Trouble at BERC?
by Geoff Kelly - posted 10:05 am, September 12, 2008
A poster over at SpeakupWNY says that John Riccione, a finance officer at BERC, has been quietly fired. Peter Cutler, the mayor’s communications director, confirmed that Riccione had been let go and told me it happened about two weeks ago. Because it’s a personnel matter, he won’t say why.
The other day I was speaking to Steve Banko, the head of the regional field office for HUD, which sends money to BERC. Banko has had a team of HUD monitors working full-time in City Hall for the past few months, trying to get a handle on the city’s incredibly poor/corrupt management of the HUD money that flows through its hands to various human service organizations, housing agencies, and economic development projects. (This story by Peter Koch is just the tip of the iceberg.)
The problem predates both the Brown and Masiello administrations, so Banko doesn’t fully trust local HUD monitors to recognize or report problems here when they see them: We’ve been screwing things up in Buffalo for so long, how’s a hometown guy to know right from wrong? (As a contrast, Banko pointed to Rochester, which he says does things aboveboard and makes great use of HUD funds.) And that’s leaving aside political motivations for letting poor accounting slide.
So Banko brought in two HUD employees from DC who he thought might cast an impartial eye on City Hall’s use of federal funds. Banko says the out-of-town guys were floored, especially when they looked at BERC. “They said, ‘Holy shit. What do these people do?'” Banko told me.
Banko said his monitors were told BERC spent $900,000 last year on salaries. That’s BERC’s estimation, not the result of digging through the numbers to find out who else is being paid through its accounts—or whose cell phone bill is paid with BERC funds, or whose car mileage allowance, etc. (This 2006-2007 BERC budget report, which I’m still parsing, suggests it’s typically more than that.)
“They said to me, ‘You were in City Hall, what do these guys do?’ And I said, ‘I was in City Hall, and I haven’t got a clue what they do.'”
He recalled that when the Breckenridge Brew Pub packed up and left town in the middle of the night, defaulting on BERC loans and stealing city-owned equipment, Banko asked then BERC chief Alan DeLisle to give him the contract with Breckenridge so that they might pursue criminal charges against the company. DeLisle refused, arguing that it would be bad for economic development if city government tried to punish an out-of-town company for screwing the city. Eventually, Banko say, he got the contract, only to learn that no charges could be pursued anyway: Under the terms of the contract, BERC had been charged with monitoring Breckenridge’s performance, and they hadn’t bothered to do so.
Technically, only 20 percent of a program’s funding can be used for administrative costs. That $900,000 in salaries can also be chalked up to “program delivery,” but Banko says you’d have to deliver an awful lot of program for that kind of money.
Banko’s in-house monitors are wrapping up the first of a multi-part study of City Hall’s practices regarding the use of HUD money. Hopefully we’ll relate the results of that report soon.