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December 16, 2010

 

Peekskill Needs To Improve Oversight of Its Business Improvement District



The City of Peekskill’s Business Improvement District (BID) is at risk of not meeting its goals and properly safeguarding cash due to the lack of a written agreement with the city, inadequate oversight of the BID’s association board by the city, and an absence of written procedures for financial grant administration, according to an audit released by State Comptroller Thomas P. DiNapoli.

“Business Improvement Districts can be tools to help revitalize local economies,” DiNapoli said.  “But there’s a right and wrong way to do this – you can’t expect good results if you’re not minding the store.”

DiNapoli’s auditors found that the BID association’s executive director approved 12 payments to himself and his family members totaling $1,758.  The audit also found that a state grant was given to a business owned by the chairman of the BID association’s board of directors.   In fact, the executive director’s contract allowed him to provide his own private business’s services to the BID.  

In addition, a BID grant planner did not sign his contract until February 25, 2009; yet the city paid the consultant $10,000 prior to signing the agreement and an additional $8,000 the day after the contract was signed.  Also, the lack of written procedures for cash management activities put the BID’s cash assets at risk of potential errors, abuse, or loss.

In 2006, the association applied for and received a $200,000 Main Street Grant from the state.  The chair of the association board engaged a grant consultant who assisted in selecting participants for the grant.  There is no evidence board members participated in the selection of participants for the grant, and the former board chair, on the advice of the consultant, selected his own business as one of the five participants to apply for the grant, receiving approximately $40,000 in grant funding.

The board had no formal record of its meetings. Neither the secretary nor administrative assistant had custody of board-approved minutes, as required in the by-laws, and the city clerk did not have a copy of the association’s board-approved minutes.  Without complete and accurate minutes, the association could not assure city officials that it was properly fulfilling its duties.

DiNapoli recommended that the city:

  • Enter into an agreement with the association that spells out the association’s responsibilities;
  • Develop performance measures for monitoring BID activities;
  • Establish written policies and procedures safeguarding BID cash assets;
  • Adhere to the city charter when paying claims against BID funds;
  • Require official minutes of BID board association proceedings;
  • Establish policies over grant applications for BID activities and ensure that the association complies with all grant program guidelines and requirements; and
  • Develop recordkeeping policies and procedures and ensure that the board’s records are reconciled with the city comptroller’s records.

Officials generally did not agree with auditors’ findings. Click here for a copy of the audit report .



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