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December 20, 2013

Conneaut Lake Park Trustees fight move to oust them

MEADVILLE — The Trustees of Conneaut Lake Park are fighting a push by Pennsylvania Attorney General Kathleen Kane to oust them for allegedly failing to take care of the historic amusement park.

In a response to Kane filed late this week, the Trustees claim that they had no money to insure two major structures in the park that burned down during the past five years. They blame the financial problems on past owners and managers of the park as well as the current operator of Hotel Conneaut, which they claim has failed to pay up per written contracts.

In October, Kane petitioned the Crawford County Court of Common Pleas to oust the current Trustees.

The Trustees is the corporation that oversees the public trust that owns the amusement park. The original Trustees of Conneaut Lake Park were volunteers who were appointed by Crawford County Court of Common Pleas President Judge Anthony Vardaro. The Trustees then appointed new members whenever there were openings.

According to the court petition, Kane claims damage inflicted on Conneaut Lake Park include failing to insure the Dreamland Ballroom, which burned to the ground on Feb. . 1, 2008, and The Beach Club, which burned to the ground on Aug. 1 this year; and failing to exploit opportunities and/or promote the best interests of the park.

In its response to Kane’s petition, Trustees admit the sitting board of directors in 2008 didn’t carry fire insurance on the Dreamland Ballroom as well as not having fire insurance on the Beach Club. However, in both instances Trustees deny failing to have fire insurance violated Trustees’ fiduciary duty under Pennsylvania law.

The Trustees said they “did not have sufficient funds with which to pay such insurance as no revenue centers had been put in place yet” at the time of the Dreamland Ballroom.

And, according to the Trustees, “poor cash flow made it impossible to maintain fire insurance on the Beach Club.”

Park Restoration LLC, which has lease agreements with the Trustees to operate the Beach Club and Hotel Conneaut, was to maintain fire insurance, according to the Trustees’ response.

Park Restoration owes the Trustees thousands of dollars in back payments, according to the Trustees’ response.

“To date, they are in arrears for more than $20,000 in back rent and unpaid expenses required to be paid by Park Restoration under that lease,” according to the Trustees’ response.

The Trustees claim Park Restoration also has failed to pay the Trustees as required under a management agreement and owes $38,327.62.

Trustees deny the board has in any manner acted in breach of its fiduciary duty, including when it turned down business opportunities offered in the past.

“To the contrary, those deals were turned down because of the sound, reasonable and acceptable business practices of the board and after considering the viability and profitability of the offers,” the Trustees said.

The Trustees said the majority of those opportunities came from Park Restoration.

“The rejection of those business opportunities was a direct result of the conduct of Park Restoration ignoring and outright defying its contractual obligation to pay the Trustees under its agreements,” the Trustees claim.

Contacted Friday night, Greg Sutterlin, one of the principals of Park Restoration, said he strongly disagrees his firm owes money to Trustees.

“We feel they owe us a sum of money,” Sutterlin said, noting his firm would pay for the work done the Beach Club and Hotel Conneaut for the Trustees, then settle accounts at the end of the year. Sutterlin said the Trustees owe Park Restoration $2,000 to $3,000 for work performed.

In its response, Trustees deny failing to pay property taxes was the result of any willful or intentional conduct by the board.

The park owes more than $850,000 in overdue property taxes interest and penalties to Crawford County, Summit and Sadsbury townships and Conneaut School District dating back to the 1990s.

Trustees claim the board inherited a “substantial tax burden when it was appointed in 2007” by Crawford County Court of Common Pleas. The tax burden, poor cash flow and breach of agreements made it impossible to pay the taxes owed, according to the Trustees.

The Trustees deny they committed any financial irregularities and asks the Attorney General’s petition be dismissed.

Attorneys for the Trustees and Kane will be back in court on Jan. 27.

Keith Gushard can be reached at 724-6370 or by email at kgushard@meadvilletribune.com.

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