DUNKIRK - It certainly wasn't good news.
The audit of the city of Dunkirk's Community Development Block Grant program performed by the state's Comptroller's Office cited many areas of the city's CDBG process as lacking. Lack of paperwork on loans, improper payments to city officials, failure to follow yearly plans and unauthorized travel were all alleged in the audit.
Comptroller Thomas DiNapoli's cover letter said the state's audits provide fiscal oversight and identify opportunities for improving operations and Common Council governance. DiNapoli also said the audit's results are resources for local government officials to use in effectively managing operations and in meeting the expectations of constituents.
The city's DLDC setup seems to be part of the problem as some officials serve as board members due to their positions in city government while the rest are appointed by the mayor. The director of development and the CDBG coordinator performed the day-to-day operations of the DLDC, according to the audit.
The audit covered the period from April 1, 2008, through June 13, 2012, and stated council has the responsibility to initiate corrective action and report on their efforts within 90 days.
The audit found fault with both the mayor and council for not properly monitoring the program. The DLDC would get CDBG funds after a request from the development director, which was then approved by the city treasurer, mayor and fiscal affairs officer.
A lack of periodic status and expense reports was also cited with the audit stating council requested neither.
The audit found city officials provided the DLDC with over $888,000 in CDBG grant moneys to fund various economic development projects.
Ineligible activities that did not meet one of three national objectives: benefiting low and moderate income persons, preventing or eliminating slums or blight and meeting urgent community needs, were cited. Federal regulations specifically identify several activities as ineligible, such as general government operation expenses and political activities. Additionally, purchases of equipment and motor vehicles are generally considered ineligible activities.
According to the audit, city officials used $41,000 to purchase four pieces of equipment, including a dump truck, two utility vehicles, outdoor cinema equipment and an undercover police car.
It is alleged the payments were made in a manner to hide the fact they were going for non-eligible items.
A revolving loan fund to assist local business also came under fire.
Loans made to the Clarion Hotel also were in the auditor's sights.
The loan terms were altered to provide the hotel a $175,000 loan over a 20-year repayment period with a $50,000 performance incentive if certain conditions were met.
The audit included recommendations for council, including establishing formal procedures to monitor the performance and administration of the CDBG program and having a written agreement with the DLDC establishing responsibilities of both parties.
It was also recommended that council authorize all transfers of CDBG funds to the DLDC and to ensure that the DLDC has effective control procedures in place to adequately safeguard grant moneys.
Updating files, sufficient documentation, looking into the possibility of recovering funds alleged to have been improperly disbursed and establishing formal procedures for selecting grant recipients through an open process were also recommended.
The methods and standards used are also contained in the audit. In addition to examining appropriate and available documentation, auditors also "interviewed appropriate city and DLDC officials and personnel to determine how the council monitored the CDBG program and the DLDC's activities."