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Jun 10, 2008 12:30 PMPublication: The East Hampton Press

State Comptrollers viewing Southampton CPF records

Jun 10, 2008 12:30 PM

Auditors from the New York State Comptroller’s office have set up shop for the next several weeks at Southampton Town Hall to pore over the town’s Community Preservation Fund records.

The state comptrollers are conducting an audit of the decade-old fund in Southampton Town after having completed a similar review in East Hampton Town, according to State Assemblyman Fred Thiele, one of the key drafters of the legislation that created the CPF in the five East End towns in 1998.

The audit, he said, has nothing to do with the recent controversy in East Hampton over borrowing and spending from the fund, according to the assemblyman. “We asked for this audit several months before the problems in East Hampton came to light,” Mr. Thiele said.

Mr. Thiele said he did not expect any of the problems that have been an issue in East Hampton to show up in Southampton. “What happened in East Hampton was not a CPF problem,” Mr. Thiele said, “It was a general finance problem and their preservation fund was the largest account available to cover those problems.”

Still, Southampton Town Supervisor Linda Kabot said she has some concerns over possible charges to the CPF for employees not exclusively working on preservation matters. But she maintained that the town has been judicious in how it has tapped into the CPF and has not used the fund to pay town salaries or make up for town budgetary discrepancies.

State law prohibits the use of CPF money for anything but preservation and closely related costs.

With June 28 fast approaching, which marks the 10th anniversary of the fund, Mr. Thiele said an audit was necessary. In total, the five East End towns have collected nearly half a billion dollars for preservation initiatives. Each fund is supported by a 2-percent tax on real estate transfers. Mr. Thiele said such a large sum required a routine professional review.

The auditors from the state are presently set up at a conference table in Town Hall, according to Ms. Kabot, and have access to any records they wish to review. The supervisor said she expects the auditors to be at Town Hall for three to four weeks.

“They can look at whatever intrigues them,” Ms. Kabot said. “It’s important that the people are assured of the integrity of this fund. It’s their money.”

According to Ms. Kabot, the state comptroller’s office will be focusing on five key areas of the town’s records. The auditors will be looking to verify that the town has complied with all mandatory referendums dating back to 1998. “This is to ensure that changes to the fund requiring a mandatory vote were made that way,” she said.

The auditors will also check that revenues collected from the 2-percent real estate transfer tax that supplies the fund were indeed placed into the fund and in no other. “All CPF revenues have to go into a segregated account,” Ms. Kabot said.

While most CPF revenues are derived from real estate closings in Suffolk County, Ms. Kabot said some revenue for the fund come from what is referred to as “walk-ins.” She said some closings, such as real estate cooperatives, can be closed outside of the county and that lawyers representing those transactions literally “walk in” to Town Hall with a check. “These have to go into the Community Preservation Fund as well,” Ms. Kabot said.

Any questionable charges to the fund, such as employees who did not work on the fund or uses not allowed in the CPF law, will also be vetted by the auditors, Ms. Kabot said. “They are going to be looking at bank statements to see how we transfer from account to account.”

And, lastly, the auditors will sample acquisitions by the town made with preservation funds. “They will be looking into how we get a property owner to say yes to a purchase,” Ms. Kabot said, “and how we go about getting appraisals for properties we are interested in purchasing.” She said the town orders two appraisals for prospective properties listed over a million dollars.

The Town Board adopted a resolution at its regular meeting Tuesday, June 10, setting a public hearing to discuss revisions in the town’s CPF law that would clarify exactly how, and for what purposes, CPF revenues can be used. That hearing will be held on July 8, and, according to Ms. Kabot, is aimed at ensuring the fund’s transparency and the public’s trust in the town’s handling of it.

For instance, the resolution sets up a Community Preservation Department so that Mary Wilson, the town community preservation manager, will oversee her own department as opposed to being under Land Management, which is currently how it stands now. If established, the department would be responsible for its own payroll and will have tighter controls over how funds are allocated, Ms. Kabot said. “It will provide additional oversight and clarity,” she said.

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