Concerns expressed about CDBG payback

When the city of Dunkirk was notified that it would have to pay back some Community Development Block Grant funds recently, there was one group of people taking particular interest. Common Council members have been following the process in varying degrees, with Councilwoman-at-Large Stephanie Kiyak being the most involved.

Kiyak attended meetings in July and September that included city officials and representatives from the federal Department of Housing and Urban Development. Kiyak pointed out the report was still a partial report, as HUD is awaiting more information on two expenditures. That would be the Dunkirk Flavors facade and loan of $22,500 and the Flickinger Building at $66,000.

In a previous story it was stated that HUD’s findings claimed funding was not used properly in some 23 cases. Further clarification of the HUD release shows the CDBG funds invested in the Dunkirk Boardwalk Market $402,166; Rookies $11,600; Rem-Tronics $110,000; Peyins Deli $10,000; Papaya Arts $2,450; and Chautauqua Woods $20,000 were deemed eligible.

The rest of the activities the city is repaying. These include the 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.

“Some issues were within a 30-day time period, some were within a 60-day period. I still do not know what the result is out of our development office as far as what they were able to satisfy with what they were still requesting,” Kiyak said. “The bottom line is not a final amount because if we did not satisfy the additional reporting that they were requesting within 30 days and still get to research and satisfy within the 60 days that amount could go up.”

While Mayor Anthony J. Dolce thought the additional amount would not exceed $50,000, which the city has budgeted in 2014’s spending plan, Kiyak wasn’t so sure.

“Until each one of those files, or whatever’s still missing, is submitted to HUD and HUD comes back and says ‘yes, that satisfies it,’ or ‘no, that doesn’t satisfy it,’ I don’t know what those amounts could potentially add up to,” she explained. “I was at that exit meeting with HUD. … They told us there were repayment plans available and there were also times where the Treasury asks for the money upfront in one lump sum. It can also be reduced from our future HUD allocations. At that time they told us that would be forthcoming and it would be decided on their end. So if the mayor has been in discussions with them about a payment plan that’s been since that meeting and it’s been outside council really being part of those discussions.”

Other council members were not happy with the process – before the problems surfaced – or after.

“I can’t believe that someone from HUD was not approached on a lot of these projects. There were developers in place at that time and I’m sure there were conversations with HUD officials regarding the use of some of that money,” Councilman Michael Michalski said. “Maybe some of it was misuse but a lot of it was reporting as well.”

Michalski cited Medicor’s remake of the former Orcutt Funeral Home building on corner of Fifth Street and Central Avenue which the HUD report said created no jobs.

“How can you take a place that wasn’t there before and now is a functioning medical office and say there’s no jobs created?” he asked. “To me that’s a reporting snafu somewhere in the department of development that it wasn’t reported correctly. I just can’t imagine that someone didn’t approach HUD and get OKs for that.”

Michalski had another concern.

“From what I understand the HUD officials, they would change personnel every year or two. So one said it’s OK and the other one said it wasn’t OK,” he explained. “I can’t believe with those dollar amounts someone didn’t seek out advice from HUD officials. I’m not saying this is totally clean and not our fault, I’m not saying that because I think we need to take responsibility for some of these transactions.”

Michalski and Councilwoman Stacy Szukala are the longest-serving members of the current council, each in their third term. Szukala said residents are not happy tax dollars will be used to repay HUD.

“I voiced my concerns about using Fund I, as it is really in no shape to take on this debt for the next several years,” she added. “I would have liked to see us send HUD a proposal of reducing future payments. I have also been looking at the HUD website and there have been several other municipalities with similar issues. Some of them were not mandated to pay anything back. So why is Dunkirk being made to do so?”

Szukala said the city has made progress in the CDBG program.

“We hired a new administrator and are currently keeping much-improved files and copies as a result of the findings, making sure we know in advance if projects qualify under the program,” she explained. “This is a very unfortunate situation we are in. I would like to see the outcome a positive one for the taxpayers. As far as holding those involved accountable, that is not for the Common Council to decide, it’s up to HUD as it is a federal program.”

There has been no indication from HUD that legal action will be taken against any individuals who were involved with CDBG funds prior to 2012.

Send comments on this story to gsnyder@observertoday.com