The City of Newburgh issued a press release this morning announcing the appointment of Edward Lynch as the new Director of Planning and Development.  He will be taking over the post from Courtney Kain, who had served as Acting Director.

According to the press release (download here from the City of Newburgh site), Mr. Lynch comes to Newburgh after spending sixteen years with the Department of Development in New Rochelle, NY.

In New Rochelle, Lynch served under the Development Commissioner Craig King.  When the Development Commissioner position opened up following Mr. King’s leaving due to health reasons, and Mr. Lynch was not selected for the position, he tendered his resignation earlier this year.

Newburgh’s press release attributes New Rochelle’s development successes to Mr. Lynch:

The City has radically changed since then with mixed use transit oriented development downtown, including a 40 story Trump Condominium and a 1000 unit Avalon Bay residential development, a mixed use family entertainment center and significantly more commercial development. As Planning Director and Clerk to the Planning Board, Mr. Lynch obviously had a role in making a positive change.

But New Rochelle’s developments, attributed to Lynch or not, may not all be so rosy.

Trump Tower project lacks lessees; OSC audit critical

Talk of the Sound, a New Rochelle blog, reported on June 21 about a New York State Comptroller audit of the New Rochelle Industrial Development Agency due to be published this month.  The OSC audit portrays a lack of oversight.  Additionally, Talk of the Sound reports that in the case of the Trump Tower, developer Louis Capelli has failed to rent retail space:

The report goes on to state that NRIDA did not monitor the status of ongoing projects to ensure reasonable progress toward the projected benefits described in the original applications so the board cannot be sure the projects will meet their intended goals, or know when they should invoke “recapture” agreements to recover some or all of the benefits provided when projects fall short of their promised goals.

The Capelli organization is on the NRIDA agenda tomorrow, in part to seek extensions on its recapture agreement for Trump Tower which expired in December. A recapture agreement is a clause which allows the City to claim money if a project fails to meet some promise, in this case to lease the retail space at Trump Tower.

The Comptroller warns that when NRIDA officials do not properly monitor ongoing projects and invoke recapture agreements, as appropriate, there is an increased risk that other taxpayers are subsidizing the projects’ financial incentives without receiving the expected benefits to the community. This is precisely what has been occurring since 2009 with Trump Tower.

Read the full post here.

Trump Tower didn’t do much for jobs

Talk of the Sound also reports that the Trump Tower project, according to the Office of the State Comptroller, failed to create the jobs it promised:

The report notes that NRIDA projects have, overall, failed to provide promised job gains for New Rochelle. In particular, Parcel 1A (Trump Tower) was supposed to deliver 358 jobs but has, as of December 31, 2008, delivered just 98 for a net deficit of 260.

Newburgh: New Rochelle North?

Mr. Lynch is not the first New Rochelle expatriate to join the City of Newburgh.  Current Corporation Counsel Bernis Nelson served as New Rochelle Corporation Counsel for twelve years (then under the name Bernis Shapiro.)

The New York State Authorities Budget Office issued their 2010 Annual Report on Public Authorities today.  The full report is available from the ABO website.

Newburgh is trebly delinquent

All three of Newburgh’s public authorities made it onto the ABO’s “Public Authority Delinquent Lists” section beginning on page 24.

The offenders are the Newburgh Community Development Agency, the Newburgh Industrial Development Agency, and the City of Newburgh Local Development Corporation.

All three failed to submit “a 2010 Budget Report in PARIS as of June 15, 2010.”  PARIS is the Public Authorities Reporting Information System, a computer system for authorities to file reports online.

Additionally, all three failed to submit “a 2009 Annual Report in PARIS as of June 15, 2010.”

NCDA•NIDA•NLDC: What’s going on?

The NCDA (Newburgh Community Development Agency) was recently voted by the council/NCDA board to be dissolved, with their assets and liabilities  transferred to the City.  Such an action would require final approval by the state legislature.  As of yet, though, there has been no bill referring to the NCDA (the successor of the Newburgh Urban Renewal Agency) appearing in either the Assembly or the Senate.  Other municipalities, Corning and Rome, have similar requests pending legislative approval, but not Newburgh.

This makes corporation counsel Bernis Nelson’s rush to transfer the agency assets a bit enigmatic.  With no bill on the horizon, why the need for speed?

Nevertheless, with a semi-dissolved agency, with governance of its assets and liabilities transferred to the city planning department, it is understandable why the NCDA would have failed to file.

The NIDA (Newburgh Industrial Development Agency) – in contrast to the other two authorities – has been actively working to get its books in order, with a board that meets regularly and auditors hired to prepare their needed annual reports.  But, as of the July 1 ABO report, they had not met their filing requirements.

The NLDC (Newburgh Local Development Corporation) is the mystery authority.  Comprised of members of the council, NCDA, and NIDA, it has not met in recent years yet continues to do business vis a vis the planning department.  (That is, business other than filing annual reports required by the ABO.)

Will the NLDC be meeting the new requirements?

In addition to the budgets and annual reports that must be filed, the ABO’s report describes changes brought about by the Public Authorities Reform Act.  New requirements for public authorities include (from page 2):

• Effective March 1, 2010 the directors of state and local public authorities, and their official designees, are required to sign an Acknowledgment of Fiduciary Duty. The purpose of this requirement is to focus board members on their legal obligations, including understanding that these duties are the means by which the board carries out the mission of the authority (See Policy Guidance 10-01 available on the ABO’s website: www.abo.state.ny.us).

• By March 31, 2010 state authority boards of directors, in cooperation with the management of the authority, were to review and consider the intended purpose for which the authority was created and to file with the Authorities Budget Office a statement defining that mission and the measures the authority would use to evaluate annually its performance against that mission. Local authorities are required to file a mission statement and performance measures by March 31, 2011 (see Policy Guidance 10-02 on the ABO web site for additional information).

• Each board is now required to perform an annual self-evaluation of its performance, measured against the authority’s mission statement, the authority’s goals and values, and the expectations of those served by the authority and the state as a whole.

• The boards of public authorities that issue debt are now required to establish a finance committee to review the authority’s proposed debt issuances; to make recommendations to the full board concerning the nature and appropriate level of the authority’s debt; and to make recommendations to the board concerning the appointment and compensation of bond counsels, investment advisors and underwriting firms.

Since the NLDC has not even met as a board, despite efforts by the NIDA to initiate such a meeting, makes it doubtful that the NLDC is compliant at this time.

Leave your suggestions as a comment…

9.17.09 Update:

Most commenters (what a wise, wonderful, bright bunch you are!) caught the Economic Development/Planning Department omission.  I think this is the cause of some of the more serious conflicts and confusions over recent years on the council (and in other areas) because agencies have been operating with minimal to no supervision or, in some cases, no awareness of their own existence (as in the recent example of the Newburgh Community Development Agency or the Newburgh Local Development Corporation).

Since E.D./Planning was funded from, as I understand it, a combination of Newburgh Industrial Development Agency money and NCDA money, at a time when the boards of those two agencies were principally council members, it was one-stop shopping to do business in Newburgh.  The two agencies even shared offices and a “received” correspondence stamp: NIDA/NCDA, documents will show, or you can see it on even fairly recent letterhead of RFP or RFQ documents.

The problem with all this is the absence of any kind of hierarchy of authority. With no chain of command, no boss or board to answer to, no department head or manager checking the time cards at the end of the day (time cards that apparently couldn’t be conveniently coughed up when the Department of Housing and Urban Development asked to see them, so Mr. Emberger pinned the tail on the NIDA’s donkey to foot the bill); not to mention the foibles of former economic development administrative directors Robert McKenna as well as his replacement Lourdes Zapata, Mr. McKenna in particular who has been vigorously and repeatedly thrown under multiple buses so many times by those left in City Hall it is a miracle he has any flesh left, even in effigy.

When it stopped: it was after 2005 that the City Council ceased passing resolutions appointing members of the NCDA.  Oddly enough, in 2005 there was the passage of the Public Authority Accountability Act, and perhaps, just perhaps, somewhere in City Hall this attracted some notice.

DiNapoli’s Office: No problem hereRecently, I checked with the Office of the State Comptroller as to whether there was any problem according to state law with the city acting on behalf of the NCDA without the agency’s knowledge.  Jennifer Freeman responded at length, citing General Municipal Law § 503-a:

§  503-a.  Cooperation  with  agencies.  For  the purpose of aiding an agency established pursuant to the provisions of  article  fifteen-A  of this chapter a municipality may:
1. Delegate to such agency such of its powers enumerated under section five hundred three of this article as it may deem appropriate, necessary or  desirable  to effectuate the purposes and provisions of this article and as are not inconsistent with the powers reserved  to  the  governing body or the commission under this article or the powers granted to such agencies in article fifteen-A of this chapter.

Ms.Freeman continues her citation, but the gist is that in this case, it looks like the City has the okay from the Comptroller to act for the NCDA.

But what if it wasn’t the city that was acting? What if, as a hypothetical example, it was a small group of individuals operating in abeyance of open government, including, as a purely fictional example, the mayor, the corporation counsel, the former acting city manager, and possibly an additional city council member?

Back to reality… At any rate, the organizational chart needs to be redrawn.  ALL of the suggestions mentioned by commenters below should be incorporated, and additional suggestions should be solicited, perhaps at a city council meeting and additionally at a public location such as the Newburgh Free Library.  It is only with a clear understanding of how such decisions get made that we can rest assured that our tax dollars are going to the right places.

Acting City Manager and City Comptroller Charles Emberger, Corporation Counsel Geoffrey Chanin, Acting Director of Planning and Development Courtney Kain, NIDA member Jerry Maldonado, NIDA Treasurer Michael Curry, and NIDA Acting Chair and Vice Chair Joshua Smith.

On Thursday, August 13, the Newburgh Industrial Development Agency (NIDA) gave a presentation at a special work session of the Newburgh City Council.  Acting Chair and Vice Chair Joshua Smith spoke for the NIDA, describing the many struggles and setbacks that have stymied the agency since the new board’s appointment in 2008.

A brief history of NIDA 2008-2009

Previously the city council and two additional appointees made up the NIDA.  Due to the passage of the  New York State Public Authority Accountability Act of 2005, the council could no longer legally make up a majority of the board.  Back at the May 2008 city council meeting Mayor Valentine states that new NIDA board members will be announced in June.

But no June announcement was forthcoming.  And on July 15, 2008, a quorum from the old  NIDA meets for one last time, and awards what appears to be a no-bid contract to Urban Design Associates with a ceiling of $50,000.  At this last meeting the then NIDA Administrative Director Robert McKenna also gives quite an optimistic update on the West Street Medical Tech Project, which is the project currently under scrutiny due to the potential partial or total loss of a $1.75 million grant from the Economic Development Administration, part of the Department of Commerce.

Finally, at the July 21, 2008 council meeting, the board is appointed.  But it is not until September 2, 2008, that the new board convenes.  At that meeting, Smith told the council last night, “we did something new for the IDA…  We turned the microphones on, so that the public could hear what was going on.”

NIDA board members continue to meet, often more than once a month, including September 15, 2008, September 29, 2008, October 20, 2008, throughout the fall and into the present. McKenna announces he will retire on December 18, 2008.  The day before he retires, he writes a check from the NIDA checking account, unbeknownst to the board, for $388,825.97.

Lourdes Perez takes over as administrator following McKenna’s retirement.  At the January 5, 2009 meeting, the board passes a unanimous call asking for a state audit of the NIDA.  At the January 16 meeting, the board recounts how they learned that NIDA is a “delinquent” agency that failed to file financial reports, that the treasurer had been unable to ascertain how much money was in the agency’s bank accounts, and that the accounting situation is “an embarrassment and an outrage.”  They pass resolutions to freeze account access and limit disbursement authority to the board.

The HUD audit and stealth government

The Department of Housing and Urban Development (HUD) issued audit 2009-NY-1008 on February 24, 2009 investigating how the City of Newburgh administered its Community Development Block Grant (CDBG) program.  HUD charges that “the City lacked documentation to show that $558,344 in CDBG funds used to pay for administrative costs was for reasonable and necessary expenditures.”

On January 28, 2008, the acting city manager John Platt responds to the draft of the HUD audit.  Copied on the letter are the City of Newburgh Council, Corporation Counsel Geoffrey Chanin, and Lourdes Zapata, Director of Planning and Development at the city.  Platt writes that

The majority of any unsupported expenditures for administrative costs have already been reimbursed.  The IDA reimbursed the CDBG program $388,825.97 on December 18, 2008 upon completion of an internal review of applicable/reimbursable costs…

As to the remaining balance, we are currently reviewing our internal records and will document that such funds were properly expended.  We will determine whether any journal entries or other records were recorded in error.

The NIDA board had no idea that this had happened and had not authorized the transfer.  On March 31, Vice-Chairman Joshua Smith writes to Zapata, City Comptroller Charles Emberger, and Acting City Manager Dwight Douglas, stating

This transfer of IDA funds was accomplished without the knowledge, consent or approval of the IDA Board.  On behalf of the IDA Board I thus demand that Ms. Zapata promptly, and no later than Friday, April 10, 2009, restore to the IDA account the full amount of $388,825.97 that had been withdrawn without the Board’s knowledge, consent or approval.

When the city fails to return the funds by the specified date, NIDA files suit against the city manager, city comptroller, and city planning director on May 6 to demand that they do so.

NCDA questions bring strange segue

In April of 2009, I was researching the Newburgh Community Development Agency (NCDA), and discovered that a personal injury suit had recently been filed against the NCDA by Elaine and Hector Lopez.  Ultimately I would write about this suit in the post “Who is negotiating with Ms. Lopez?” on May 7.  In preparing to write about the NCDA, following the conclusion of the April 27 council meeting I ask Mayor Nick Valentine when he thinks the agency last had met.  According to state law, the NCDA is made up of the city council.  Mayor Valentine states that he thinks it was about two years ago, to handle a property deal.  He then segues into talking about the NIDA.

“We screwed the IDA,” he says, “we didn’t give them their $418,000 for the Broadway School… They could sue… But they’re not going to sue, because we appointed [them],” and, he explains, they’d just get rid of them, appointing a new board.

Mayor Valentine’s memory is slightly off on the Broadway School amount.  At the September 4, 2008 work session, then City Manger JeanAnn McGrane gives the council a presentation on options to reduce the cost of the courthouse bond, including “nonrepayment of IDA loan $511,701.”  On her powerpoint slide and in the video, Ms. McGrane clearly states that IDA approval would be needed to forgive the loan.  That approval is never sought.

Mayor Valentine confirms with Corporation Counsel Geoffrey Chanin at a May 21, 2009 work session (at the end of this video, and also below) that the Newburgh Industrial Development Agency Board serves at the pleasure of the city council, and that “there are no time limits.”  The NIDA suit predates this inquiry by two weeks.  The NIDA board serves at the council’s pleasure… or not.

What about the NCDA?

Following the publication of the post “Who is negotiating with Ms. Lopez?” on May 7, the city council discusses the NCDA and, to some extent, the NIDA and the Newburgh Local Development Corporation (NLDC) at two work sessions, on the above mentioned May 21 and also June 18 meetings.  At these sessions, the council majority of Bell, Bello, and Dickinson express reluctance to take on the governing of an additional body on top of their council duties. On June 18 Councilwoman Bello asks whether the NIDA could take over the NCDA, since the Authority Accountability Act requires training and strict reporting of financial information, requirements that the NIDA board fully understands to which it is “working diligently” toward compliance.  Interim City Manager Dwight Douglas dismisses this idea, and Mayor Nick Valentine says, “I don’t care what it’s from, we’re in a lawsuit,” and bursts into laughter, to the dismay of Councilwoman Marge Bell.

June 18 part 1:
[video deleted]

June 18 part 2:
[video deleted]

In this excerpt, Councilwoman Christine Bello states her preference not to be a part of the NCDA. Interim City Manager Dwight Douglas tries to explain how the city council is already conducting NCDA business, unbeknownst to them, and suggests that he and corporation counsel Geoffrey Chanin will look into what the implications are of this and report back to the council. “I feel chastened,” Douglas says, that he hasn’t done that research already for the council.

May 21 part 1:
[video deleted]

May 21 part 2:
[video deleted]

Why wasn’t the risk explained to the city council?

Watching these meetings, I could not understand why Corporation Counsel Geoffrey Chanin did not emphasize the necessity of responding to the personal injury lawsuit filed by Elaine and Hector Lopez.  If the council did not take action and, at a minimum, hold one meeting as the NCDA to authorize the hiring of legal counsel to represent the agency in this case, they would be at risk of a default judgment.  At one point during these discussions, Councilwoman Bello expresses her extreme reluctance to take on the NCDA, but says if she really must, she will.  But Douglas and Chanin humor the council’s request for more time and more information, and say they will get back to them.

The workaround

Conveniently, four days after the June 18 work session, on June 22, things get much easier for Corporation Counsel Geoffery Chanin.  The attorney for the Lopezes, Peter C. McMahon, files a “supplemental summons” listing the City of Newburgh as a co-defendant along with the NCDA.  In this document, McMahon writes almost duplicate statements implicating the city along with the NCDA:

4. Upon information and belief, and at all times hereinafter mentioned, the Defendant, NEWBURGH COMMUNITY DEVELOPMENT AGENCY, owned the lot and/or parking lot at Section 12, Block 6, Lot 5, Newburgh, County of Orange, State of New York.

5. Upon information and belief, and at all times hereinafter mentioned, the Defendant, CITY OF NEWBURGH, owned the lot and/or parking lot at Section 12, Block 6, Lot 5, Newburgh, County of Orange, State of New York.

6. Upon information and belief, and at all times hereinafter mentioned, the Defendant, NEWBURGH COMMUNITY DEVELOPMENT AGENCY, maintained the lot and/or parking lot located at Section 12, Block 6, Lot 5, Newburgh, County of Orange, State of New York.

7. Upon informition and belief, and at all times hereinafter mentioned, the Defendant, CITY OF NEWBURGH, maintained the lot and/or parking lot located at Section 12, Block 6, Lot 5, Newburgh, County of Orange, State of New York.

8. Upon information and belief, and at all times hereinafter mentioned, the Defendant, NEWBURGH COMMUNITY DEVELOPMENT AGENCY, controlled the lot and/or parking lot located at Section 12, Block 6, Lot 5, Newburgh, County of Orange, State of New York.

9. Upon information and belief, and at all times hereinafter mentioned, the Defendant, CITY OF NEWBURGH, controlled the lot and/or parking lot located at Section 12, Block 6, Lot 5, Newburgh, County of Orange, State of New York.

On July 29, attorney Michael E. Catania from the firm Tarshis, Catania, Liberth, Mahon & Milligram files a request for judicial intervention on this suit, signing as “Attorneys for Defendant CITY OF NEWBURGH.”

And, at the August 10 city council meeting, under the “communications” portion of the meeting, the council votes and approves unanimously referring this suit (among many others) to the corporation counsel for action.  Did any of them even realize this was the same NCDA suit that necessitated the earlier work session discussions?

Even Mr. Chanin’s memory seems a little fuzzy.

“I noticed that the Lopez suit, Elaine and Hector, was referred… they were originally suing NCDA?” I ask him.

“Ok, it’s not registering, but keep talking.”

“Ok, I just noticed that it was referred…”

“All claims are referred to the corporation counsel to the power to act because technically, under the charter…” he goes on.

“If the Community Development Agency is listed as a party, do they still have to reply?”

No answer.

“You had explained to me earlier, that if somebody sues the CDA, they have to hold a meeting and appoint somebody to respond.”

“In the absence of the CDA… You can’t just not show up… when you get a notice of claim, if it’s against any city agency, whether it’s the NCDA or the IDA or some other [entity]… if they have not formally met to act, it’s incumbent on me to defend the city… at least until they decide to meet, and make another decision.”

No NCDA, but that doesn’t stop them from collecting debt

The same day things get easier for Mr. Chanin, the city comptroller Charles Emberger decides things would not get any easier for NIDA.  On June 22, Mr. Emberger writes a letter of demand to the NIDA.  They need to pay $169,518 to the Newburgh Community Development Agency – that’s right, the same agency that has no board members, no administrative director, and, according to the July 2009 Annual Report on Public Authorities in New York State issued by the Authority Budget Office, has not submitted either budget reports or annual reports in PARIS, the required state filing method.

Emberger sends his letter to the NIDA:

To back up his claim, Mr. Emberger includes the first two pages of the June 15 letter from HUD’s New York office, from Vincent Hom, the Director of Community Planning and Development.  Mr. Hom writes at the top of page 2 that (emphasis mine)

The Office of Inspector General stated in the report that documentation provided by the City during the January 2009 exit conference to demonstrate that the $388,825.97 was reimbursed to the CDBG Program was found to be acceptable.  After review of the documentation, we agree in that assessment.  In order to resolve this recommendation, the City must submit evidence that overall receivables from the IDA to the CDBG Program including the $388,826 have been reduced in the City’s records and supply documentation for the remaining balance of $169,518 which clearly indicates that these costs were for eligible CDBG administrative expenses; or repay ineligible or inadequately documented costs from non-federal funds. The City shall arrange to submit additional documentation or have materials available for examination within 45 days of the date of this letter.

Despite the city’s claim in their January 28 letter to HUD, included in the February 24, 2009 Audit, that

As to the remaining balance, we are currently reviewing our internal records and will document that such funds were properly expended.  We will determine whether any journal entries or other records were recorded in error.

…for whatever reason, that documentation must not have been forthcoming, since Mr. Emberger sends the bill to the NIDA.

What are the consequences?

I ask the New York State Authority Budget Office, to whom agencies such as the NCDA and the NIDA–as well as the Newburgh Local Development Corporation–must file financial reports, if there are any consequences to the NCDA failing to file or meet as a board.  Matt Anderson replied, stating:

The ABO does not have statutory authority to compel reporting or to require the board to meet on a regular basis.

I also ask if an agency is not being administered by its board or an officially appointed administrative director, could the city manager and/or the city comptroller act on the agency’s behalf?  Mr. Anderson replied (emphasis mine):

We do not believe that a city employee can act in place of the board without the specific authorization of the board. It is our understanding that the Office of the State Comptroller has issued opinions that appear to conclude that only the agency can appoint personnel and this power cannot be delegated to officers or employees of the agency.  I suggest speaking with the Office of the State Comptroller for further information on this issue.

The Office of the State Comptroller did not provide an answer to repeated requests for comment on this issue.

What about HUD?

I ask HUD’s New York office if it matters to them that the NCDA is not filing financial reports and without an active board.  Newburgh annually receives HUD money in the form of CDBG funds, and those funds have been administered, as far as I can tell, by the NCDA (whether the council is cognizant of that or not.)

Adam Glantz answers that there is no requirement that the CDBG funds be administered by the NCDA; “the eligible applicant is the City of Newburgh,” and were the NCDA to somehow be dissolved, the city could apply directly.

Does HUD have any problems granting CDBG moneys to an agency that has no officially appointed director and is not acting in accordance with the authority requirements of New York State?

Mr. Glantz says no.  “HUD regulations allow that the chief executive to designate a public agency to administer and monitor its programs,” he writes, “HUD regulations only require only that an agency have “continuing capacity” to carry out the program activities in a timely manner.”

NIDA auditors stymied

NIDA board members were kept in the dark about the $388K check for the HUD audit.  And the Newburgh planning and development office apparently wasn’t any more forthcoming with the NIDA auditors.  At the July 13, 2009 meeting, the 2007 audit is accepted. The auditors describe in their difficulties gaining access to records and city personnel at arranged appointments, writing that “when we showed up, no one was there…”

Paging the NLDC

The day after Robert McKenna retires, on December 19, 2008, a letter is written to him from the State of New York Authority Budget Office.  Writes the ABO,

As you [McKenna] know, recently we mutually determined that your local development corporation met the definition of a local public authority under the Public Authorities Accountability Act (Act).  This letter is intended to continue the communication between our offices and to prepare your LDC to meet the requirements of the Act…

We look forward to working with you in the spirit of open, transparent and accountable government embodied in this legislation.

Yet this letter only came to the knowledge of the city council through the efforts of a citizen.  That these various agencies must comply with the Public Authorities Act was something that seemed of greater importance, awareness and urgency to Councilwoman Bello at the June and July work sessions than to either City Manager Dwight Douglas or Corporation Counsel Geoffrey Chanin.  Despite promises, no public follow-up happens regarding these issues.  With the assignment of the Lopez suit to corporation counsel, the immediate heat is off.

At the conclusion of the NIDA’s presentation on August 13 (first video on this page), the subject of the NLDC comes up, and when it does, Mayor Valentine brusquely draws the meeting to a close.  The members of the NLDC are present, although they might not all know it.

Why the confusion?

In January of 2003, the city’s charter is changed, merging the NIDA and the NCDA into a new city department:

ARTICLE XIV
Department of Planning and Development
[Added 1-27-2003 by L.L. No. 1-2003]

§ C14.00. Establishment; head.
There shall be a Department of Planning and Development, headed by a Director of Planning and Development, who shall be appointed by the City Manager and who shall serve at the pleasure of the City Manager.

§ C14.01. Director of Planning and Economic Development.
The Director of Planning and Development shall be appointed on the basis of his education and experience in carrying out the duties of the position. Among the Director’s functions and duties, but not by way of limitation, shall be the following:

A. To act as a full-time administrator of the Department, the Newburgh Local Development Corporation and the Newburgh Industrial Development Agency offices to ensure a coordinated and comprehensive approach to community and economic development within the City of Newburgh.

B. To develop and administer a combined and integrated staff to support the Newburgh Community Development Agency, Newburgh Local Development Corporation and the Newburgh Industrial Development Agency and other community-based programs recognized by the Council.

In the aftermath of the Savoy scandal, NIDA administrator and board changes, City Manager William F. Ketcham recommends the reconfiguration in part to reduce the influence of “politically motivated” decisions.  If the administrative director to these agencies is under the city manager’s control, perhaps abuses like the $380,000 unauthorized transfer to the Savoy partners would be less likely to happen.

As late as January 10, 2005, the city council appoints the officers of the Newburgh Community Development Agency, in resolution 9-2005.  They are:

Mayor Nicholas Valentine – Chairman
Councilwoman Regina Angelo – Vice Chairman
Dawn Gobeo – Treasurer
Councilwoman Else Figureoa App – Secretary

Time passes; Robert McKenna takes care of things, and, until the passage of the Public Authorities Act in 2005, there isn’t much reason to do anything differently.

It is a strange coincidence that it is another $380K sum of questionable provenance that has drawn this tangle of agencies and government authority under scrutiny.

Conference tomorrow on NIDA vs. City Manaager, City Comptroller, and City Planning Director suit

Monday morning, August 17, attorneys representing the NIDA and the City Manager, City Comptroller, and City Planning Director will meet in Goshen and perhaps come up with terms for a settlement.

The saga of the city’s public authorities – the Newburgh Industrial Development Agency, the Newburgh Community Development Agency, and the Newburgh Local Development Corporation – will no doubt continue.

The Mid-Hudson Times has an article by Allan Gaul (not available online)  that relies heavily on Mayor Nick Valentine, whose quotes “Are we finishing it? The answer is yes.  Are we going to get the money? The answer is yes” also make a neat bolded text summary on the front page.  As the article continues on page 4, Gaul writes that “Valentine said that the city is in ‘constant communication’ with HUD and the city’s congressman.  ‘The buildings are built, the road is done,’ Valentine said, adding that the city has been given a ‘punch list’ of items that HUD wants done and the city is determined to complete.”

What’s that again?  HUD?  The mayor has apparently erred once again in naming his apparent favorite federal agency, HUD.  The $1.75M grant now at issue is from the Economic Development Administration, a branch of the Department of Commerce.  HUD is in no way involved.  Mayor Valentine also erred in blaming HUD in his “My View” editorial to the Record in which he brings up the Kingston Newburgh Enterprise Corporation audit.  He wrote “The audit report itself [Valentine refers to actual HUD Audit Report No.: 2009-NY-1001]was flawed beyond belief. This did not surprise me as I had seen the same act with HUD with the Kingston/Newburgh Enterprise Corp. With that situation, HUD was determined to undermine Rep. Maurice Hinchey, and it was literally blatant in its inaccuracies and falsehoods.”  As reported here, that audit was done by the Department of Labor, not HUD.  The mayor may have been confused because HUD contributed funds to start KNEC, although it was the Dept. of Labor that contributed $1.9 Million for jobs training, nothing to sneeze at.

Why did Mayor Valentine fail to mention the “other” HUD audit in his editorial, Audit Report No.: 2009-NY-1008?  The city has already seen fit to pay back approximately $388,000 of over $500,000 spent on salaries and other charges that HUD ruled were inappropriately paid for with Community Develoment Block Grant (CDBG) funds.

Where did the city get the $388K?  Robert McKenna, former administrative director for the Newburgh Industrial Development Agency, wrote a check the day before he retired from the NIDA’s checking account, unbeknownst to the NIDA board.  This unauthorized transfer is currently a matter of litigation between the city and the NIDA.

At the conclusion of the city council meeting Monday, August 10, Councilwoman Christine Bello expressed her dismay as she revealed that Newburgh may have lost $1,750,000 in grant money from the Department of Commerce’s Economic Development Administration (EDA.)  As documented in correspondence with the EDA, there was a breakdown in communications, with no response from the city after the city sent a letter in January 2009 to the EDA until Ms. Bello heard from the EDA on July 31.

The EDA grant was meant “to support the creation of a Medical Technology Office Park and the construction of a Medical Technology Incubator Building,” according to the agreement passed by the city council on May 27, 2003. Voting to approve the resolution were then Councilman Valentine, Councilwoman Angelo, Councilman Rockafellow, and Mayor Marino.

The reasons for losing the grant include noncompliance with certain “special award conditions,” such as the city’s failure to conduct an archeological survey to gain clearance from the New York State Office of Parks, Recreation and Historic Preservation.  Another issue was the lack of completion of the project, and exceeding the original time line.

“Why are we in this situation?” Bello asked.

On Thursday, August 13, at 6:00 p.m. the Newburgh City Council will hold a work session at 83 Broadway, Newburgh, NY. The agenda will include an “EDA grant update.” Additional agenda items include Jim Mercer of the Mercer Group, the firm hired to conduct the city manager search; property sales, and a presentation by the Industrial Development Agency.

Councilwoman Bello’s full remarks (15:00):

Video may be downloaded here.

Several meetings were scheduled in an attempt to acquire information pertinent to our audit, however, when we showed up no one was there to meet us.

We requested documentation that was needed to complete the audit, however, much of that information was never provided to us.

In the second of the two letters to the board, Nugent & Haeussler write that:

The auditor found instances where segregation of duties was limited…

The financial statements could be significantly misstated due to errors or irregularities and fraud or misappropriation could occur and not be detected without adequate segregation of duties and responsibilities.

On the first page of the audit itself, Nugent & Haeussler, P.C., make the following statement:

We were unable to follow professional standards and perform a proper audit because adequate documentation for the City of Newburgh Industrial Development Agency’s books and records were not available.  We were unable to satisfy ourselves as to the correctness of the financial statements by means of other auditing procedures.  In addition, specific paperwork required by the United States Department of Commerce has not been filed to collect a grant that was originally recorded as a receivable in 2004; consequently, the collectability of this receivable is undetermined.

Because we were unable to verify the documentation regarding the books and records, and we were unable to apply other auditing procedures regarding the completeness of the financial statements as discussed in the preceding paragraph, the scope of our work was not sufficient to enable us to express, and we do not express, an opinion on the financial statements referred to in the first paragraph.

Mid-Broadway Business District (former Carchietta properties)

There’s a new district in town – the “Mid-Broadway Business District,” christened by Assistant City Administrator Courtney Kain.  The properties were formerly known as the “Carchietta lot,” the vacant site on the North side of Broadway.  The City is planning on issuing a RFQ to selected parties to come up with a plan – “new construction,” according to Interim City Manager Dwight Douglas.

Will the RFQ mention asbestos and lead abatement?

Not discussed was the potential place of the Newburgh Inudstrial Development Agency with regard to these properties.  Perhaps this will be a discussion item when the IDA meets with the City Council at the Council’s work session on August 13th.  The RFQ would already be issued by that point – Douglas is aiming for July 24, with a return date expected to be the last week of August.

Also, a funding mechanism of the past – KNEC – was mentioned; Douglas made a reference to $200,000 of KNEC funds with regard to expenses for the disposition of property.

Post-meeting follow-up: Ms. Kain explained the Carchietta properties were taken back through In Rem proceedings, and the judge signed an order passing them to the city about two weeks ago.

Full audio recording of the work session meeting is available here.

On Friday, January 16, the Newburgh Industrial Development Agency held a special meeting.  Board members listened to a memo written by treasurer Michael Curry that described the great difficulties he had encountered in attempting to access the IDA’s own records.  Lourdes Zapata, the administrative director of the IDA, indicated  to Mr. Curry that he would have to sign a confidentiality agreement to see the records, on the advice of Corporation Counsel Geoffrey Chanin.  Ms. Zapata explained to Mr. Curry that the IDA’s records were “intermingled” with City records.  Mr. Curry wondered if “intermingled” might mean “cannot be found.”

Mr. Curry and Joshua Smith both stated that neither would sign a confidentiality statement at this time.  Mr. Smith pointed out that Mr. Chanin is the city’s attorney, not the IDA’s, and his interests may differ from the IDA’s.

Newburgh IDA is Delinquent

[Video deleted]

Mr. Curry read an email from Ms. Zapata written upon learning that the IDA board would not fund her “under $1,000″ trip for training to Albany.  Through this email board members learned that the Newburgh IDA is actually in delinquency:  “The IDA is currently listed as a delinquent Industrial Development Agency by the New York State Authority Budget Office, and, as such, has no authority to offer state tax exemptions,” wrote Ms. Zapata. 

“This was, by the way, for the record, news to us,” said Spencer Gulliver. 

Mr. Curry continued reading Ms. Zapata’s email: “the IDA has not filed, as far as I can tell, the appropriate documentation with the State for the past two years at least.”

IDA doesn’t know how much money is in its accounts

In explaining why the board turned down Ms. Zapata’s request for training, Mr. Gulliver said there was an online tutorial and training for the reporting system.  Mr. Smith brought up the another reason for the refusal: “And when we don’t know how much money we have in our own accounts.”

“That is the second reason why, we don’t know how much we’re spending currently,” said Mr. Gulliver.

“Nor are we granted access…” said Mr. Curry.

“Also, this is the very same person that knew about our delinquency but never informed us,” said Jack Penney. “Why send her away to learn something, we’re not even going to find out what’s going on right now.”

“This is an atrocity to the City of Newburgh, and we’ve been left in an accounting nightmare,” said Mr. Gulliver.  “It really is, it’s a disaster.”

“It’s an embarrassment, and an outrage,” said Mr. Curry.

Three motions pass

At the meeting’s conclusion, the board passed three motions:

Motion 1:
The IDA will freeze all financial activity until we are all granted access to information pertaining to the Industrial Development Agency, including financial information and all other information to be requested by the treasurer.
Motion carried unanimously.

Motion 2:
Effective this date, the chairman, vice chairman, secretary and treasurer of the Industrial Development Agency shall be the only authorized signatories on bank accounts of the IDA.  Treasurer will sign checks up to $1,000 and all other checks will be countersigned by one other officer of the board.  This resolution will be transmitted to the banks immediately.
AYES: Bedrosian, Maldonado, Penney, Gulliver, Smith
ABSTAIN: Curry

Motion 3:
As of this date, all previous signatories are nullified on IDA accounts.
Motion carried unanimously.

Full coverage of the meeting: