CDBG?bill coming due

The City of Dunkirk now knows how much it may be on the hook for when it comes to repaying the federal Department of Housing and Urban Development for what HUD considers shortfall in the city’s use of Community Development Block Grant funding. The use of the funds occurred before 2012 and could require the city to repay more than $700,000, although a final figure has not been set.

After meetings with city officials in July, August and September, HUD issued its monitoring report that was received by the city Dec. 6. Mayor Anthony J. Dolce said the city has been working with HUD to set a repayment plan but as of Monday, according to HUD spokesman Adam Glantz, the agency was still considering the city’s repayment plan.

The city’s plan would have repayment come from the general fund.

“That is the most likely scenario. It will be a Fund I expense,” Dolce explained, adding that would use city taxpayer dollars. “We have a proposal that they are reviewing. We do have $50,000 set aside for it in the 2014 budget.”

HUD issued a number of findings in its report, including that Dunkirk’s community development team lacked CDBG program knowledge sufficient to ensure compliance and Dunkirk has historically disregarded CDBG procedural requirements. Also cited was a lack of clear distinction between city and Dunkirk Local Development Corporation roles and responsibilities and questionable CDBG eligibility, questioned costs and insufficient documentation; projects/activities did not meet a national objective and/or were not eligible and CDBG expenditures were therefore not justified.

HUD also had concerns that the CDBG program’s national objectives were not met by the city.

HUD’s findings claimed funding was not used properly in some 23 cases totaling $708,276. Included were:: Dunkirk Boardwalk Market $402,166; Rookies $11,600; Remtronics $110,000; Peyins Deli $10,000; Papaya Arts $2,450; Chautauqua Woods $20,000; Dunkirk Flavors $22,500; Flickinger Building $66,000; Bertges Building and site $313,962; tourism development $30,000; Medicor $30,000; G&E Tents $10,000; NAPA building (59-61 Lake Shore Drive E.) $15,000.

In addition: P&G Foods $7,148; Flowers by Anthony $4,631; Elks Club $5,395; Carriage House $40,000; Nutri-Perx $2,783; Selling Hive $30,000; Henlie $15,000; Palmer Bryant Building $1,689; Dunkirk Metal $69,442 and Graf Building $17,904.

Dolce said the city is on the right track with the compliance issues HUD found a concern.

“We’re focused and we’re confident on putting together a solid program going forward. As far as the repayment goes, right now what we’re hoping is the scenario that we use those monies, the payback monies, to add to our current CDBG allotment for that year,” he explained. “For example, if we’re allotted $450,000 and our payback is $50,000 for that year, then we can allocate $500,000 in CDBG activities.”

Dolce said the city will continue to be under close HUD review.

The HUD report stated the buildings in the 200 block of Washington Avenue were not part of a blight problem. Dolce said the city is working with HUD to classify the Flickinger Building as a slum and blight property. He added the city was also negotiating HUD’s findings on Dunkirk Flavor. He added the finding that the Medicor project created no jobs was due to a difficulty in getting employment numbers from Medicor.

Dolce said the lack of paperwork hindered the city’s case.

“We took the approach that it behooved us to get as much together that was there and supply it to HUD for their review. …This is the culmination of that whole process and we have a proposal out there that is being reviewed in terms of payback.”

Dolce added a complete immediate payback is not on the table. If HUD does not accept the city’s plan, the other options include cutting a check to HUD for the U.S. Treasury or a cut in the annual allotment.

“We’ll have to pay $700,000 back, possibly more, but not in one fell swoop,” he added. “My administration’s focus has been getting to this point knowing the damage and focusing on quality HUD programming that the public would be not only proud of, but one that is really effective, one that the public uses and sees the direct results of,” he stated.

Send comments to gsnyder@observertoday.com