Report: Griffiss agency 'cavalier' about funds
Posted in the Utica Forum
#1 Jul 6, 2014
The state agency that oversees Griffiss Local Development Corp. and similar economic development groups throughout the state has issued a tough report on the local group’s fiscal management.
“Probably the most significant issue is the Board’s attitude,” said Mike Farrar, the author of the report from the state Authorities Budget Office.“Their perspective seemed to be a cavalier approach to their funds.”
At the moment, the Authorities budget Office is not planning to take action against GLDC, but reserves the right to do so if the issues raised are not addressed. The office has the power to publicly warn or censure such entities, and in some cases recommend the suspension or dismissal of staff or board members.
Since it was founded in 1994, GLDC has taken in more than $90 million in government funds. But it’s also allowed the Mohawk Valley EDGE economic development agency to use its funds, credit and employees for work not related to GLDC projects, and for activities that are “inconsistent with Not-for-Profit Corporation Law,” the report says.
EDGE president Steve DiMeo, who is also the authorized representative of GLDC and runs the entity, was very critical of the report.
“Frankly, they don’t know what they are talking about,” he said.
While the report acknowledges GLDC’s successes in redeveloping Griffiss, it also highlights the complex relationship between GLDC, EDGE and other entities functioning at the former base, such as the Griffiss Institute, Griffiss Utility Services Corporation, Griffiss Park Landowners Association and Cardinal Griffiss Realty LLC. It suggests that the arrangement “complicates governance, oversight and public accountability."
“We got the sense that EDGE maintained these entities, puts the money into a big pot and pays it out where it needs to go,” Farrar said. He also said GLDC funds were sometimes loaned to entities off the former base that have relationships with EDGE.
In addition to its ties to GLDC, EDGE also maintains the financial records for the Griffiss Institute and the landowners association. But DiMeo said the entities were each created for a reason, and that they work together for the betterment of the business park.
About 5,800 people work at the business park in jobs ranging from high tech to distribution center work. In addition to the $90 million in government funds spent there, around $400 million in private investment has come to the former base through GLDC.
The report looked at the corporation’s finances from January 2011 to September 2013. Among its findings
GLDC paid $309,000 during that period to a consulting firm that typically engages in lobbying activities. Entities like GLDC are barred by law from attempting to influence legislation by propaganda.
GLDC maintenance staff were directed to work at properties owned or managed by EDGE.
* A $13,748 loan was made from GLDC to EDGE for improvements at Griffiss Business and Technology Park, but the transaction was never approved by GLDC’s board. The report calls this and other incidents indicative of the “cavalier approach” of the GLDC board toward using GLDC funds to “initially finance the operations of other organizations.”
GLDC has allowed its credit cards to be used by EDGE as the equivalent of a cash advance. The study found at least six instances totaling more than $10,000 in which EDGE charged payments to GLDC for projects not related to GLDC. The funds were later paid back without interest.
The report also found at least 54 instances in which errors were made by EDGE staff who were providing financial support to GLDC. The errors totaled around $78,000.
DiMeo said that in the period covered by the study, EDGE processed 14,865 transactions for GLDC, representing more than $48 million. He said the report focused on 198 of those, totaling about $287,000, or just 0.6 percent of the total dollar volume. Of the transactions, 131 were for less than $1,000, he said. GLDC also has regular independent audits, he said.
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