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
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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