KNEC & 50 other Newburgh nonprofits lose status

The Kingston Newburgh Enterprise Corporation has had its nonprofit status revoked, along with 50 other nonprofits listed with an address in Newburgh, NY.  The IRS has published the full list by state here.  I have extracted the Newburgh nonprofits onto this document.

It’s a bit of a surprise to hear KNEC has lost its nonprofit status because in previous discussions, there appeared to be only the leftover funds (and loan portfolios) from a defunct governmental agency, to be used at the discretion of the respective cities (Kingston and Newburgh each receiving separate amounts.)

The nonprofits have had their tax-exempt status revoked because of failure to file an annual return for three years.  From Guidestar:

The Pension Protection Act of 2006 requires the IRS to revoke the tax exemption of any nonprofit that is required to file an annual return (Form 990, 990-N, 990-EZ, or 990-PF) but has failed to do so for three consecutive years.

Revocations are mandatory and automatic under the law.

Conversations with HUD

In answer to a Freedom of Information Act request to the New York office of the U.S. Department of Housing and Urban Development made December 21, 2010 and answered February 3, 2011 asking for “Correspondence including emails, faxes, letters, or notes from phone calls with any elected officials, their staff or representatives regarding the Kingston Newburgh Enterprise Corporation (“KNEC.”) from January 2010 to the present.”  An update regarding HUD is scheduled for the City Council work session Thursday evening, February 10, 2011.

* * * * * * * * * * KNEC FUNDING ELIGIBILITY * * * * * * * * * *

From: Lynch, Edward

Sent: Sunday, December 12, 2010 6:48 PM

To: Hom, Vincent

Subject: KNEC FUNDING ELIGIBILITY

Vince,

I know that various individuals from Newburgh have been trying to get through to you to get a written clarification of eligibility of using KNEC funds for the hiring and training center proposed by Community Voices Heard and others. For your information, I am attaching an analysis done by our Corporation Counsel (you met Bernis during your visit). The City Manager recently forwarded that analysis to the City council. In part her analsyis came from an earlier invetigation done by the Comptroller….Christine Mitchell. However I believe your office should arrive at its own independent conclusion based on your own analysis.

I have spoken with the director of the Orange County One Stop training and employment center located in Newburgh, in close proximity to City Hall. I can give you his name and number if you want to speak to him. He told me that he does not support the creation of another competing center. His counterpart in Westchester County also told me and Professor John Nolan of Pace University that he thought a second center would be problematic and dissipate resources. But Community Voices Heard has its own agenda and interest in a new Hiring and Training Center. A letter of clarification from you as to the eligibility of KNEC funds for this purpose would be appreciated. Thanks

From: Herbek, Richard
Sent: Sun 12/12/2010 2:58 PM
To: Lynch, Edward; Nelson, Bernis; Hadley, Dwight; Kain, Courtney; City Council
Cc: Evans, Elizabeth; Kelson, Michelle
Subject: RE: KNEC FUNDING ELIGIBILITY

All, I am sharing this analysis with the City Council.

Rick

From: Lynch, Edward
Sent: Thu 12/9/2010 2:56 PM
To: Nelson, Bernis; Herbek, Richard; Hadley, Dwight; Kain, Courtney
Cc: Evans, Elizabeth; Kelson, Michelle
Subject: RE: KNEC FUNDING ELIGIBILITY

Has this been shared with City Council? This is a good analysis.

Edward Lynch, AICP

Director of Planning and Development

City of Newburgh

83 Broadway

Newburgh, New York 12550

Tel: 845 569-9400 Ext. 202

Fax: 845 569-9700

E-mail:

From: Nelson, Bernis
Sent: Thursday, December 09, 2010 2:28 PM
To: Herbek, Richard; Hadley, Dwight; Lynch, Edward; Kain, Courtney
Cc: Evans, Elizabeth; Kelson, Michelle
Subject: KNEC FUNDING ELIGIBILITY

Rick, Dwight, Ed, and Courtney,

Copied below is my e-mail of June 22nd analyzing the KNEC funds. As stated therein, I would recommend that absent HUD written determination that KNEC funds can be used for other purposes such as a job training center, that use of these funds be restricted to creation of a revolving loan program, with new loans to be underwritten only in accordance with the original KNEC purposes of job creation, job retention, and small business development in the City, and that repayment on such loans be secured by mortgage instruments with adequate overall loan to value ratio.

Bernis

From: Nelson, Bernis
Sent: Tuesday, June 22, 2010 8:35 PM
To: Mitchell, Christine; Kain, Courtney
Cc: Herbek, Richard; Hadley, Dwight
Subject: Kingston-Newburgh Enterprise Corporation (KNEC) Funds

Christine and Courtney,

I have reviewed the pertinent files from the Departments of Finance and Law and the New York State Department of State Division of Corporations website, and find as follows regarding the loan repayment funds remaining with the City and the City of Newburgh Industrial Development Agency (IDA) from the Kingston-Newburgh Enterprise Corporation (KNEC):

1. The Division of Corporations website states that KNEC was incorporated as a not-for-profit local development corporation on March 24, 1995 and that it is still active.

2. Note 1 of the 1997 Financial Statements for KNEC stated that it was formed to “…plan, promote and coordinate programs in the cities of Kingston, New York and Newburgh, New York directed towards promoting additional employment, industrial development, relief of the poor and lessening the burdens of government.” We do not have a copy of the certificate of incorporation for KNEC, but we can assume this language was drawn from such certificate.

3. Note 1 of the 1997 Financial Statements also stated that KNEC received 501(c)(3) tax exempt status from the IRS.

4. Note 2 of the 1997 Financial Statements stated that “(t)emporarily restricted net assets are available for the one stop capital shop program. This program is for the development of small business enterprises, providing entrepreneurial training, counseling and financing guidance to the enterprise zone. The amount available is an advance received from Federal and State agencies to establish the program. The program began in January, 1998. Permanently restricted net assets consist of a revolving loan program. Recipients must show a reasonable benefit in the form of job creation or retention for residents of the enterprise zone. The Board awards the loan based primarily on the intended use of funds, as well as the ability to payback. The Corporation receives the funding for these loans through Federal and State agencies. The interest and principal from existing loans are used to provide future awarded loans.” (emphases supplied)

5. Resolution No. 195-2001 stated that “…repayment funds shall be dedicated to support activities consistent with KNEC’s mission to promote small business development for Enterprise Community (EC) Zone businesses or commercial enterprises or activities that benefit EC Zone residents, through a revolving loan program…and…the loan funds utilized by KNEC originated from a grant from Social Security Block Grant funds and New York State Empire Development Corporation….” (emphasis supplied)

6. Resolution No. 106-2003 stated that on March 12, 2001, KNEC “…transfer(red) to the City of Newburgh certain loan accounts…”. Such Resolution directed the City Manager and City Comptroller “…to take possession of all documentation of said loans, and custody of all such funds and records that all repayments of said loans shall hereafter be directed to the City of Newburgh…”; and such Resolution further authorized the City Manager and Corporation Counsel to “…negotiate an agreement to administer a new revolving loan fund program subject to the final approval of any such agreement by the Council.” (emphasis supplied)

7. Resolution No. 52-2009 referenced the authorization for establishment of a revolving loan fund in Resolution No. 106-2003, and authorized a transfer of $300,000 of “…KNEC funds to the City IDA (City of Newburgh Industrial Development Agency) to be loaned to LNA (Leyland Newburgh Associates, LLC) exclusively for the purposes of said Project (the East Parmenter Street Project). Neither the resulting agreement between the City and IDA for transfer of such $300,000 to the IDA nor the mortgage instrument between the IDA and LNA contain any provisions for repayment of such funds to the City on the IDA’s receipt of loan repayments from LNA.

In view of the foregoing, I would recommend as follows:

a) The City, by resolution, adopt rules and regulations for the establishment of a City revolving loan program using the remaining balances in the KNEC accounts together with any other loan repayments still due to KNEC. Such rules and regulations should include language that new loans shall be underwritten only in accordance with the original KNEC purposes of job creation, job retention, and small business development in the City, and that repayment on such loans shall be secured by mortgage instruments with adequate overall loan to value ratio; and.

b) The IDA, by resolution and recorded assignment of mortgage, assign the $300,000 Note and Mortgage from LNA back to the City, with all repayments on such loan to be deposited back into the afore-mentioned City revolving loan program.

As in Opinion of the State Comptroller, 1987 No. 87-9, where the State Comptroller held that “…UDAG monies retain their identity as federal money…,” even after they have been loaned out to private parties, the City revolving loan program would not violate the unconstitutional loan provisions set forth in Article VIII, Section 1 of the New York Constitution, because the original purposes under which KNEC received its grants from the Federal and State governments, for job creation, job retention, and small business development in the City, will be carried forward under the purposes of the City revolving loan program

Bernis

* * * * * * * * * * NEWBURGH VISIT * * * * * * * * * *

From:                                         Lynch, Edward
Sent:                                           Monday, December 13, 2010 12:50 PM
To:                                               Hom, Vincent; Kain, Courtney
Cc:                                               Velez, Lucille; Andreo, Nicholas J
Subject:                                     RE: Newburgh Visit

Thanks Vince:

I see Latasha N. Abney’s  comment.    I assume that “asset” is capital as well as real estate when talking about the KNEC .  Correct?

Edward Lynch, AICP
Director of Planning and Development
City of Newburgh
83 Broadway
Newburgh, New York 12550
Tel:      845 569-9400 Ext. 202
Fax:     845 569-9700
E-mail:

From: Hom, Vincent  
Sent: Monday, December 13, 2010 12:36 PM
To: Lynch, Edward; Kain, Courtney
Cc: Velez, Lucille; Andreo, Nicholas J
Subject: Newburgh Visit
Importance: High

Courtney & Ed,

My apologies for being so tardy in providing follow up on our meeting at the end of October.

I appreciated your candor and the time invested to try to address the issues outstanding and to move forward.

Below is a list of issues we covered and our conclusions or additional comments based on the meeting.

Please take a look and get back to us with requested items, comments, or other information.

I will follow up with a call a little bit later today.

Vincent Hom
Director
Community Planning and Development
212.542.7428

Regarding the use of KNEC assets and funds – I obtained this ruling from

Latasha N. Abney
Social Services Program Specialist
Division of State Assistance
Office of Community Services
Administration for Children and Families
Tel: (202) 401-5324
Fax: (202) 401-5718
Email:

DISPOSITION OF ASSETS FINANCED WITH GRANT FUNDS:      
State grantee agencies are encouraged, to the extent allowed by State law and procedure, to enable the EZ/EC or CS lead entities to continue using any asset, including real property, that is acquired with the OCS EZ/EC SSBG grants and that it owns as of December 31, 2009, for the purposes consistent with the authorizing legislation.
It is anticipated that any asset, including real property that was financed in whole or in part with OCS EZ/EC SSBG funds but is owned by an organization other than the local EZ/EC or CS lead entity as of December 31, 2009, will remain the property of that organization and will remain available for purposes consistent with the authorizing legislation.

On the OIG Audit reports:

We resolved that we would likely never get sufficient documentation to support the eligibility of the questioned costs, and decided to pursue a different tack.  Identifying City-funded projects that could be accepted as CDBG eligible projects in payment for ineligible costs. We are confirming with OIG if this is acceptable to address these issues, and the City was identifying potential City funded projects that might qualify towards this “payment” alternative.

The City was also exploring additional uses to render the acquired property on Liberty Street an eligible CDBG expenditure,

On Section 108 Loan Guarantee:

We determined that the City only had to reserve a net amount sufficient to cover remaining payments on the Waterfront project, and could use the remainder for other eligible purposes provided it received authorization from HUD.  These uses could include prepayment of the Crystal Lake Section 108 notes, so that the City could achieve an interest expense savings.  Please transmit a formal request to HUD to prepay 100% (or less of the outstanding notes on that project, from excess waterfront litigation settlement proceeds) and we will forward for further action.)

On vacant lot abatement program

We confirmed that the project could be considered an eligible activity in a number of different ways, depending on ownership of the property.

On Section 3 Requirements

See the Department’s Section 3 resource page.

http://www.hud.gov/offices/fheo/section3/section3.cfm

Also attached are pdfs describing reporting requirements and contact persons in Washington DC.  Locally, Douglas Feeley is the Section 3 point of contact.  Mr. Feeley can be reached at ( 212 ) 542-7561.  Mr. Feeley advises that HUD records show no online reporting of Section 3 for 2009. If the report was submitted in hardcopy, it may not be reflected in HUD’s records.

On Technical Assistance and other Matters:

1)     Attached is the guidance from the IDIS Online.  Chapter 6 discusses Program Income and Revolving Loan Funds. It is a big manual, so please ask questions…..

2)     HOME Eligibility – PJs and HOME consortiums receiving direct HOME funding are not disqualified from having HOME projects funded through the State HOME program within their geographic territory.  Application for State HOME funding would be through NY State’s Housing Trust Fund Corporation, Unified Funding Round.  The 2011 competition recently opened….attached is their solicitation.

3)     We contacted you regarding submission of aggregated information on MBE/WBE for CDBG programs, and will confirm your status and be back in touch as needed.

* * * * * * * * * * NEWBURGH VISIT1 * * * * * * * * * *

From: Mejia, Karen

Sent: Wednesday, December 15, 2010 3:19 PM

To: Hom, Vincent

Subject: RE: Newburgh Visit

Many thanks for sharing the information Vincent.  If there is anything we can do to assist your efforts, please do not hesitate to contact me.

Best regards,

Karen

——————————————————————————

Karen Mejía | Deputy District Representative | Congressman Maurice D. Hinchey

16 James Street, City Hall, 3rd Floor, Middletown, NY 10940 | Tel: 845.344.3211 | Fax: 845.342.2070

Sign Up for Congressman Hinchey’s e-Newsletter!

The information contained in this message is the property of the United States Congress, is confidential, and is intended only for the use of the addressee. Unauthorized dissemination, distribution, or copying of this communication is strictly prohibited without the expressed permission of the sender. Violators are subject to all penalties as allowed by federal law. If you have received this communication in error, please delete it immediately.

From: Hom, Vincent
Sent: Tuesday, December 14, 2010 1:54 PM
To: Mejia, Karen
Subject: Fw: Newburgh Visit
Importance:High

From: Hom, Vincent
Sent: Tuesday, December 14, 2010 01:17 PM
To: ‘karen.mejias@mail.house.gov’
Subject: FW: Newburgh Visit

Karen,

This is the information and advice we provided to Newburgh following my call with you.

We need to get some follow through on our side regarding prepayment of the loan guarantee notes, and also confirmation on eligible uses of Enterprise Community assets, as well as some leads on financing the operations of an expanded employment/training center function they are trying to organize.

 

Vincent Hom

Director

Community Planning and Development

212.542.7428

From: Hom, Vincent
Sent: Monday, December 13, 2010 12:36 PM
To: ‘Lynch, Edward’; ‘Kain, Courtney’
Cc: Velez, Lucille; Andreo, Nicholas J
Subject: Newburgh Visit
Importance: High

Courtney & Ed,

My apologies for being so tardy in providing follow up on our meeting at the end of October.

I appreciated your candor and the time invested to try to address the issues outstanding and to move forward.

Below is a list of issues we covered and our conclusions or additional comments based on the meeting.

Please take a look and get back to us with requested items, comments, or other information.

I will follow up with a call a little bit later today.

Vincent Hom

Director

Community Planning and Development

212.542.7428

Regarding the use of KNEC assets and funds – I obtained this ruling from

Latasha N. Abney

Social Services Program Specialist

Division of State Assistance

Office of Community Services

Administration for Children and Families

Tel: (202) 401-5324

Fax: (202) 401-5718

Email:

DISPOSITION OF ASSETS FINANCED WITH GRANT FUNDS:
State grantee agencies are encouraged, to the extent allowed by State law and procedure, to enable the EZ/EC or CS lead entities to continue using any asset, including real property, that is acquired with the OCS EZ/EC SSBG grants and that it owns as of December 31, 2009, for the purposes consistent with the authorizing legislation.

It is anticipated that any asset, including real property that was financed in whole or in part with OCS EZ/EC SSBG funds but is owned by an organization other than the local EZ/EC or CS lead entity as of December 31, 2009, will remain the property of that organization and will remain available for purposes consistent with the authorizing legislation.

On the OIG Audit reports:

We resolved that we would likely never get sufficient documentation to support the eligibility of the questioned costs, and decided to pursue a different tack.  Identifying City-funded projects that could be accepted as CDBG eligible projects in payment for ineligible costs. We are confirming with OIG if this is acceptable to address these issues, and the City was identifying potential City funded projects that might qualify towards this “payment” alternative.

The City was also exploring additional uses to render the acquired property on Liberty Street an eligible CDBG expenditure,

On Section 108 Loan Guarantee:

 

We determined that the City only had to reserve a net amount sufficient to cover remaining payments on the Waterfront project, and could use the remainder for other eligible purposes provided it received authorization from HUD.  These uses could include prepayment of the Crystal Lake Section 108 notes, so that the City could achieve an interest expense savings.  Please transmit a formal request to HUD to prepay 100% (or less of the outstanding notes on that project, from excess waterfront litigation settlement proceeds) and we will forward for further action.)

On vacant lot abatement program

 

We confirmed that the project could be considered an eligible activity in a number of different ways, depending on ownership of the property.

On Section 3 Requirements

 

See the Department’s Section 3 resource page.

http://www.hud.gov/offices/fheo/section3/section3.cfm

 

Also attached are pdfs describing reporting requirements and contact persons in Washington DC.  Locally, Douglas Feeley is the Section 3 point of contact.  Mr. Feeley can be reached at ( 212 ) 542-7561.  Mr. Feeley advises that HUD records show no online reporting of Section 3 for 2009. If the report was submitted in hardcopy, it may not be reflected in HUD’s records.

On Technical Assistance and other Matters:

1)     Attached is the guidance from the IDIS Online.  Chapter 6 discusses Program Income and Revolving Loan Funds. It is a big manual, so please ask questions…..

 

2)     HOME Eligibility – PJs and HOME consortiums receiving direct HOME funding are not disqualified from having HOME projects funded through the State HOME program within their geographic territory.  Application for State HOME funding would be through NY State’s Housing Trust Fund Corporation, Unified Funding Round.  The 2011 competition recently opened….attached is their solicitation.

 

3)     We contacted you regarding submission of aggregated information on MBE/WBE for CDBG programs, and will confirm your status and be back in touch as needed.

* * * * * * * * * * Annual Audit as of 12/31/01 * * * * * * * * * *

From: Nelson, Bernis

Sent: Wednesday, January 12, 2011 2:48 PM

To: Lynch, Edward

Subject: KNEC Annual Audit As of 12/31/01

Attachments: 20110112133253703.pdf

—–Original Message—–
From: Nelson, Bernis
Sent: Wednesday, January 12, 2011 2:32 PM
To: Nelson, Bernis
Subject: KNEC Annual Audit As of 12/31/01

See Pages 6 and 10 regarding transfer of loan repayment funds and outstanding loans to cities of Newburgh and Kingston in 2001.

* * * * * * * * * * $300,000 to Leyland Newburgh Associates * * * * * * * * * *

From:                              Nelson, Bernis
Sent:                               Wednesday, January 12, 2011 2:52 PM
To:                                   Lynch, Edward
Subject:                          KNEC Loan Repayment Fund – August 2009 Transfer of $300,000 by City of Newburgh to City of Newburgh IDA and IDA’s Loan of $300,000 to Leyland Newburgh Associates LLC
Attachments:                 20110112144144691.pdf

—–Original Message—–
From: Nelson, Bernis
Sent: Wednesday, January 12, 2011 2:46 PM
To: Nelson, Bernis
Subject: KNEC Loan Repayment Fund – August 2009 Transfer of $300,000 by City of Newburgh to City of Newburgh IDA and IDA’s Loan of $300,000 to Leyland Newburgh Associates LLC

Enclosed are copies of Transfer Agreement between City and IDA and Note and Mortgage from Leyland Newburgh Associates LLC to IDA.

* * * * * * * * * * KNEC Loan Repayments as of 9/30/02 * * * * * * * * * *

From: Nelson, Bernis

Sent: Wednesday, January 12, 2011 2:51 PM

To: Lynch, Edward

Subject: KNEC Loan Repayments As Of 9/30/02

Attachments: 20110112133643304.pdf

—–Original Message—–
From: Nelson, Bernis
Sent: Wednesday, January 12, 2011 1:47 PM
To: Nelson, Bernis
Subject: KNEC Loan Repayments As Of 9/30/02

 

 

 

 

When Banks Say No, City Says Yes

This article was written as part of a collaboration with Understanding Government.

Newburgh, N.Y., October 16, 2008 — With the downturn in the economy, LeylandAlliance, Newburgh’s waterfront developer, has had a hard time getting the loan they wanted from banks for their East Parmenter Street Project.  LeylandAlliance is looking to build 24 homes downtown, including eight homes to be built together with Habitat for Humanity.  So the developer came before the Newburgh City Council to request a project construction loan from the city’s Kingston-Newburgh Enterprise Corporation (KNEC) funds.

“With what’s going on with the credit market now, the banks do not want to lend against speculative building,” said Lou Marquet, executive vice president of LeylandAlliance, to the City Council of Newburgh, NY at their meeting September 8.  “All we’re asking you to do is to help underwrite the financing of the infrastructure of this project.”

The council voted 3-2 to grant the $300,000 loan.

Some on the council were asking whether the city should be in the role of lending money to a developer when banks are reluctant.
Councilwoman Mary Ann Dickinson, who cast a dissenting vote, said she believed “we should be as fiscally responsible as we can, which means holding onto our money right now and not lending it out. The people that are asking us for money are people that are supposed to be having money, and so why are they coming to the city?”

Councilwoman Dickinson had made a motion to table the loan resolution, which would have allowed more time to review financial statements from the developer.  Her motion was voted down, 3-2.

Mayor Nick Valentine, who voted in the majority to fund the loan, said “on this one it’s not really a risk.  I sat on the KNEC board from its inception. We were the last resort for some businesses at the time, when banks maybe said no, we were the ones that were supposed to say yes.  And part of [Congressman] Maurice Hinchey’s philosophy was, help out some smaller businesses, they’re going to hire locally.”  Mayor Valentine noted that many businesses in Newburgh and Kingston have benefited from KNEC funding.

“I think it’s a good use of it, it’s used wisely, and certainly between Leyland and Habitat, I think the risk is very low,” the mayor said.  I think it’s something that will not only come to fruition, but will be a useful mechanism for our city to use in jumpstarting some projects.”

The LeylandAlliance is Newburgh’s chosen waterfront developer.  They are redeveloping approximately 30 acres of land along the Hudson River that was leveled by urban renewal efforts in the 1970s.

In addition to the waterfront project, Leyland is collaborating with Newburgh’s Habitat for Humanity on the East Parmenter Street development.  Of a total of 24 buildings, 8 will be Habitat homes and 16 will be workforce homes – homes available to anyone but designed with the goal of providing reasonably priced in-town housing for workers like policemen, firemen, teachers, and nurses. The $300,000 loan will go toward demolition and infrastructure costs for this project, at a 5% interest rate.

History of high-risk loans

These days, $300,000 is real money.  So where’s it coming from?  The Kingston-Newburgh Enterprise Community, the brainchild of Congressman Hinchey, who arranged for the designation in 1994.  Money came from Washington – the Department of Housing and Urban Development (HUD) – and from New York State, which targeted for $3 million for economic and community development projects in specific census tracts with high poverty rates.  Kingston gave tax breaks to the Head Trauma Center and built the Edward Hodge Community Center.  Newburgh built the Washington Heights Community Center.
Dan Marsh of the National Development Council helped write the initial application to HUD in 1994.  “Kingston and Newburgh got together because both of them independently probably wouldn’t have qualified.  It was successful.  It was designed to provide benefit [for] public service, social service, economic and community development.”

“The loan funds were designed as very high-risk loan funds,” Dan Marsh notes.  He called KNEC an attempt at “bold action to try to jumpstart some needed projects in the areas.  Quite honestly, I don’t know what ever happened to most of the loans.”

Department of Labor audit put funds on hold


But KNEC funds have a troubled history, and the corporation has been audited by the federal government.

KNEC received $1.9M in funding from the Department of Labor from 2001-2004 for job training programs.  In an audit from 2006, the Labor Department’s Office of the Inspector General found problems with ineligible program participants, or programs without participants at all, concluding with a request that $1.2 million be repaid to the Department of Labor.

“The problem was mostly factors of recordkeeping – programs of training for homeless people without addresses, or welfare recipients without sufficient credentials,” said Robert McKenna, Newburgh’s Economic Development Director.  McKenna stated that they have been negotiating with the Labor Department and that “all the questionable costs have been resolved.”

A spokesperson for the Department of Labor declined to comment, stating that the matter is under appeal by the auditee.

December of 2004 marked the end of the Enterprise Community designation, although KNEC had been disbanded two years earlier, when most of its funding had run out.  The remaining funds and loan portfolios, totaling about $500,000, were disbursed to the cities of Newburgh and Kingston to administer.
Newburgh hadn’t spent this money because of the ongoing Department of Labor audit, in the event that they would have to give some money back.

Leyland fits the criteria


Newburgh development director McKenna said that KNEC projects must meet the original criteria for the funds use: economic or community development within census tracts 4 and 5.  As a housing project, Leyland’s East Parmenter Street project appears to make the cut.

Asked to comment, LeylandAlliance’s executive vice president Lou Marquet said “The City of Newburgh is committed to the revitalization of neighborhoods and encouraging housing to meet the needs of people who live and work in the city. By providing funding to demolish existing residences that are beyond repair and install infrastructure and utilities for the new residences to be built, the City is demonstrating a vote of confidence for the East Parmenter Street project. The loan will be repaid as each homeowner takes ownership of their new home.”

According to McKenna, the loan will be paid back proportionally when Leyland sells each house.  Construction will be done in small groups of three to four homes, so they won’t go on the market all at once.  Construction is expected to start in spring of 2009.