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HomeMy WebLinkAbout2019 Audit - Office of State ComptrollerREPORT OF EXAMINATION | 2018M-219 DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY MARCH 2019 Town of Cortlandville Improving Private Property Contents Report Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Improving Private Property . . . . . . . . . . . . . . . . . . . . . . . 2 Is It Appropriate to Use Town Resources to Improve Private Property? 2 Resources Were Inappropriately Used to Improve Private Property . 3 What Do We Recommend? . . . . . . . . . . . . . . . . . . . . . . 4 Appendix A – Response From Town Officials . . . . . . . . . . . . . 5 Appendix B – Audit Methodology and Standards . . . . . . . . . . .10 Appendix C – Resources and Services . . . . . . . . . . . . . . . . .11 Office of the New York State Comptroller 1 Report Highlights Audit Objective Determine whether the use of Town resources to improve private property was appropriate and properly disclosed . Key Finding l Town officials inappropriately spent $22,600 to improve and maintain a Board member’s property with no lease agreement in place . Key Recommendation l Consider the legal implications of this arrangement and consult with the Town attorney as to whether it may be appropriate to recoup the initial costs for improving the private property . District officials agreed with our recommendations and have initiated or indicated they planned to initiate corrective action . Background The Town of Cortlandville (Town) is located in Cortland County . The Town is governed by an elected five-member Board (Board), composed of four Council members and the Town Supervisor (Supervisor) . The Board is responsible for the general oversight of the Town’s operations and finances . The Supervisor is the chief executive and fiscal officer and is responsible for the day-to-day financial operations . The Highway Superintendent (Superintendent), an elected official, is primarily responsible for the maintenance and repair of roads and parks . The Cortlandville Fire Department provides fire protection services for the Town . Audit Period January 1, 2013 – August 28, 2018 Town of Cortlandville Quick Facts Population 8,509 Square Miles 50 2018 Appropriations $8 .9 million 2 Office of the New York State Comptroller At the August 2013 meeting, the Board discussed finding canoe and kayak access to the Tioughnioga River (river) for residents and referenced a specific property located in Blodgett Mills . The Board directed the Superintendent to contact the property owner about constructing a boat launch on this property . In January 2014, a sitting Board member, who was not re-elected in November 2017, purchased the riverfront property previously discussed . In July 2014, the Board member received a permit from the Town’s planning and zoning board to expand the parking lot . At that time, the planning and zoning officer stated that the Board member was also working with the NYS Department of Environmental Conservation (DEC) to obtain a required permit for any work to be performed on the river bank .1 In May and June of 2015, Town highway department employees improved a parking area and access to the river on the Board member’s property . At the June 2015 Board meeting, the Board member publicly disclosed that he purchased the riverfront property and received a permit to work on the parking from the Town . Further, the June 2015 Board minutes indicate that the Board member stated that he planned to grant an easement for recreational and fire department use . In June 2016, the Board authorized the Supervisor to enter into a lease agreement with the Board member for access to the property . The lease agreement was signed in April 2018 (before we began our audit) and back dated to June 2016 . Is It Appropriate to Use Town Resources to Improve Private Property? The New York State Constitution (Constitution) generally prohibits the expenditure of town money for the benefit of private parties .2 However, a town may expend money on a private undertaking if the project is for a proper town purpose pursuant to a statutory obligation or properly authorized contract under which the town receives fair and adequate consideration . Typically, a town would need a leasehold interest, or at least a license for town use, to spend funds to improve private property .3 The term of the lease should be of sufficient length to ensure the town a reasonable and proper return on its expenditures . Furthermore, a cost benefit analysis should be performed and decisions on whether to spend town resources on private property should be publicly discussed, disclosed and approved by the Board before any work is performed . Improving Private Property 1 A DEC permit is required for any work done in or on the banks of the Tioughninoga River due to its DEC classification. 2 New York State Constitution, Article 8, Section 1 3 Refer to the New York State Comptroller’s Opinions 1981-359 and 1979-513, as examples . Office of the New York State Comptroller 3 Resources Were Inappropriately Used to Improve Private Property Town officials spent approximately $18,500 on wages, equipment use and materials to improve the Board member’s property in May and June of 2015 . However, the work performed raises potential issues under the Constitution, because no contract was in place at the time . Additionally, the Board did not perform a cost benefit analysis to make an informed decision on whether this project was necessary or publicly discuss, disclose or approve the work to be performed . Our review of Board minutes for the audit period did not disclose any Board discussion or authorization for the highway department to work on the Board member’s property . Furthermore, the DEC Deputy Regional Permit Administrator told us that any work done on a protected river or river bank, such as this river, would require a DEC permit4 and that he had no record of contact from the Board member or Town officials for the work performed . The lease agreement does not appear to be in the best interest of taxpayers, because there is no mention of the Town’s costs of improvements to the property as fair consideration already paid . Additionally, the Town must pay $10 per year for use of the property and is responsible for maintaining and insuring the property . Property maintenance costs totaled approximately $4,100 from 2015 through 2018 . Although officials added the property to the Town’s insurance policy after the lease agreement was signed, the premium did not increase because there is no structure on the property . The lease also states both parties could terminate the lease with 60 days’ notice, with no provision for the Town to recoup any of its costs for the improvements . Current Board members told us that the former Superintendent took it upon himself to clean up and improve the property after the June 2016 resolution authorizing the Supervisor to enter into a lease agreement, which was not signed until April 2018 . However, the work was completed a full year before this Board meeting . The former Superintendent told us that the entire Board was aware that the highway department was performing the work on the property . Town officials told us that they believed river access was a needed amenity for residents and that the fire department needed easier access to the river in this area because this part of the Town does not have fire hydrants . However, there are two other public boat launches to the river, one approximately three miles upstream . Furthermore, the Fire Chief told us that the fire department did not request or need easier access at this location because they had no problem 4 6 NYCRR, Part 608 4 Office of the New York State Comptroller accessing the river at the boat launch site before the work was performed and that if there was a fire in this area, the department’s first option would be using the nearest hydrant, not the river for water . Lastly, Town officials inappropriately used Town resources to improve the board member’s property and failed to erect signage at the site or post information on the Town’s website indicating that the boat launch is open for public use . What Do We Recommend? The Board should: 1 . Consider the legal implications of this arrangement and consult with the Town attorney as to whether it may be appropriate to recoup the initial costs for improving the private property . 2 . Consult with the Town attorney about the lack of a DEC permit to authorize the work done to determine whether a permit must be obtained before using the site . 3 . Consider adopting a formal policy to protect the interests of the Town when making improvements to private property . Office of the New York State Comptroller 5 Appendix A: Response From Town Officials 6 Office of the New York State Comptroller Office of the New York State Comptroller 7 8 Office of the New York State Comptroller Office of the New York State Comptroller 9 10 Office of the New York State Comptroller Appendix B: Audit Methodology and Standards We conducted this audit pursuant to Article V, Section 1 of the State Constitution and the State Comptroller’s authority as set forth in Article 3 of the New York State General Municipal Law . To achieve the audit objective and obtain valid audit evidence, our audit procedures included the following: l We interviewed current and former Town officials, reviewed property records and meeting minutes for the entire audit period to gain an understanding of events surrounding the improvement of private property . l We calculated the cost to improve and maintain private property from Highway employee timesheets, invoices and vouchers, and the Federal Emergency Management Agency (FEMA) schedule of equipment rates . l We reviewed the lease agreement signed between the Town and a former Councilman . l We interviewed Fire Department officials to determine whether the department requested or needed the private property improved . l We inquired with DEC officials, used mapping software, and searched municipal websites to determine the number of public boat launching sites in the county . l We reviewed the Town website and visited the boat launch to determine whether it was publicly disclosed as a Town park . l We inquired with DEC and Town officials to determine whether applicable permits were granted for work on the banks of a protected river . l We reviewed relevant laws and determined whether the Town complied with these laws . We conducted this performance audit in accordance with GAGAS (generally accepted government auditing standards) . Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objective . We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objective . A written corrective action plan (CAP) that addresses the findings and recommendations in this report should be prepared and provided to our office within 90 days, pursuant to Section 35 of General Municipal Law . For more information on preparing and filing your CAP, please refer to our brochure, Responding to an OSC Audit Report, which you received with the draft audit report . We encourage the Board to make the CAP available for public review in the Clerk’s office . Office of the New York State Comptroller 11 Appendix C: Resources and Services Regional Office Directory www .osc .state .ny .us/localgov/regional_directory .pdf Cost-Saving Ideas – Resources, advice and assistance on cost-saving ideas www .osc .state .ny .us/localgov/costsavings/index .htm Fiscal Stress Monitoring – Resources for local government officials experiencing fiscal problems www .osc .state .ny .us/localgov/fiscalmonitoring/index .htm Local Government Management Guides – Series of publications that include technical information and suggested practices for local government management www .osc .state .ny .us/localgov/pubs/listacctg .htm#lgmg Planning and Budgeting Guides – Resources for developing multiyear financial, capital, strategic and other plans www .osc .state .ny .us/localgov/planbudget/index .htm Protecting Sensitive Data and Other Local Government Assets – A non- technical cybersecurity guide for local government leaders www .osc .state .ny .us/localgov/pubs/cyber-security-guide .pdf Required Reporting – Information and resources for reports and forms that are filed with the Office of the State Comptroller www .osc .state .ny .us/localgov/finreporting/index .htm Research Reports/Publications – Reports on major policy issues facing local governments and State policy-makers www .osc .state .ny .us/localgov/researchpubs/index .htm Training – Resources for local government officials on in-person and online training opportunities on a wide range of topics www .osc .state .ny .us/localgov/academy/index .htm Like us on Facebook at facebook .com/nyscomptroller Follow us on Twitter @nyscomptroller Contact Office of the New York State Comptroller Division of Local Government and School Accountability 110 State Street, 12th Floor, Albany, New York 12236 Tel: (518) 474-4037 • Fax: (518) 486-6479 • Email: localgov@osc .ny .gov www .osc .state .ny .us/localgov/index .htm Local Government and School Accountability Help Line: (866) 321-8503 BINGHAMTON REGIONAL OFFICE – Ann C . Singer, Chief Examiner State Office Building, Suite 1702 • 44 Hawley Street • Binghamton, New York 13901-4417 Tel (607) 721-8306 • Fax (607) 721-8313 • Email: Muni-Binghamton@osc .ny .gov Serving: Broome, Chenango, Cortland, Delaware, Otsego, Schoharie, Sullivan, Tioga, Tompkins counties