Months after announcing that he will not run for a second term, Stephen Donnelly, a member of the Vestal Town Board, will soon resign from his position as he plans to leave the area. He submitted his resignation on March 28 and will officially step down on April 15, with his seat expected to remain vacant until the November election.

He faces multiple claims in bankruptcy court related to the closing of Atlas James, his failed construction company.

In an email to Debra Wallace, the town clerk, Donnelly said that he is resigning because he is moving out of Vestal. He reiterated this in a statement to Pipe Dream, saying he cannot serve on the board if he no longer lives in the town.

In a lawsuit filed by Chemung Canal Trust Company, a community bank in Elmira, Donnelly is accused of overstating his assets by at least $850,000 in a personal financial statement submitted to the bank in December 2022. The statement was sent while Donnelly tried to renew a $100,000 line of credit for him and his firm, Dynamic Innovation Group LLC, in 2019. Chemung Canal Trust Company seeks attorney’s fees and $86,000 that it claims he still owes.

A day before he resigned, Maria Sexton, the town supervisor, released a statement regarding the case against Donnelly.

“The members of the Town Board are aware of the allegations against Councilman Donnelly,” Sexton wrote. “The allegations are unproven at present and will be resolved by the Judicial system. The Vestal Town Board does not have any authority under New York State Law to remove elected officials.”

“We understand the concerns of our residents,” she continued. “Mr. Donnelly was removed from all Town Committees in 2024. Town Council members do not have access to Town funds.”

Sexton did not return Pipe Dream’s request for comment.

Donnelly’s construction company shut down in November 2023 and filed for bankruptcy in February 2024, owing an estimated $1.1 million to creditors. Donnelly filed for individual bankruptcy four months later.

He released a statement to those impacted by his construction company’s collapse, saying he “did not have the critical knowledge necessary” to run the business and intended to pass the company to his son as a “legacy piece.” He said that “a lot of people got hurt as a result.”

“I am not afraid to admit that, nor did I dodge any responsibilities including paying back deposits for customers that had paid us for work,” he said. “The reality is that things have been very tough for me and my family over the past year or more, and we are actively doing everything we can to try and make things right with everyone, including working day and night, attending events that are important for business, etc. to rebuild and make things right with people who lost out because of my mistakes.”

“I feel regret on a daily basis and know that I am working hard every single day to rebuild our lives and the lives of those around us who were affected by the construction company,” he added.