MAYVILLE - Millions of dollars have been lost by Chautauqua County due to risky investment and questionable management decisions, according to a scathing report released Tuesday by the state comptroller's office.
County Executive Greg Edwards, meanwhile, doesn't see it that way, noting that the report does not convey the millions of dollars in additional construction and nearly 200 jobs the development agency has brought into the county.
According to state Comptroller Thomas DiNapoli, the county lost nearly $600,000 in revenue after two County Industrial Development Agency bonds "failed to meet expected returns" through October 2011. A half-million dollars was lost in interest revenue and $94,000 was lost in property taxes in those projects.
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“Financial risk should not be shifted from businesses and an IDA to the county and its taxpayers,” — State Comptroller Thomas DiNapoli
Another $3.6 million in direct payments is also owed to the county.
"Encouraging economic development in our upstate communities has never been more important. In today's fiscal climate, however, imprudent investments can have a devastating impact on local taxpayers," DiNapoli said of his Report of Examination, which studied the county IDA from January 2010 to October 2011.
"Financial risk should not be shifted from businesses and an IDA to the county and its taxpayers," he continued.
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According to DiNapoli, the county IDA in 2000 and 2001 purchased bonds to fund the construction of speculation (spec) buildings in the towns of Sheridan and Busti. Auditors, however, found that payments from the businesses in these spec buildings did not cover the required annual IDA debt payments.
The bond in Sheridan was used in part to develop the Chadwick Bay Industrial Park, while the bond in Busti was used to develop the Stoneman Business Park.
The audit shows the first bond defaulted, causing the county to lose $1.8 million in its fund balance; the county also lost $94,500 in outstanding property taxes.
Edwards, however, criticized the audit report as a "headline grabber," and noted that he and Bill Daly, county IDA director, were not even in office when the bonds were secured.
The county executive added that two new businesses have moved into the Sheridan location since the report was conducted, while the $1.8 million bond is back on the county's books.
"The comptroller is focusing on what happened 12 years ago instead of the over $8 million in physical growth and the 185 employees that developed in and around these spec buildings," Edwards said.
He added, "I think Thomas DiNapoli has an agenda and only Thomas DiNapoli knows what that is. Apparently, supporting economic growth isn't one of them. That's unfortunate; I've got a job to do and he's got a job to do.
"I'm pleased to stand by my record and continue to represent and protect the citizens of Chautauqua County."
Mark Thomas, former county executive, was in office from 1998 to 2006.
Edwards said even with the 2008 recession the economic and job development of the industrial parks have met the expectations of the legislature that approved them in 2000 and 2001. He added that at the time, the $5.3 million in bonds was "minute" in the county's overall $100 million investment portfolio.
"It's easy to play armchair quarterback 12 years later. That doesn't take into account the growth we have had," Edwards said.
The audit report examined the county's internal controls relating to real property tax services and the county-owned nursing home. The additional audit findings included:
Auditors then made a series of recommendations, including:
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