March 26, 2002

City of Ithaca Is Audited

Print More

In a recent audit of the City of Ithaca, the U.S. Agency for Housing and Urban Development (HUD) found $580,000 worth of unsupported and ineligible funds, Mayor Alan Cohen ’81 announced yesterday at a press conference. The City, however, is arguing that only $5,300 of the contested funds were in fact ineligible or unsupported.

Three members of the HUD staff spent four months from March through July examining the “operations of the City of Ithaca, New York pertaining to its Community Planning and Development Programs,” according to the organization’s audit report. The report covered from July 1, 1999 to Dec. 31, 2000.

The report was mainly concerned with the Marina Realty Development Project and the opening of the Boatyard Grill Restaurant that came out of it.

The project itself has also been under scrutiny recently because of Cohen’s particular relationship with two of the three partners of the Boatyard Grill itself. One partner is the mayor’s former landlord and the other is the son of his former professor.

Cohen said that neither relationship had anything to do with the project, but that he plans to release his canceled rent checks to prove that he paid market price for the apartment.

“I think this is an invasion of privacy. But, as the chief elected official, I have no choice but to release those checks. I’m not happy that there is a certain perception [about the legitimacy of the operation] out there and this [report] will only fuel that perception,” he said.

The auditors found that the City gave the developer of the project funds “without adequate assurance that the funds were used to incur necessary and reasonable costs.”

“Our review disclosed that the Grantee [Ithaca] generally complied with the HUD program requirements when administering its community Planning and Development Programs,” the report stated.

“However, our review disclosed that for certain areas the Grantee did not always carry out its activities in an efficient and effective manner, comply with HUD regulations and charge costs to the Programs that are necessary and reasonable.”

The report stated that the developer spent $76,486.25 to cover “ineligible costs.” The report went on to claim that an additional $504,736.08 was “unsupported.”

HUD’s report recommended that Ithaca “repay the ineligible costs and provide justification for the unsupported costs.”

The City is arguing, however, that other than a duplicate payment of $5,321.47, all of the funds can be justified and are in fact legitimate.

The audit itself was the most intense the City has ever undergone, according to Cohen.

“Municipalities are audited on a random basis. We were told we were audited so intensely because in the past six years, Ithaca has received more HUD money than any other small city in the state,” Cohen said.

He added that the agency has told Ithaca in the past that it was one of the best run agencies in the state.

“A similar audit in Utica resulted in criminal charges being brought,” he said.

H. Matthys Van Cort, Ithaca’s director of planning and development, added, “I’d be surprised if any organization could go through that sort of scrutiny and not come up with some problems.”

Cohen emphasized that the audit process is not over. “We still have the opportunity to appeal,” he said.

As for the future of Ithaca-HUD relations, the municipality is optimistic.

“There is nothing that is not correctable,” Van Cort said.


Archived article by Freda Ready