Brookhaven Town Local Development Corp Cited In Audit: DiNapoli

FARMINGVILLE, NY — The Brookhaven Town Local Development Corporation’s board did not properly approve and monitor about eight projects such as the ones at Long Island Community Hospital and the Port Jefferson Ferry Retirement Community, a state audit has found.

An audit by State Comptroller Tom DiNapoli's office found the goals for the projects vague and not clearly defined in the authorizing resolutions. For the LICH project, the board approved the issuance and sale of up to $85 million in tax-exempt bonds and up to $20 million in taxable bonds.

Of the amounts, about $59 million in tax-exempt and $17 million in taxable bonds were issued to refinance tax-exempt bonds originally used by the hospital in various previously approved projects to acquire, construct, renovate or equip facilities, like the Knapp Cardiac Center, on the hospital’s 35-acre campus on Hospital Road in East Patchogue.

The project’s application indicated that the debt for previously-approved projects would be refinanced, creating 31 full-time jobs and one part-time job during the first three years, saying it would “promote and maintain the job opportunities, health, general prosperity and economic welfare of the citizens of the town.”

But the authorizing resolution did not specify how that would be achieved, according to the audit.

The board also approved the issuance and sale of up to $125 million in tax-exempt bonds for the Port Jefferson Ferry Retirement project, and of that amount $89 million was issued for the construction and renovation, as well as the installation of machinery.

While the project’s application indicated it would create about 42 full-time jobs and two part-time jobs during the first three years, its authorizing resolution indicated only that the project would “promote and maintain the job opportunities, health, general prosperity and economic welfare” of the town’s and state’s citizens, and “improve their standard of living,” the audit states.

The resolution was not specific though, according to the report.

The audit also found that the corporation also did not determine whether LICH or Port Jefferson Ferry “provided any health benefits for, improved the standard of living of, or increased the general prosperity and economic welfare of town citizens, which were all cited as project goals in the project’s authorizing resolution.”

“While the project applications defined the job creation and retention goals for each project, officials did not incorporate these goals into each project’s resolutions,” auditors state. “Approving projects without identifying clear and measurable goals that benefit the town is not in the public’s best interest. If the board had adopted authorizing resolutions that established clear and measurable goals, it would have provided specific guidance to applicants and to corporation officials while monitoring project goals.”

Auditors recommended the board should develop and adopt a written policy that establishes procedures for approving and monitoring projects, and ensure staff collects all required fees and consider recouping uncollected fees.

The board also recommended ensuring authorizing resolutions that include clear and measurable goals so that officials can easily determine whether projects are meeting the intended purposes.

The corporation’s officials generally agreed with the findings and recommendations and indicated they would take corrective action, according to the audit.

But, in a May 25 letter to the state, Board Chairman Frederick Braun wrote that members disagree with the key finding that the agency did not properly approve and monitor projects, saying that the Board of Directors “thoroughly and thoughtfully review all information pertaining to LDC applications and projects and each resolution is prepared by Counsel and properly approved.”

He went on to describe an intricate process by which the board and its counsel review a series of documents associated with the projects before each resolution is approved.

“Having entities like Jefferson’s Ferry and LICH providing services for the residents of Brookhaven is the goal and directly impacts the language in our resolution, which states the bonds are issued to, promote, develop, encourage and assist projects such as the project to advance job opportunities, health, general prosperity and economic welfare of the people of the State of New York,” Braun writes.

“In the cases of Jefferson’s Ferry and LICH, their existence - at minimum - directly advances the job opportunities and health of the residents of the Town of Brookhaven, which certainly advances job opportunities,” he continued. “While employment is part of the stated purpose and goal of the LDC financing and it is monitored and reported, it is only one part of the monitoring of the success of the project.”

Braun writes that he has read other audits and realized that the state’s response would be that it is “vague and not measurable, but I challenge you to provide a measurement of the importance to have a hospital or a continuing care retirement center in your community.”

“The goal of our support is to ensure that our residents have access to health care and our seniors have the option to age in the community they want to live in,” he wrote, adding, “Your insistence that a goal must be ‘measurable’ is narrow and misses value of having not-for-profits providing services.”