DiNapoli: Virgil Paid Ski Resort Over $50,000
More Than It Was Entitled to for Services
Because Virgil town officials did not adequately oversee and scrutinize the terms of town water and sewer contracts with ski resort company Peak Resorts, the town potentially lost tens of thousands of dollars in revenue, and paid the company over $50,000 more than it was entitled to under these contracts, according to an audit released by State Comptroller Thomas P. DiNapoli. Additionally, because town officials could not find a copy of a licensing agreement with the company, they could not determine whether Peak Resorts was meeting its obligations to operate Hope Lake Park.
The audit also found that the town did not adequately oversee capital projects at the park, did not monitor project expenditures, or obtain requests for proposals and sealed bids, contrary to the town’s procurement policy. The audit covered the period January 2006 to September 2007.
“In these difficult times, those charged with minding taxpayer dollars need to keep an eye on every penny,” said DiNapoli. “This means making sure that people or firms doing business with your town aren’t being paid more than they’re entitled to. Officials have to be equally sure contractors are doing what they’re supposed to do, under contract – nothing more and nothing less.”
According to DiNapoli’s audit:
- in direct violation of the town’s contract with Peak Resorts, the town inappropriately allowed the company to collect water and sewer charges – amounting to $240,000 during the audit period – and in turn did not receive all penalties the town was entitled to, or re-levy on property taxes all delinquent accounts;
- in some cases Peak under-billed itself on sewer and water use penalties, and some non-Peak users were either under- or over-billed on penalties, and Peak’s own delinquencies totaling $32,000 were not levied onto its taxes;
- the board paid Peak approximately $48,000 above what was called for in the contract for service fees for the water and sewer systems, and over $2,000 for routine maintenance and minor repairs that the contract clearly states should not be paid to Peak;
- town officials were not monitoring the terms of an agreement by Peak to operate a public park on lands the company had previously donated to the town; officials and company officers didn’t have a copy of the agreement on file;
- town officials did not establish budgets, track cumulative expenses, or monitor change-work orders for park improvement projects, and contrary to town policy, they did not utilize a request for proposals process before spending approximately $11,000 on legal services and over $13,000 on engineering services for the park project; and
- contrary to state law the town did not follow state bidding requirements before spending tens of thousands of dollars on materials and labor for the park skating rink and concession stand.
DiNapoli recommended that town officials:
- determine the amount of moneys due the town from Peak, including interest and penalties on delinquent water and sewer accounts, payment of delinquent water and sewer accounts that should have been re-levied, and monthly services fees and expenses reimbursed to Peak that were not part of the contractual agreements;
- conduct a proper audit of all Peak claims to ensure that they contain sufficient supporting documentation and that they comply with contractual agreements;
- maintain a copy of executed agreements with supporting details;
- develop strong internal controls and establish a system for the proper management of town financial operations to strengthen its oversight of town operations and contractual operations;
- ensure that Peak is complying with contractual agreements;
- ensure that only town officials or employees, or designated banks or trust companies, collect water and sewer user payments;
- ensure that late penalties are assessed correctly on all delinquent water and sewer user accounts and that delinquent water and sewer user accounts are properly re-levied on real property tax bills;
- pay only monthly service fees as per the contractual agreement with Peak and ensure that all changes and/or modifications are authorized in writing;
- formally adopt budgets for all capital projects and then track historical expenditures for the life of each capital project;
- ensure that the bookkeeper, under the direction of the supervisor, maintains separate capital project records for the duration of each project and submit periodic budget to actual reports to the board for review; and
- follow their procurement policy regarding use of RFPs and following competitive bidding requirements as required.
Town officials generally agreed with DiNapoli’s recommendations, and indicated they would take corrective action.
Click here for a copy of the report.