By: Mark Frost

After a scathing report last year from the state comptroller regarding the mishandling of grant funding to the city of Dunkirk. Mayor Dolce on Tuesday August 18, 2015. Asked the city Council to make A total of 13 budget transfers would be made under 64-2015, including eight in the general fund and five in the water treatment fund. The largest transfer is $45,000 from contingencies in the general fund to a repair/maintenance line for City Hall and to cover the cost of hiring seasonal workers which was not included in the original budget, but with Mayoral elections just weeks away, many wonder why hire additional workers if we don’t have the money. The water fund would transfer $5,000 from its contingencies line to a water main/maintenance line under water distribution. So far this years budget transfer have surpassed a half million dollars and most from contingencies fund.

A discussion about funding and budgets for the projects already completed like the Sea wall and business facades on Central Ave. ensued during the council meeting between Fiscal Affairs Officer Rich Halas and Gugino, with Mayor Anthony J. Dolce joining in to say funding is being sought to cover any shortfalls left in the project after the city failed to seek matching funding on time or failed to follow guidelines to receive the grant funding from the county. The projects moved forward without funding. Failure on the cities part has left city residents with outstanding bills. Which will likely result in higher taxes and water rates increases next years to bring the city budget out of deficit created by Mayor Dolce.

The recent loss of water customer such as the town of Portland will add pressure to the city water budget.

To balance next years budget, the city of Dunkirk will have to layoff significant numbers of Police, Fire and City workers to bring the budget into balance and raise taxes and water rates.

A run down from the last audit indicated The City of Dunkirk spent more than $1 million from the U.S. Department of Housing and Urban Development’s (HUD) Community Development Block Grant (CDBG) program on unauthorized or questionable activities, according to an audit issued today by State Comptroller Thomas P. DiNapoli. The findings have been referred to HUD for further review.

Auditors found the city could not provide adequate documentation to support claims paid with CDBG funds or demonstrate how federal program requirements were being met. Several transactions were recorded in a manner to apparently hide the true nature of the transactions.

“These funds were spent on questionable activities such as travel and staff bonuses rather than rebuilding neighborhoods and helping low income residents as intended,” said DiNapoli. “City officials have mismanaged this program and failed to put in place effective controls to safeguard grant funds. They repeatedly neglected to show if program goals were met or that projects provided a public benefit.”

According to HUD guidelines, all activities funded with CDBG program moneys must satisfy one of the three national objectives: benefiting low and moderate income persons; preventing or eliminating slums or blight; and meeting urgent community needs.

DiNapoli’s auditors found that, from April 2008 through June 2012, the city disbursed more CDBG funds than properly authorized, spent funds on items that are not eligible under the CDBG program, and spent more than $500,000 for no legitimate CDBG purpose. In addition, nearly $400,000 in loans were made without obtaining appropriate documentation such as a signed loan document.

During the four-year grant period reviewed by the Comptroller’s office, the Dunkirk Local Development Corporation (DLDC), created by city officials to administer the revolving loan program, was provided CDBG grants to fund various economic development projects.

Auditors, however, found the DLDC operated with little oversight. For example, DLDC spent more than $500,000 for two property acquisitions – a vacant building and a former car dealership – that officials could not justify as an eligible CDBG activity. Additionally, $41,000 was spent on ineligible equipment, $15,000 on unauthorized travel expenses and conference registration fees for the DLDC chairman, and $6,600 on bonus payments to the DLDC chairman and treasurer.

There were a number of CDBG funds distributed directly by the city that were not in line with community development goals. This included $76,000 in grant funding to a hotel for various improvements and renovations. The money was used to construct an outdoor wooden pavilion, for vinyl wall coverings and restroom renovations, and for the purchase of a commercial laundry machine.

DiNapoli made a number of recommendations in the audit, including:

• Establish formal procedures to monitor the performance and administration of the CDBG program, including production and review of periodic status reports on grant activity;
• Authorize all transfers of CDBG funds to the DLDC only after ensuring they comply with the approved plans;
• Require documentation sufficient to support all claims against the city’s CDBG funds to demonstrate how moneys are being used to meet the program’s objectives;
• Recover unauthorized payments made to the DLDC Chairman and DLDC Treasurer; and
• Select CDBG grant recipients through an open, competitive process.

Along with current spending and repayment of HUD funds the city budget will be out of lines in the millions will resulting in significant tax increases and cuts to Police, Fire and City workers.