ODD CHOICE: Mayor Excuses IDA Audit by Comparing New Rochelle to Yonkers Where DOJ Investigates Bramson-Linked Developer

During his radio show on Tuesday, Mayor Noam Bramson commented publicly for the first time on the findings of the Office of the State Comptroller (OSC) Audit of the New Rochelle Industrial Development Agency, first reported by Talk of the Sound.

To listen you can download the 3 minute audio file here (3.7 MB .mp3 file)

The Mayor said the OSC issues audits like this for IDA’s all the time. He said they are often quite similar in their content and cited a “recent or contemporaneous” audit of the Yonkers IDA that had many of the same conclusions.

A check of the OSC web site shows there is no such recent audit of the Yonkers IDA.

The most recent audit of the Yonkers IDA was made public on February 23, 2009.

At the time that the Yonkers IDA Audit was released — more than a year ago — Thomas DiNapoli, the State Comptroller said “The primary reasons IDAs exist are to grow a local economy and facilitate the creation of jobs to the benefit of the community they serve. If an IDA cannot prove that projects are worth taxpayer investment, and if an IDA does not hold businesses responsible for not meeting their obligations, what is the point in having an IDA in the first place?”

This is a question many in New Rochelle have begun to ask in the wake of the OSC audit of NRIDA which comes on the heels of a series of projects that have failed to deliver promised benefits, contained large unexpected costs or both.

Ten months after the Yonkers IDA audit was released, the Department of Justice indicted Sandy Annabi, a former Yonkers City Councilwoman, along with a politically connected attorney for their involvement in a bribery scheme allegedly orchestrated by a developer with ties to Mayor Bramson.

Forest City Ratner, the developer behind the Echo Bay Redevelopment Project in New Rochelle, has been implicated in a scheme to bribe former Yonkers City Councilwoman Sandy Annabi. The one time Democratic Majority Leader of the Yonkers City Council turned herself into the FBI in White Plains this morning. She has been accused of receiving more than $160,000 In secret payments to change her votes on to Yonkers development projects. The Indictment also charges Zehy Jereis, the former head of the Yonkers Republican Party, and Anthony Mangone a Westchester County attorney, with conspiracy, bribery, and extortion in connection with two real estate development projects within the City of Yonkers which were pending before Annabi.

The DOJ investigation is ongoing.

There was a recent Yonkers School District audit released this months by the OSC but it does not contain language nearly as harsh as the criticism contained in the NRIDA audit:

DiNapoli’s auditors found that although the board adopted a procurement policy and officials developed procedures to implement the policy, there were no guidelines for the use of requests for proposals (RFPs) for awarding energy service companies contracts and professional services contracts. DiNapoli’s auditors reviewed the process used to award contracts to energy service companies and professional services providers who received contracts totaling approximately $19 million. They found that the district did not always document the reason for selecting a bidder, did not always award the bid to the lowest responsible bidder….

Not good but not in the same ballpark as the NRIDA audit and not an IDA audit.

On the day the NRIDA audit was released, the OSC also announced five other audit reports for municipalities around the State.

Let’s take a look at the other five:

Town of Plattsburgh – Internal Controls Over Billed Receivables – “DiNapoli’s auditors found weaknesses in the town’s internal controls over water and sewer billed receivables…”

Village of Ossining – Internal Controls Over Water Billings and Collections – “DiNapoli’s auditors found that internal controls over the billing and collection of water charges were appropriately designed and operating effectively…”

Town of Hinsdale – Justice Court – “DiNapoli’s auditors reviewed the justices’ records and reports and found that generally, internal controls were appropriately designed and operating effectively, and that the justices properly maintained their accounting records…”

Town of Glenville – Internal Controls Over Personal, Private and Sensitive Information – “DiNapoli’s auditors noted that the board did not establish adequate policies and procedures to safeguard personal, private and sensitive information…”

Village of Canaseraga – Financial Operations – “DiNapoli’s auditors found that the clerk-treasurer did not maintain appropriate records to properly account for and report financial activity, such as cash receipts, disbursements journals, general ledger accounts or general journals.”

Some good, some bad but absolutely nothing that supports the Mayor’s claim that the NRIDA audit is typical of OSC audits. Far from it.

The Mayor went on to say there are a few things that stand out to him in the report. He then named just two.

1. “The audit was stimulated in part by a third party complaint that the IDA had issued benefits counter to state law. The audit rejected that complaint and affirmed that the IDA’s incentives have been fully compliant with law. That this is important in having confidence in the process we employed in New Rochelle.”

There is not a single word in the OSC report that supports this claim. The report indicates there was a third-party complaint but does not say that it “stimulated” the report in any way. In fact, it is mentioned as a sidebar issue to the OSC review of the NRIDA approval process:

During our review of the project approval process we followed up on a complaint that NRIDA improperly extended benefits for retail space located on the property of the New Rochelle Center project. Prior to February 1, 2008, GML (with certain exceptions) prohibited IDA benefits for retail projects. However, the benefits extended by NRIDA for the retail project were approved by the Board on March 17, 2008, after the prohibition on retail projects expired. Therefore, the extension of IDA benefits was in accordance with existing statutes.

2. “The report acknowledges the general development philosophy we have used for about a generation which measures the cost and benefits not only by what is generated on a specific development site but also how it impacts the larger area. Secondary and spillover effects are critical to analyze and examine and consider when you are trying to evaluate whether a project does or does not make sense.”

No. The audit itself does not make mention of this at all. This issue is raised by Marianne Sussman in her reply to the audit and only as it relates to a single project (Avalon-on-the-Sound). The auditor points this out in a note appended to the final report.

The application form for the Avalon on The Sound project included job creation as one of the benefits to be realized by the City if the application for NRIDA assistance were approved. However, we acknowledge that job creation is not the only benefit to be considered in project approval and have amended our report to include other benefits stated on the project application

.

This is an old Bramson trick.

Back in February the OSC did a report looking at Capital Planning and Budget for 10 municipalities. In the City’s reply to the OSC (the Mayor’s really), the Mayor made this comment:

We have reviewed the document and concur with both your conclusions and recommendations. We stand ready to offer our process as a model for other communities throughout New York State.

Got it? The Mayor writes a letter saying that he wants to put New Rochelle forward as a model.

So how does the Mayor describe this report on his blog? “State Comptroller’s Report Lauds New Rochelle-City Emerges as State Model”

Only the out-sized ego of Noam Bramson could be so self-serving and disingenuous as to write a letter where he says “We stand ready to offer our process as a model” and then claim that it was the Comptroller who was citing New Rochelle as a model.

Noam sounds like the kid who scratches the zero off his 10th place ribbon in the Pinewood Derby, paints it blue and runs to his mother shouting “Mommy, Mommy, look…I won first place!”

The Mayor then makes a number of assertions as to what he claims the report says, all of them false.

1. “illustrates some potential improvements in the procedures and process the IDA employees in evaluating incentives”

No, the report says NRIDA has no process. You cannot “improve” a process that does not exist you first create a process then improve it.

2. “suggests that we develop local standards that are more closely tailored to the economy and goals of New Rochelle and don’t rely on state standards to the degree we have in the past”.

No it does not. The report says nothing about “local standards” — that phrase is never used. What it says is that NRIDA used a GENERAL policy based on the state’s Uniform Tax Exemption Policy but has never, in 13 years, developed any specific criteria with which to evaluate a project. The words in the report are quite clear on this point (general/specific as in vague/clear-cut):

NRIDA officials relied on the general procedural guidelines in NRIDA’s Uniform Tax Exemption Policy (UTEP) and did not have a checklist of specific criteria for evaluating project owners’ applications for financial incentives. In the absence of detailed evaluation criteria, they did not document the reasons for their project approvals and, therefore, there is no assurance that projects are evaluated in a consistent manner.

UTEP is a set of general procedural guidelines not a specific set of criteria. To make the point, imagine you need to take your car to a mechanic. Do you want to go to one who looks you up and down then says he will charge you two hundred bucks to take a look at your car or one who looks at your car and says he will do a 40-point inspection for $199.50. NRIDA is the first guy.

3. “suggests we establish a more robust framework for examining costs and benefits at the time incentives are granted”‘

No again. The report says that NRIDA has never done any comprehensive cost benefit analysis at all not that their “framework” was not sufficiently robust. The report is clear on this point as well:

NRIDA officials did not perform a comprehensive cost-benefit analysis for any of the 10 projects we reviewed to determine if the benefits to the City would exceed the cost of providing tax abatements and exemptions, even though seven of the applications provided sufficient information…by not performing a thorough analysis of anticipated costs and returns, the NRIDA Board does not have adequate assurance that taxpayer moneys are invested in a productive manner that will benefit the City.

The report also says that the developer applications for three projects (which received $29 million in benefits) did not specify dollar amounts for benefits requested and received. Read that again. Slowly. Now think about it. They just handed over the money like drunken sailors.

The actual list of recommendations from the OSC is a bit longer and far more substantive than the Mayor’s fairytale version:

1. The Board should develop specific project evaluation criteria upon which to base sponsorship decisions.

2. NRIDA officials should use a standard format to document the project evaluation process so that interested parties can readily determine which criteria officials used to make the decision to sponsor, or deny assistance to, a specific project.

3. The Board should perform a documented cost-benefit analysis for each proposed project.

4. The Board should verify the information on the project applications, including the stated number of existing jobs.

5. The Board should evaluate the project applicant’s financial operations prior to approving the project. These evaluations should include reviewing the applicant’s credit history, assessing the strength of the business by analyzing past earnings and projected cash flow, and considering the experience of management.

6. NRIDA officials should verify the employment data (number of existing jobs) that businesses report in their ongoing annual reports to NRIDA and determine whether reported data is accurate and reliable.

7. NRIDA officials should monitor projects on an ongoing basis to determine whether they are making reasonable progress toward projected goals. Such monitoring should include tracking the capital amounts invested by project owners to ensure they are equal to those specified on the application and used in the cost- benefit analysis.

8. The Board should make sure all eligible projects include an agreement to recapture the financial incentives provided if the business does not produce the intended benefit; and should invoke those recapture provisions, as appropriate, if monitoring activity shows that the business has not delivered sufficient benefits.

9. NRIDA should comply with GML by remitting PILOTs received to the affected tax jurisdictions within 30 days of receipt.

There were a few things the Mayor “forgot” to mention that WVOX listeners might have wanted to know:

1. “NRIDA officials also did not monitor the status of ongoing projects to ensure reasonable progress toward the projected benefits described in the original applications”

2. “As a result NRIDA could not “know when they should invoke “recapture” agreements to recover some or all of the benefits provided when projects fall short of their promised goals.”

In fact, NRIDA just extended Capelli’s recapture agreement on Parcel 1A (Trump Tower) for two more years just two days after the OSC report was published — according to City Finance Commissioner Ratner the City was owed $700,000 going back to December 2009 but elected not to invoke the recapture agreement and collect the money. Readers will recall that at the very time Capelli owed the City $700,000, firefighters and CSOs were being fired or forced into giving up previously negotiated raises. I wonder how the firefighters are going to feel when they learn that just this week Capelli waltzed into the Fire Department Headquarters building on Beaufort to, in effect, cash a check that could have gone to preserve their raises.

3. “NRIDA did not remit approximately $1.3 million in payments in PILOTs to affected tax jurisdictions within 30 days of receipt as required by GML.”

Still no word on the BoE on this one but one has to wonder how many teachers were fired because the IDA was illegally holding onto money they were not entitled to keep.

4. “NRIDA officials generally agreed with our recommendations and indicated that they planned to take corrective action”.

5. “NRIDA does not have a formal process to determine whether IDA assistance is necessary for the project to proceed…therefore, NRIDA may be providing tax abatements and exemptions that are not always necessary, at the expense of the taxpayers.”

6. “Although they maintained that these project approvals were justified, they did not have any documentation to support their project approval decisions.”

7. “…while they evaluate the data provided by an applicant for a proposed project, they do not independently verify the data on the application due to limited resources.”

8. “NRIDA officials did not adequately monitor IDA-sponsored projects to ensure they achieved, or made reasonable progress toward, the employment projections or other goals stated in their applications.”

9. “NRIDA officials did not verify information contained on each project’s annual reports, as well as in the original project applications as previously described.”

10. “they do not actively monitor capital amounts invested by project owners to ensure amounts invested are equal to those submitted on the application for financial assistance.”

Apparently the Mayor did not get the memo that Marianne Sussman and Chuck Strome have already agreed with the findings in the audit.

It is a small point within the context of this story but revealing nonetheless so I will mention it here.

The Mayor begins his fact-challenged peroration by responding to a question from Bob Marrone, the News Director and morning host at WVOX, as to whether the Mayor has read the report. The Mayor tells Marrone he “received and learned about the report”… “I think on Friday which is the same time it became a public document” he says he looked it then and in greater detail “over the weekend”.

Friday was June 19th. The report was made available to the City of New Rochelle on or around June 8th. It was made public, by the OSC, on June 22nd (not the City). To the best of our knowledge the City has still not published the report to its own web site and did not send a copy to the press.

That this report was coming was no secret. It has been in the wind for a while. We keep track of these sorts of things — when the school board claims they are going to discuss a certain topic like the abysmal graduation rates at the high school (July), when the DPW expects to get the report on the BramsonMobile (June and again in September) and so forth. Talk of the Sound is on the press distribution list for a wide variety of government agencies, regulated utilities, political campaigns and so forth. In this case, we spoke with the folks at the OSC press office in the middle of June and were told the report was due out in July. I noted that in my calendar. Over the weekend I was hearing the report was being circulated within City Hall. By Monday morning I had obtained a copy. I immediately wrote a story and published it, describing my story as a preview of a report due out in July.

I was greatly surprised when I read a story about the audit in the Journal News which said the report was released on Monday June 22nd. After several heated phone calls with the OSC I learned that the press office had erred in telling me in July. They admitted that they had not actually checked with the auditor in charge of the NRIDA Audit but simply checked an internal listing which indicated the report was due in July. Apparently the audit was completed sooner than expected.

In either case, what I learned from all this is that OSC has a strict policy on how they prepare, circulate, finalize and ultimately release a report. They write a draft report, send it the municipality for comment, respond to that comment, then show the final version to the municipality, wait 10 days and then publish the report along with a press release.

In this case the audit report was released by the OSC on June 22. Counting backwards 10 days, the City of New Rochelle received the report on or about June 8th. It is not clear who exactly got the report but it would seem highly likely that Chuck Strome got a copy because he is both City Manager and on the IDA Board. I would have to imagine Marianne Sussman got a copy because she chairs the IDA board and sits on the City Council. Perhaps Michael Freimuth, the development Commissioner, got a copy and likely Jeremy Schulman who was the Executive Director of the IDA at the time.

In order for Bramson’s answer to Marrone to be true, the Mayor would have us believe that Strome and Sussman had this final report burning a hole in their pockets for 11 days and withheld any information about it from the Mayor until June 19th.

Is there a single sentient New Rochelle resident who sincerely believes this would happen?

It doesn’t even make sense. According to the OSC, there would be absolutely no legal or ethical reason for Strome or Sussman to NOT send the Mayor a copy of the report let alone to not even mention it in passing during a break in a City Council meeting. In fact, Strome, Sussman or anyone else could have published the entire report to the City web site the second it hit their inbox and been within their right to do so. It was and is a public document which was meant to be published; the standard 10 day delay is merely a courtesy from the OSC to give the municipality time to circulate and digest the findings before the press and the public start asking questions.

So, why would Sussman and Strome keep the Mayor in the dark about this report? More to the point, why would Bramson sit across the table from Bob Marrone and expect Marrone to believe that the Mayor first learned of the report at the same time as Bob Cox (recall, I am on the OSC mailing list!).

This sure seems like a clear case of Bramson just flat out lying to Marrone’s face — and doing so to no particular advantage. Bramson being Bramson, simply unable to answer a straight question with a straight answer.

And that is why this is such a revealing little anecdote. It explains why Bramson has become so widely reviled in New Rochelle, even among many Democrats. He appears constitutionally incapable of telling the truth.

Beyond that it provides a glimpse into why the Bramson era has been such an utter failure. It is about leadership — or lack thereof.

Bramson’s answer to Marrone was all about some nebulous Bramsonion notion of political gamesmanship — another case of too-clever-by-half.

What Bramson has never been able to understand is that being a leader is not about winning a momentary political advantage or sneaking something past a political opponent at a City Council meeting but looking a problem square in the face and dealing with as it is not as one might wish it would be. In behaving this way, Bramson shows his true colors — not the elected leader of the entire community but rather a spare Democratic vote on the City Council. In these tough times New Rochelle needs political leadership not partisan hackery.

About a year from now the City of New Rochelle will be edging towards the final months of what is sure to be a bruising 2011 Mayoral Race. There is a buzz out there that the Mayor will not be standing for election again in the City of New Rochelle. Good. He needs to go — anywhere, just not here. Whoever does step forward to contend for Bramson’s job, let’s just hope it is someone who, when faced with the sort of damning indictment of a municipal agency found in the OSC’s NRIDA audit will have the courage to honestly assess the situation, explain the problem to the public in a forthright manner, offer a solution and then carry it out.

If Noam Bramson cannot give an honest answer on such a simple question to a well-respected local radio show host in what were obviously prepared remarks to an easily anticipated question, why should voters expect to be treated any differently?

If this topic holds any interest for you at all, I would urge you to mark your calendar for 5:30 PM on Thursday July 29th, the day the IDA has scheduled a discussion of the OSC Audit. See you there.

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