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NYS Comptroller

THOMAS P. DiNAPOLI

Taxpayers' Guide to State and Local Audits

Audits of Local Governments and School Districts

Village of Silver Creek – Property Acquisition (2011M-229)


Released: February 17, 2012 -- [read complete report - pdf]

Purpose of Audit

The purpose of our audit was to evaluate the circumstances and decisions that were made by the Board related to the Village’s acquisition of a building for the period August 1, 2009 to September 19, 2011.

Background

The Village of Silver Creek is located in Chautauqua County. The Village is governed by an elected Board of Trustees which is comprised of a Mayor and four Trustees. Budgeted general fund appropriations for the 2011-12 fiscal year are approximately $2.1 million and are funded primarily with real property taxes, grants and fees.

Key Findings

  • The Board was unable to demonstrate that the purchase of a building for $725,000 was the most prudent use of taxpayer resources because the Village paid more than twice the apparent market value. Village officials could not demonstrate that they fully evaluated or considered the long- term costs and/or potential consequences of purchasing and renovating an older facility rather than constructing a new building.
  • Because the Board decided to purchase a used building rather than construct a new facility, Village officials have no assurance how much, if any, Federal and State reimbursement will be received. As a result, Village taxpayers could potentially become responsible for the full cost, over $900,000, of the building and improvements.

Key Recommendations

  • Obtain one or more independent appraisals on any real property the Board intends to purchase to ensure the price is reasonable. Exercise due diligence when acquiring real property using a deliberate process that fully considers all suitable options and long-term implications.
  • Take appropriate action to determine how much, if any, Federal and State aid reimbursement the Village will receive and develop a plan to address any shortfalls in expected reimbursement.

Local Government and School Accountability Contact Information:

Phone: (518) 474-4037; Email: localgov@osc.state.ny.us
Address: Office of the State Comptroller, Division of Local Government and School Accountability
110 State Street, 12th Floor; Albany, NY 12236