By Gregory Korte
The Cincinnati Enquirer

Cincinnati City Council members began to ask the question Tuesday: What went wrong with the now-defunct Empire Theater project?

The answer: Almost everything.

"To be frank, this is egg on all of our faces," said Councilman David Pepper, toward the end of a 90-minute Finance Committee session on the Empire fiasco. "Council members who voted for this should feel accountable for their vote. I certainly do."

In June, City Council voted 6-2 - along party lines, with Democrats voting yes - to approve city funding for the renovation of the Vine Street Theater. The city was to contribute $220,000 toward the $908,000 project in the form of a forgivable loan.

Last week, after the developer spent $184,000 in taxpayer money, the city declared the loan in default.

No one can find the developer, LaShawn Pettus-Brown. At least two officers he listed for his company, Pettus-Brown Inc., told the Enquirer that they were unaware that Mr. Pettus-Brown was using their names.

And when city officials insisted that Mr. Pettus-Brown demonstrate some additional financing for the project, he produced a letter which appeared to be from PNC Bank, but which the bank says it never sent.

City officials called that letter "fraudulent," but conceded that they don't know exactly what happened without hearing Mr. Pettus-Brown's side. Because the city did not expend any funds based on that letter, city prosecutors said it was probably not criminal.

That letter came on Nov. 15, and its wording immediately made city officials suspicious. But the city administration didn't alert City Council for two months.

That troubled Councilman Pat DeWine, a Republican who opposed the project.

"Every day that goes on, taxpayer money is more and more at risk," he said. "In this situation, it's critical to start the clock ticking, so we can get our money back."

Mr. DeWine said council members were also to blame, saying they should do their homework before submitting "pet projects" to City Council.

Vice Mayor Alicia Reece, who championed the project and co-sponsored the funding motion with Mayor Charlie Luken,said she had no apologies for her involvement.

"It may sound good to politicize this issue, but I think it's a good example of us trying to take the bull by the horn and invest," Ms. Reece said. "I keep hearing about `pet projects.' I know the campaign is coming up, and people are looking for another Genesis, so they can run with it."

Genesis Redevelopment was the West End housing program that spent $700,000 in city tax money with little to show for it.

"It's not a pet project to want to invest in one of the most disinvested neighborhoods in the city," Ms. Reece said. "That's not a pet project. That's a Cincinnati project. We did nothing different here than what we do in these chambers every week."

Mr. Pepper said that's a good reason to change how City Council does business. He will propose rule changes that would require City Council to wait at least a week before authorizing spending money. On the Empire project, the motion was introduced June 3 and approved by City Council June 5.

Other lessons:

The city has no consistent process for checking a developer's credit history. Community Development Director Peg Moertl said the challenge will be to create a new policy, without closing the door to the "new and emerging" developers.

The administration interpreted City Council's support for the project as a mandate to move forward immediately, without the other funding sources in place.

"That's certainly an area of vulnerability," Ms. Moertl said. "We went ahead with him on faith for the first few steps."

E-mail gkorte@enquirer.com