For six months, suspicion and reports of mismanagement have plagued Bethlehem City Council member Karen Dolan and potentially doomed the nonprofit organization that runs the Illick's Mill Fox Environmental Center. She has spent more than a decade developing and had served as executive director until this past April.

Critics have raised concerns about ethical, rental, utility, tax filing and construction payment issues.

A grand jury inquiry led by Northampton County District Attorney John Morganelli into suspected improper operation of the nonprofit has stifled funding support of the center and has been a contributing factor to its recent closing.

In an exclusive interview, Dolan said she is the victim of lies, misleading information and politics.

ETHICS/CONFLICT OF INTEREST

Issue: The use of official influence to benefit the nonprofit organization, including advocating the change of a city ordinance banning the use of alcohol in city parks and buildings, which would include Illick's Mill.

Karen Dolan has been the executive director of the Illick's Mill Fox Envirnmental Center since she founded it 14 years ago. During that period, she was a Bethlehem Area School District teacher until her retirement in 2011-12 and received no pay for her work at the center until 2013. She was paid from October 2013 until this past April.

She became a city council member in 2005, running on a platform of community involvement, which included the continued refurbishment of historic sites.

She said voting as a member of council and as chair of the Parks and Recreation Committee on items affecting her nonprofit organization is not a conflict of interest, according to state Ethics Act guidelines.

"As council members, we're expected to be involved in the community," she said, adding advocacy is one of her responsibilities and that other council members have connections to local nonprofits as well.

Futhermore, during her 14 years of work with the nonprofit, her ethics have never been questioned.

"Nobody has filed anything with the ethics commission," she said. "It hasn't come from the DA, the mayor, anybody."

Serving alcohol at the center also has never been an issue. It's been permitted at the mill because there is no mention in its lease agreement of the city's ordinance that prohibits alcohol use in city parks.

Dolan explained that events at the mill are treated like private functions, much like those at the municipal golf course, Boutique at the Rink and Musikfest.

According to the city's website, City Ordinance 941.06 specifically allows limited alcohol consumption at Illick's Mill.

"I did not advocate for relaxing alcohol rules in any specific park or area," she said about her role in the ordinance discussion. "I was sharing the suggestions made by the parks director, and steered clear of any mention of Illick's Mill."

RENT/UTILITIES

Issue: Illick's Mill has not paid rent or made utility payments.

Dolan said the rent payments were never an issue for Illick's Mill because it is a city property that the city was helping during its restoration. The nonpprofit paid utilities from 2001 through 2012 ,when Mayor John Callahan visited the site and, without any prompting, waived utility payments.

She said the mayor and Parks Department director have the power to waive payments from nonprofits that benefit the community.

She said the center never received bills for rent, or for utilities from 2012 on.

"We did not stop paying utilities," she said. "We were not required to pay them."

Fox resumed paying utilities as of April at the request of Mayor Bob Donchez.

LEASE

Issue: It had been reported that talks between the city and the center had failed to produce a new lease.

Dolan said closing the nature center became inevitable when a new lease arrived in mid-July. Not only had news of the grand jury investigation hurt fundraising efforts, she said, but new provisions in the lease made Fox responsible for all building repairs and upkeep – things a lessor (the city) would normally be responsible for.

She said given the circumstances, there is currently no plan to reopen the walk-in nature center, though there are local groups interested in taking over the center's operation.

Dolan said a quote, from an email sent to Mayor Bob Donchez regarding an ealier proposed lease, was taken out of context.

TAX RETURNS

Issue: From 2008 through 2010, Illick's Mill's Fox Nature Center did not file federal tax returns, which led to the suspension of its nonprofit 501C3 status. Reportedly, Dolan continued to raise funds for the center during the time its nonprofit status was suspended.

Dolan said she was unaware that tax documents had not been filed with the IRS until she received a letter of notification from the IRS. She said that the IRS website had listed no such change during the three-year time period in question.

She said the nonprofit tax documents were prepared each year and signed by her, as executive director. But the person responsible for actually filing the IRS paperwork, whose name has not been released, never mailed the returns. Dolan said the person responsible for filing the tax documents may have been preoccupied by his wife's long-term illness.

Dolan said that a new IRS nonprofit regulation instituted during the years in question cost not only the mill its nonprofit status, but more than 60 other city nonprofits as well.

She said it took her about four months to resolve the issue and reinstate the center's nonprofit status with the IRS.

There was limited effect on the center's fundraising abilities.

UPGRADE COSTS

Issue: Illick's Mill was given $128,000 to help complete its renovation. In a recent audit, the $128,000 was labeled "uncollectable."

Dolan said the much-debated $128,000 was given by the city and had nothing to do with her.

A change in the Americans with Disabilities Act shortly after vo-tech students had finished the building's internal restoration necessitated small but expensive changes, especially in the bathrooms.

Dolan said the building's general contractor, Ron D'Arcy, negotiated with the city on his own initiative and secured the $128,000 for his pay and for another contractor to complete the ADA-required changes.

Dolan said she does not know who in city hall ultimately approved the exchange, but the Fox group was never directly involved and the money went directly from the city to the contractors.

Questions about the $128,000 have arisen each year since 2011 following the annual audit. Dolan agreed that Northampton County DA John Morganelli almost certainly has asked the former mayor about the money as part of the ongoing grand jury investigation.

"I don't know how John Callahan answered that question with the DA," she said.

POLITICS

Issue: Concerns involving the nonprofit and center operation are being characterized as mismanagement problems.

Dolan has said repeatedly that she and her project have been targeted for political reasons.

Dolan explicitly stated that her detractors are working to undermine her to further their political ends, most especially by throwing the veracity of the $128,000 gift into doubt.

She said it only became an issue when a news article indicated the depth of the city's financial straits, and calling attention to the money might allow the former mayor and at least one member of council to point to outstanding debts owed to the city.

Regarding current Mayor Bob Donchez' desire to have the center pay both rent and utilities, Dolan said, "Every administration has a right to set different priorities. That's how it goes in political life."

Dolan suggested that Bethlehem Press freelance reporter Bernie O'Hare is a political ally of Donchez and Morganelli.