By GIB SNYDER
OBSERVER City Editor
The audit report from the state comptroller's office on the city of Dunkirk's use of Community Development Block Grant funds continues to be a focus of the Com-mon Council. Work on the response required was the subject for a council Finance Committee meeting Monday.
Article Photos
OBSERVER Photo by Gib Snyder
Common Council’s Finance Committee met Monday night with the focus on the audit report from the state comptroller’s office on the city of Dunkirk’s use of Community Development Block Grant funding. Pictured from left are First Ward Councilman Michael Michalski, Councilwoman-at-Large Stephanie Kiyak, Development Director Steve Neratko and Fourth Ward Councilwoman Stacy Szukala.
Development Director Steve Neratko explained the process of using the CDBG funds, saying pre-filed plans need to be followed.
After several separate discussions broke out, First Ward Councilman and committee chairman Michael Michalski called on Neratko and City Treasurer Mark Woods for information on the process.
The major area of concern from the audit was the use of CDBG funds by the Dunkirk Local Development Corporation. With the proper process calling for council to approve CDBG fund use in one- and five-year plans, it was pointed out council has already given permission for the spending; oversight was the concern.
Neratko said a review process at the end might slow things down but if the DLDC is done one way as a subrecipient the rest should be handled the same way. Council members were concerned they would be notified after the fact.
Neratko said all expenses for a subrecipient's plan should be in place prior to approval.
"When you expend money, the money has to be in the one-year plan and also has to be in the five-year plan," he stated.
City Attorney Ron Szot had an issue with the letter from the comptroller's office.
"In my opinion ... this page and half thing was generated in some press office in Albany by a politician. If you look at the recommendations, while they sort of glean what the recommendations of the auditor are, they just glean. ... They mischaracterized what the process is in the press release," he stated, citing the fourth recommendation of the letter on recovering unauthorized payments.
"The press release makes a legal conclusion that is far afield from what the audit says," he stated. " ... I think the important thing ... macro versus the micro. The micro is they looked at the DLDC but the macro, it needs to happen for everybody and it comes down to the process. The process being followed for all the subrecipients, everybody in the food chain doing their job, in the city and in the subrecipient organizations. Once the process is there the backend reporting, the after-the-fact reporting, is a confirmation of the council on a quarterly or monthly basis that what was approved in advance was followed through."
Michalski still wondered about the timing but Szot replied that if the paperwork is done properly everything else should almost work automatically.
"The problem, quite frankly, is the DLDC was inept in being the subrecipient and probably inept in being the recipient of tax dollars from ad valorem money from the city," he explained. "What that caused is what we've got now, an opportunity to get some protocol that not only complies with the HUD regulations, but with common sense oversight for tax dollars. ... From a timing perspective ... it is after the fact in a lot of respects but quite frankly, you're trusting everyone down the food chain to have done their job right."
"That's how we got in this mess," Michalski noted.
Council will approve the subrecipient agreements in the future.
Fourth Ward Councilwoman Stacy Szukala pointed out the report says council has responsibility and that's the reason for the questions. Dolce noted the report says there is a lot of intent to conceal.
Neratko said there were a lot of controls in place but they were disregarded.
"It is a very technical program and I can definitely see where if somebody wanted to conceal they definitely could," he explained. "If you're not aware of all the intricacies of the program it's difficult."
Michalski asked what else can council do.
Neratko said a procedure for selecting subrecipients should be established with council making the final decisions. He suggested council's economic development committee should be the first place for review with the full council having the final vote. Neratko pointed out a process in writing is needed.
After further discussion it was decided work on the response to the audit will continue at finance committee meetings in January.
After the meeting Michalski said there would be no disputing anything that was done in the past.
"The problem lies that this is a New York state audit of a HUD program so that we have to respond to both the state and to HUD to hopefully keep this program going," he said. "I can't say if it was malicious per se, that's kind of subjective, but definitely it was a case of things missing from the files. You can't dispute that. ... I'm not going to play judge and jury but at the same time the audit speaks for itself."
With a Feb. 12 deadline to reply to the audit findings, Michalski did say he thought it wasn't a "gunslinger approach."
"I think there was plans that were addressing future development and I think they were honestly doing what they felt was best for the city of Dunkirk," he explained. "These plans were in place to do that, it's just the way maybe it was approached. The way it was handled it was inappropriate, the documentation to back it up."
Michalski said the goal is to ensure the CDBG funds keep coming to the city and the response of the city may play a role.
"I would imagine they're going to wait until they see how serious we are," he said. "I would say that state auditors came in here and they saw some smoke, and where there's smoke there's usually fire and they investigated. ... We haven't heard from HUD directly yet, and again, we may not until we have our response in place seeing how serious we are."
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