad, but I don’t know and don’t want to know anything about their business.”