The city of Dunkirk has been in the proverbial hot water over its use of Community Development Block Grant funds prior to 2012. The United States Department of Housing and Urban Development has been working with the city to straighten out the problems since Mayor Anthony J. Dolce took office in January 2012.
It turns out HUD itself may be a contributor to some of the city’s CDBG woes. City officials over the years have complained privately that HUD approved projects only to later withdraw approval – sometimes much later.
On Wednesday, at a meeting of the Common Council Economic Develop-ment Committee, some of those complaints were made in public. Development Director Steve Neratko said one issue was the city’s CDBG target area, which had been thought to encompass the entire city after the 2010 census.
A problem arose when the city’s recently rejected one- and five-year CDBG plans were submitted using the city as the target area. Neratko said it was submitted using 2010 census data, but the city is not allowed to use that data.
Fourth Ward Council-woman Stacy Szukala said her concern was the city doesn’t get anything in writing from HUD officials.
“They will never give things in writing, that’s not how it’s going to be,” Neratko replied. “The programs are all grey-area programs.”
Neratko said Council-woman-at-Large Stephanie Kiyak was in a meeting when a couple questions came up about the city’s CDBG, and outside contractor Harry Sichermann argued with HUD officials about the rules they were stating.
“If we want to go by what he thinks, you have to prove it. You have to prove everything. He did, in fact, prove a couple of those facts … after the meeting,” Neratko explained. “That’s generally just how it’s going to be. Nothing is black and white and it’s really unfortunate. But really, everyone that’s working on these programs really needs to be up to date on everything and needs to be able to argue all those points.”
Discussion eventually turned to the numerous meetings being held with HUD officials, including one scheduled today. The proper use of CDBG funds, spending them in a timely manner, proper documentation and eligible projects are all in the mix.
When Kiyak noted subrecepient agreements seem to be an issue, Neratko said there were bigger issues on the table, especially concerning the purchase of the former Bertges property by the Dunkirk Local Development Corporation with the use of CDBG monies and the loans and grants given to the Clarion Hotel. He added Sichermann is trying to help the city avoid a big payback.
“Helping us to justify the expenditures,” was how Neratko explained Sichermann’s role. “And kind of leading us on the way.”
Fiscal Affairs Officer Richard Halas said the problem has been going on for two years.
“When you have a problem that goes back and to be quite honest, is as messed up as that project was, there were five loan documents,” Neratko replied.
Halas said he had audited the documents and they were a “mess.”
“Anyone who has come to me, I’ve talked about it. But … you can’t talk about it in a public setting,” Neratko stated. “A lot of these developments are in the works between attorneys and Harry Sichermann. It’s a lot of negotiations right now to figure out how we’re going to go forward. Depending on how you go forward with making the Clarion pay, or repay, some of those funds, how that turns out could actually be worse for us because we might actually end up having to pay that back to the CDBG program. Again, the Bertges site as well, we could end up losing the site as well as all the money.
“We have to be very delicate in how we handle these situations.”
Neratko said until a recent meeting he wasn’t aware of HUD’s focus on getting the 2012 funds spent.
“Truthfully I am more worried about spending more money wrong while we’re focused on trying to correct back issues,” he said, adding the Clarion Hotel issues were time consuming. With the funding for Sichermann running out, council may have to find additional funds to keep Sichermann’s services.
“We have to go back and every dollar they spent, there’s just boxes of receipts, we have to go through and figure out which ones are eligible and which ones aren’t,” Neratko explained of the Clarion issue. “Some of them are like stuff they installed into the hotel. Some of that stuff would bring up other requirements, Davis Bacon laws and that kind of stuff. … “We will know by Aug. 1 or so how this will come out.”
He said HUD is claiming all CDBG loans are DLDC loans.
“If that’s the case there’s a different set of starting numbers,” Neratko added.
Szukala said at the end of it all, Sichermann’s efforts may be for nothing and the city would still have spent the money. Neratko said that was known at the outset.
“A $15,000 investment to try and save $1 to $2 million. What are you going to do,” Neratko asked. “None of us want this to be the situation.”
Szukala pointed out the city was dealing with multiple people at HUD at various levels.
“It doesn’t seem at their end they’re on the same page and that’s why we’ve been asking from day one, record the meetings, get something in writing,” she added. “I know it’s hard to do.”
Neratko said unless it was an official letter from HUD, phone calls or face-to-face conversations were the norms.
“They do not send detailed information in emails,” he explained, “We get official letters from them, other than that, communications from them come via telephone.”
Kiyak said the bottom line was it was HUD’s money, they make the rules, and they can keep changing the rules.
“That’s why they leave it so nebulous, so they have the ability to turn around and say we don’t like this,” she added, “that’s the impression I get.”
Halas said it was time to move on.
“What else are we going to do, We’re not making any progress at all,” he added.
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