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ABO’s Syracuse Audit

October 18, 2012

The Authorities Budget Office has completed its review of the Syracuse Urban Renewal Agency.  Our report concludes that the URA board of directors allows the City to use the URA to hire individuals for city positions rather than to work as URA staff.  This practice is inconsistent with provisions of General Municipal Law and contrary to opinions issued by the State Comptroller’s Office. This practice enables the City to circumvent civil service rules, under report its city workforce and may allow for the misuse of grant funds to offset the cost of city operations. It also represents a clear violation of the fiduciary duty that the URA board has to act in the best interests of the agency. Many of the findings presented in this review were identified in the ABO’s initial review of the URA that was conducted in September 2009, but have gone unaddressed by the URA and the City of Syracuse.

The final report is posted on the ABO website (www.abo.ny.gov) at http://www.abo.ny.gov/reports/compliancereviews/SyracuseURAFinalReport.pdf 

URA Personnel Practices

URA Employees Do Not Perform URA Work:

The report by the Authorities Budget Office (ABO) states that there has been a long-standing practice of the Syracuse URA (SURA) hiring individuals who actually work for the City. It also notes that the number of URA employees has decreased during the current administration from 120 to 103. It is SURA’s position that 75 URA employeesi are in fact charged with fulfilling the goals and objectives of the current adopted Urban Renewal Planii. The remaining 28 URA employees that are located in other City departments, SURA acknowledges are not directly involved in the fulfillment of this Plan, the vast majority of which were hired on by previous administrations. It is the stated position of this administration and SURA to focus on transitioning these 28 employees off of the URA payroll through attrition as opportunities present themselves to do so. The City believes and SURA concurs that transitioning all 28 employees en masse would create a disruption in city service provision.

City’s Use of URA Appointments:

As stated above, SURA feels that the 75 URA employees in the Departments of NBD and Law as well as the Bureau of Planning and Sustainability are in fact charged with fulfilling the goals and objectives of the City’s Urban Renewal Plan. And while the vast majority of the remaining 28 employees were hired under previous administrations, SURA has hired some personnel under the current administration that are not directly related to fulfilling the Plan. These hires are looked at as temporary in nature to fulfill an immediate or unique need with the aim of transitioning that position into either a civil service or management confidential position.

Board’s Abdication of Duty:

The composition of the Syracuse URA is dictated by state law and specifically states that the Mayor serve as the Chair, the Commissioner of Finance serve as the Treasurer and the Commissioner of Community Development (now NBD) serve as Secretary. This is cited in the report as a potential conflict of interest but what is not noted is that it is an unavoidable one due to conflicting state law to which theSyracuse URA is held. While the board members of SURA are deemed “independent members”, the ABO infers that members are acting in their capacity as city officials and not URA Board members. The SURA Board disagrees with that viewpoint and is careful not to conduct URA business outside of formal URA meetings in compliance with state open meetings law.

The Syracuse URA feels it has demonstrated to the ABO a strict process for changes to the URA payroll in that, minimally the Chair of the URA (or her designee) and the Secretary of the URA sign off on all changes in URA payroll. In cases where the changes in URA payroll involve employees within the Department of Neighborhood and Business Development (NBD), the URA’s Treasurer also signs off on payroll changes as well. Once these individuals sign off on any changes in URA payroll (approval by the City’s Commissioner of Budget is also required for reimbursement to occur), it is understood that changes can be made to the payroll on a provisional basis subject to the approval of the entire URA board.

Going forward, SURA will memorialize by resolution a policy for the hiring and discharging of employees. The Chair will be given the power to hire interim employees subject to the authorization of the Treasurer. All interim positions may last for a period of up to six months without the approval of the Board. Upon approval of the full Board, such position(s) shall become permanent. Discharge of employees (other than officers) shall be at the discretion of the Chair.

Reporting:

If directed by the ABO, the Syracuse URA will report all of its employees to the Public Authorities Reporting Information System (PARIS). The previous policy of not reporting these employees was based on the unique relationship between the URA and the City. For example, while the individuals on the payroll are reported as URA employees to the State Retirement System and the URA has its own federal employer identification number separate from the City, the City includes URA employees under its current and retired medical benefits.

URA Activity

The Syracuse URA continues to be needed as a tool to address the blight or threat of blight in the Greater Syracuse Urban Renewal Area and any other area later determined to be appropriate for urban renewal. The fact that a local land bank has been incorporated in immaterial to the necessity of the URA. It is the view of both SURA and the City that the Syracuse URA and the land bank will complement each other in their purpose and mission. The land bank has county-wide jurisdiction while the URA is focused exclusively within the renewal area. Incentivizing targeted investment to URA-owned properties is a crucial component to revitalizing distressed areas.

Furthermore, the different boards will have different opinions as to the priority of the projects. The land bank and SURA have different statutory powers that complement each other in the elimination of blight. The land bank and SURA also have different funding sources and different and distinct avenues for funding, ultimately allowing for more funding to be applied to distressed properties and neighborhoods.

Use of Community Development Block Grant Funds

The City and the Syracuse URA take strong issue with the way in which the use of CDBG funds was characterized in the ABO report. The confusion lies in the fact that an account called the “CDBG account” is used to advance payroll for all URA employees. However, this account starts with a balance of roughly $200,000 from the City’s General Fund, and is used “front” the money used to make payroll on a monthly basis. It is important to note that the City does not draw down CDBG funds in advance. The CDBG account is replenished with CDBG funds only after documentation is made to HUD that only those eligible to receive CDBG administrative funds require reimbursement. In the same fashion, the $200,000 in General Fund money is also transferred to the URA’s payroll account to reimburse URA personnel that do not receive CDBG funds.

SURA employees working in the Department of NBD personnel are the main recipients of CDBG administration funding but so too are some SURA employees under the direction of the Law Department that work on CDBG-eligible activities (real estate closings, housing court, etc.) as well as some SURA employees under the direction of the Bureau of Planning and Sustainability that are performing planning functions related to the block grant. The employees’ salaries being reimbursed by CDBG funds are explicitly identified to HUD each year through its Consolidated Plan and Action Plan. In no way are CDBG funds used to advance funds on personnel costs for any employees or are they paying salaries of employees that are not performing CDBG-eligible work.

While it may appear that CDBG funds are used to purchase the worker’s compensation coverage for the entire URA payroll, it is in both the City’s and SURA’s view that the entire cost of administering this program is more than the totality of the premiums for the URA employees. The City provides for these administration costs in-kind on behalf of the URA employees covered. The City estimates that the administration costs are commensurate with the aggregate premium costs of the 28 non-CDBG related employees and thus the exchange for the non-CDBG related employees and the in-kind services that the City provides is a wash. As a corrective action, however, to the ABO’s concern and to avoid confusion on this matter going forward, the City intends to quantify the administration costs it currently performs on an in-kind basis on behalf of all the CDBG-related URA employees (75 people currently) and bill the CDBG program for that service.

Conclusions and Recommendations

The Syracuse URA appreciates the ABO’s review of the Agency and while it does not agree with all of the ABO’s findings, several actions will be discussed in future board meeting as recommended corrective actions to several of the concerns made in the ABO’s report:

  • SURA Board members will work more diligently to document their decisions as those in their capacity as board members and those in their capacity as City officials. As such, going forward, appointment letters for new SURA employees shall come from the Chair of the Agency and all changes in URA payroll will be memorialized by SURA resolution in a timelier manner.
  • The use of CDBG funds in URA payroll will be clarified and more apparently segregated so as to more clearly demonstrate that CDBG funds are used for only allowed reimbursable activities. Insurance costs going forward will be separated and more accurately show that CDBG funds are being used for other previously unbilled but reimbursable expenses.
  • SURA will continue to gradually transition its employees who do not directly perform URA services to City civil service positions. Employees who continue to perform URA functions in any capacity shall remain on the URA payroll.

The Syracuse URA does not agree with the ABO’s recommendations to dissolve SURA citing that it no longer serves a public purpose. This was also the recommendation of the ABO’s 2009 report. The 2009 report also made recommendations on how to improve the Syracuse URA which seemingly contradicts its recommendation to dissolve the URA. Since the 2009 ABO report, the current administration focused on the ABO’s recommendations for improvement rather than dissolution. These improvements include:

  • Regular URA meetings are held on a monthly basis open to the public with appropriately advance legal notice given to area news outlets and materials such as the agenda and minutes and attachments made readily available provided on the City’s website in advance of the meetings;
  • A new urban renewal plan that was introduced and adopted by the Common Council and signed into law by the Mayor that lays out a strategy to address the slum and blighted conditions that plague the City’s most distressed neighborhoods;
  • The URA’s “legacy” inventory of properties left over from previous urban renewal plans have been marketed; most of which has been sold/conveyed strictly following public authority guidelines for property disposition;
    • New block plans have been adopted by the URA that allowed the Agency to acquire eight properties on one block to allow private investors to bid on their redevelopment simultaneously;
    • The URA has and will continue to assemble land for the City’s housing partners in anticipation for New York State tax credit awards to go toward their redevelopment including a 30-unit vacant, crime ridden apartment complex that will be the focus of a City-supported tax credit application in the Fall of 2012;
    • Overall payroll is down 14 percent.

It is the view of the current members of SURA that this administration chose to renew the spirit and intent for which the Agency was incorporated in the first place; that as a tool for neighborhood revitalization and a vehicle to incentivize private investment in the areas that most need it as outlined in its most recent URA Plan. The public has in fact benefited from the Syracuse URA under this administration and will continue to expand the breadth of these benefits if allowed to move forward on its mission to redefine ‘urban renewal’ in the modern era.

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iSixty-one (61) URA employees are situated in the Department of Neighborhood and Business Development (NBD) which includes the Division of Code Enforcement; eight (8) URA employees within the Corporation Counsel’s office and the six (6) URA employees in the Bureau of Planning and Sustainability total 75 URA employees dedicated to the fulfillment of the City’s most recently adopted URA Plan.

iiThe Syracuse Urban Renewal Plan adopted in 2010 is attached with this submission.

Authorities Budget Office Comments

Note 1: The matters discussed in this portion of the URA’s response have been removed from the final report.

Note 2: The report has been revised to better reflect the URA’s position on this issue.

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