By GIB SNYDER
OBSERVER City Editor
The recently released audit of the city of Dunkirk's Community Development Block Grant program was the topic for the Dunkirk Local Development Corporation's board of directors recently.
OBSERVER Photo by Gib Snyder
The Dunkirk Local Development Corporation board of directors discussed the state audit of the city’s Community development Block Grant program at a recent meeting. Pictured from left are Development Director Steve Neratko, member Joseph Becerra, member and Second Ward Councilman Adelino Gonzalez and member Richard Halas.
While the board barely reached a quorum, there was plenty of discussion on the issue. Development Director Steve Neratko began by stating the city is taking the audit seriously and time is needed to correct everything. Work is progressing with the help of Sicherman and Associates, the firm hired by the city to help deal with the federal Department of Housing and Urban Development.
AUDIT CRITICAL OF CLARION LOAN
Neratko said work is focused on DLDC loans and HUD's Integrated Disbursement & Information Systems reporting requirements.
"I guess the Clarion Hotel was a big topic. We're delving into that. There was some conflicting information but I think we've started to come to a consensus on how to move forward on that," Neratko explained. "We have a little more research to do. We have to sit down and have a conversation with the folks at the hotel and just go from there."
Neratko explained IDIS is the program HUD utilizes to monitor its programs.
"One of the problems we have is some of those have been open projects since 2008," he added.
City Attorney Ron Szot said it was more of a city issue before Neratko pointed out the DLDC had to provide the city information.
"One of the big issues is the loans in the past in the IDIS system were all entered as one big loan program," Neratko explained. "They have to be entered as individual loans, so we're gong out to the businesses and trying to get some of that information, as well as get information on job reporting and that sort of thing."
Letters have been sent to loan recipients but not all have replied. Szot pointed out when loans are given, the borrowers have to be aware of their requirements and added proper loan documents are needed.
"None of the stuff we saw comes close to even alluding to the fact there are other ancillary reporting requirements," Szot explained. "So from the point of view of the borrower we need to have them do that. ... It's supposed to be low interest loans, not gifts."
Work with Sicherman has lead to some progress and more information will be updated in the next month.
Nicole Waite works as DLDC administrator in the Development Department and looked through loan documents with a Sicherman associate making lists of what is needed and what action can be taken.
"His main focus was the Clarion, just kind of going through and making note of every document that was in the file and trying to create a timeline, because at the Clarion there was numerous notes that had different dates and different amounts," Waite explained. "So just trying to write down a timeline and figure out how everything went through. I think we found another file that had more information on the Clarion, so I think he was happy to see there was more documentation."
AUDIT CRITICAL OF BERTGES PROPERTY
DLDC board member Richard Halas said the state audit was specifically critical of the Bertges property.
"Yet, we are taking the money from them in violation of what (Comptroller Thomas DiNapoli) is telling us to make payment for this. If someone mentioned to you that this was approved, let's put it in the minutes who told you," Halas added. "As a board member, I don't want to be responsible, we're going against what he's telling us."
It was explained that HUD has approved the payments and they have been part of the CDBG action plan for the last three years.
Neratko added the audit didn't criticize the payments but rather how the property was purchased.
"The payments are fine. We've talked with them numerous times. ... You can definitely purchase property with HUD funds, it was how they went about doing it," he explained. "No appraisal, the parking lot, they tore the building down, you're not supposed to."
Halas read from the auditor's report about the purchase of the vacant lot and the Bertges property, "that officials could not justify the CDBG activity."
"I don't know where she got that wording from," Neratko replied. "The state comptroller's office and the HUD office are completely different. State comptroller's office does not have any authority over the HUD office. Basically they both do their own audit. There's going to be numerous things in her audit that don't line up perfectly.
"She's here for a few months. She looks through all the documentation, which there's a lot of, and she makes her judgment call. Some of those are not going to be perfectly spot on. ... It's basically a wakeup call ."
STATE, CITY AUDITS DON'T MATCH
Neratko added some of the audit numbers don't match up with an internal audit the city has done.
"I think the only difficulty that may come from any of this was there was no appraisal done at the time," he added. "Those types of things are what they have a problem with, not paying it, so we can definitely make property purchases."
Board member and Councilwoman-at-Large Stephanie Kiyak said the DLDC is still waiting to hear back from HUD regarding the state's findings and asked if that will affect the CDBG funds going to the DLDC.
Neratko replied the funding has been approved and the city may not hear from HUD on the audit.
"We've been in communication with HUD since the beginning of the year. I think it will just be an ongoing process," he explained. "They do receive a copy of the audit. ... It may impact some of their decision making but they're not going to say we received this, we're going after each one of these things."
Szot again pointed out that while the DLDC gets city funding, it is among other subrecipients when it comes to CDBG funds.
"They all are required to do certain things and just because there's such a blending of the roles and responsibilities and personnel over time, it's confusing," he added. "The DLDC is just a subrecipient of these monies. It has responsibilities, but as far as HUD's concerned, they want it done right."
Neratko added it was the city's responsibility for filing the necessary subrecipient information and HUD usually doesn't talk with subrecipients.
Halas suggested that a conference call with HUD officials, "would be very important before any response is given back to the state ... so we could specifically ask these questions."
Szot pointed out it was unlikely HUD would agree to a conference call at a public meeting.
'If I'm HUD, you're a subrecipient. Do what you're supposed to do, we'll talk to the people we give the money to," he stated. "As a subrecipient, you're supposed to know how to operate the program properly. That's the problem."
Halas persisted and Neratko said he would ask, but was doubtful.
"I think what you're bound to do, you're bound to prove to HUD that the DLDC is not capable, competent, able, to be a subrecipient," Szot stated.
Halas replied that the state said $1.2 million was misused.
"That's incompetence, that's what they're saying. ... That was supposed to go to low-income," he added.
Neratko didn't go along with Halas' statement.
"That right there is a misrepresentation. It is supposed to go to low- and moderate-income people. The majority of cities utilize the funds for economic development purposes to eventually assist as it goes down the system to low- and moderate-income people," Neratko responded.
Neratko did say he could ask HUD about a conference call.
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