An audit released Tuesday by New York State Comptroller Thomas DiNapoli's office cited City of Dunkirk shortcomings in its Community Development Block Grant program. The Dunkirk Local Development Corporation was prominently featured as part of the problem, along with a lack of Common Council oversight.
Mayor Anthony J. Dolce and Development Director Steve Neratko provided the OBSERVER with some of their thoughts on the report.
"Basically, we agree with the report and we're working, and have been working, to address the findings," Dolce said.
A big criticism in the audit was a lack of available records, something both Dolce and Neratko have been talking about for months. They were asked if former development director Kory Ahlstrom or former mayor Richard Frey had been asked for help with the records.
"There were a few conversations. We had some emails go back and forth just regarding certain projects more than anything else," Neratko replied. "Obviously, (CDBG Coordinator Tim Gornikiewicz is still) here. He was involved. He was involved in a lot of conversations with the auditor."
The audit stated city taxpayers could have to replace some funds alleged to be missing.
"They haven't indicated any amounts that HUD would be looking to recoup," Dolce said. "Our main thing is that there's a few loans out there that we need to make sure are being repaid back to the DLDC, so then we can redistribute through other loans."
The officials were asked if the auditors got everything they needed.
"Everything we had we gave them. She spoke with basically everyone she needed to in City Hall. She reached out to other individuals who are no longer here," Neratko replied. "I think their point is there may have been some loose definitions of plans, but still this amount of time in, there hasn't been any plans."
The audit took council to task for its lack of oversight during the period. Dolce, who served for some eight years on council before being elected mayor, was asked about that audit statement.
"I keep asking myself what questions could I have asked that would have led us to the answers to look at how all this money was improperly spent and the lack of documentation. How do we know what's being done when the documents aren't being produced," he replied. "It also repeatedly states throughout the audit that there is an intent to conceal. When you have an intent to conceal you're going to do everything you can to keep council and the public in the dark about what you're doing.
"For example, if you're going to spend $150,000 on a parking lot, chances are you're not going to have a purchase order or a resolution authorizing that. They did not. It also mentions in here five people who did approve those items. Council wasn't one of them."
At one point as a councilman Dolce was on the DLDC board.
"That stuff didn't go through the DLDC board. A couple things it did mention that the DLDC spent more than what was approved. One was for $100,000 that the DLDC approved, they gave $125,000," he stated. "So you could see they're very cavalier in how this money was being spent or being distributed."
The city has yet to spend CDBG money this year through the DLDC due to the need for fixing things, according to Neratko.
"We've been working with Harry Sicherman Associates. This is the reason we hired them - because we knew there were issues and we wanted to clean them up," he explained.
Outstanding DLDC loans are a big concern.
"We're still looking through the report and working with state and federal agencies trying to figure out what's the best way to go forward," Neratko said. "Right now, basically everything's on the table in regard to trying to recoup these funds."
Dolce added the city has been in discussions with HUD officials since the beginning of the year.
"They see that we're progressing. They definitely want resolution on a couple of these things sooner rather than later, but they see we're progressing," he stated. "Again, it's all about a plan on how to proceed from here. We have the report, now it's up to us to proceed correctly."
Both Ahlstrom and Frey were contacted for their thoughts on the audit. While Frey said he had yet to see the audit, Ahlstrom took issue with parts of the report. He said he was contacted by the auditor on one issue concerning a check.
"There was documentation ... she acknowledged everything matched," he stated. "That's the way the bank had us do it."
Ahlstrom said he operated under the rules as he knew them. He took objection to the audit stating the lack of a national objective being met with the purchase of the Bertges and Flickinger Building properties.
"At the time we purchased both properties there were development plans in place that met national objectives. The building on Washington Avenue was an old blighted structure and one of the national objectives is to fight blight," he explained. "The other building, there was a development plan, an RFP, drawings and the whole bit on doing a mixed-use property, a significant portion of which was going to be another retail incubator. Creating jobs for low to moderate income individuals is a national objective. I know things have changed since then, but plans were definitely in place at the time of purchase and acquisition."
Ahlstrom said all his travel was properly approved, including three trips to conferences where HUD was a presenter.
"Reports were given back to the mayor and other folks and frankly we used some of that knowledge and networking to get some of these projects going," he stated. "I don't think it was properly characterized as unapproved. It was approved per the travel guidelines in place at the time."
Ahlstrom explained alleged bonus payments were set up that way on the advice of the DLDC's legal counsel at the time. The payments were viewed as stipends for work done on festivals and events and when working onsite at DLDC properties.
"I think there are inherent challenges anytime there is a complete change in administrations and goals and projects. I think it was probably very difficult, both for the auditors and the people involved at City Hall, to have some of the institutional knowledge that typically would be had at one of these audits," he stated. "I can tell you this, there aren't any loans without notes signed on them. If there are, somebody else got rid of them and that's all I'll say about that."
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