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December 28, 2009

Nyack Fire Officials Saddled Taxpayers With
A Nearly $13 Million Fire House That They Don’t Even Own

The Nyack Fire District board circumvented state law and a voter-approved referendum when constructing a new firehouse, potentially costing taxpayers up to $9.9 million more than necessary, according to an audit released by State Comptroller Thomas P. DiNapoli.

“All across New York, families are watching every dime,” DiNapoli said. “Government officials should be doing the same. And they should give taxpayers honest numbers and straight information. In the Nyack Fire District, taxpayers were led by the nose when this project was first put on the drawing board, and now they’ll pay through the nose for the new firehouse. Government is supposed to protect taxpayer dollars, not throw them away.”

In December 2004, taxpayers approved a mandatory bond referendum to finance the acquisition and construction of a firehouse with an estimated maximum cost of $2.85 million and a useful life of 30 years. However, the board did not follow correct procedure and instead inappropriately formed two not-for-profit corporations to handle land acquisition and construction activities. Under the not-for-profit law, the board was not legally authorized to form these corporations.

In July 2006, the board entered into a 30-year lease purchase agreement with one of the corporations for the firehouse. This allowed the board to avoid competitive bidding requirements and exceed the taxpayer authorized maximum for the construction of the facility. Moreover, in November 2008, the agreement was amended to eliminate the district’s purchase option and shorten the lease to 10 years.

District officials have no assurance that the not-for-profit corporation will continue to lease the facility to the district upon the expiration of the lease, or that the monthly payments will not increase at that time. Based on the current structure of the lease and the required lease payments, DiNapoli’s auditors estimate that the firehouse could cost up to $9.9 million more than authorized by the taxpayers.

Other findings in DiNapoli’s audit include:

  • District officials did not make sure goods and services were purchased according to the law or board procurement policy, or that written agreements or board resolutions were in place for professional services. Consequently, district officials did not obtain bids for purchases totaling $241,962 from five vendors, or use competition to procure professional services totaling $393,654 from seven providers.
  • District officials did not sign contracts with five of the seven professional providers who were paid a total of $133,903. As a result, the taxpayers have no assurance that goods or services of the desired quality were acquired at the lowest possible price, and that purchases were not influenced by favoritism, extravagance, fraud or corruption.

DiNapoli recommended that district officials:

  • Ensure all commissioners receive state-approved training within 270 days of the taking of their office and adopt a comprehensive code of ethics;
  • Review the treasurer’s work to be sure transactions have been recorded correctly, cash has been accounted for, and the district’s records and reports contain reliable information;
  • Contract with an independent auditor to audit the treasurer’s financial records and reports on an annual basis, and ensure that the independent auditor furnishes a certified audit report to the board members, OSC, and the town boards for Orangetown and Clarkstown within 180 days of the end of the fiscal year audited;
  • Comply with the law for future capital projects, making sure the projects are transparent and records are made available for pubic review;
  • Comply with the competitive bidding requirements when making purchases in excess of bidding thresholds and comply with procurement policy by using RFPs or quotations in the procurement of professional services; and
  • Enter into written agreements with professional service providers to provide a clear understanding of the services to be provided and the basis for payment. A board resolution may also serve this purpose.

District officials disagreed with certain aspects of the findings and recommendations in DiNapoli’s report, but indicated they planned to implement some of the recommendations. The auditors’ response to the district’s comments is also contained in the report. For a copy of the report, click here.


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