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May 6, 2009 1:55 PMPublication: The Southampton Press

Money designated for affordable housing never moved; housing fund in the red

May 6, 2009 1:55 PM

A total of $2 million in general fund surplus that the Southampton Town Board had earmarked for affordable housing projects was never actually transferred into the designated affordable housing account in 2005 and 2006, leaving that fund in the hole, town officials revealed this week.

The discrepancy with the fund balance in the Affordable Housing Opportunity Bank can now be added to the $6.5 million in direct appropriation transfers to the capital budget from the general fund that were never completed in 2004, 2005 and 2006. That moves the total impact of the current budget crisis being uncovered at Town Hall to $8.5 million.

The latest failed transfers and the housing fund shortfall came to light on Friday when the Town Board’s affordable housing liaison, Councilwoman Anna Throne-Holst, requested $44,475 from the housing bank to fund the development of properties given to the town by Suffolk County for affordable housing purposes. Ms. Throne-Holst said the initial resistance to that request prompted her to look into the health of the housing bank fund. “I asked for a full accounting,” she said.

In 2005, the Town Board allocated $1 million from the general fund—believed to be part of a budget surplus—to the Affordable Housing Opportunity Bank, which was created by the Town Board in 2000 to subsidize affordable housing projects. In 2006, the Town Board allocated another $1 million, also believed to be surplus funds, to that same housing bank.

However, though the transactions were made in the corresponding town ledgers, the $2 million dedicated in those resolutions was never moved into the designated housing bank. This is exactly what happened with the previous incomplete direct appropriation transfers to the capital fund.

The first $1 million earmark for affordable housing was authorized by the Town Board on June 28, 2005, to fund the purchase of property on Moses Lane in Southampton from Katie Press. On August 19, 2005, the Town Board adopted the subsequent budget appropriation, authorizing the comptroller to transfer the money from general fund surplus to the housing bank.

The Town Board earmarked another $1 million on January 24, 2006, for the purchase of vacant land on Cedar Lane in North Sea from Margaret Conklin. On April 11, 2006, the Town Board adopted the budget appropriation to that resolution, clearing the way for a transfer of funds.

Because that money was never actually moved from the general fund into the Affordable Housing Opportunity Bank, as directed by the Town Board, that fund is now $2 million in the red.

Although the Town Board approved another $2 million direct appropriation into the Affordable Housing Opportunity Bank in 2008—which was completed—that money will, in effect, simply reimburse the fund for the incomplete transfers.

“The difference is really covering the old expenses and not advancing more affordable housing,” Town Supervisor Linda Kabot said. “Little did we know, until now.”

Although the properties named in those resolutions were purchased, instead of the funding coming from the housing bank, as allocated by the Town Board, the town took other money out of the capital account, which was all comingled in one fund. Now, the town segregates its various capital projects into separate accounts to avoid a similar scenario.

The discrepancy in affordable housing funding was found as part of an ongoing review of the town’s books that recently uncovered similar problems with capital budget transfers during the tenure of former Comptroller Charlene Kagel in 2004, 2005 and 2006. Ms. Kagel informed town officials in March of $5 million not moved in 2005 and 2006, but then town officials also discovered another $1 million not transferred in 2004.

On Tuesday, Ms. Kabot said the 2004 amount turned out to be slightly higher, bringing the total to $6.5 million. With the housing fund discrepancies, that figure is now $8.5 million—but that number may increase, as there are potentially more incomplete direct appropriation transfers yet to be discovered, according to the supervisor. Ms. Kabot said she is currently investigating whether a $1.25 million allocation from 2004 for another property was completed.

“This will get darker before it gets lighter,” she said.

Town officials may cushion the impact of the deficit by eliminating some older projects that were never completed or paid for, although money was allocated for them. Abandoning old projects would require Town Board approval, Ms. Kabot said.

According to Ms. Kagel, human error was the reason the transfers were not made in 2005 and 2006. When she discovered those errors in the summer of 2007, Ms. Kagel said she instructed her deputy comptroller, Marie Buday, to move the money from the general fund into the capital account at that time. But Ms. Kagel did not inform Ms. Kabot and Deputy Supervisor Bill Jones of the blunders until last March.

The 2004 inter-fund transfer failures were unearthed by town officials working on reconciling the capital budget.

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Who can Linda find to blame for this. November elections can not come soon enough.
By eastquogueguy (22), East Quogue on May 6, 09 12:42 PM
....MEMO...LEVY ELECTED HEANEY FOR "WORKFORCE" HOUSEING! and Heaney helped get NUZZI elected...and Holtz is very friendly with both --just to add friends now with Suskind!
By UNITED states CITIZEN (207), SOUTHAMPTON on May 6, 09 12:54 PM
Send in the clowns
By littleplains (305), olde england on May 6, 09 1:22 PM
Same old story-this is not human error. Not moving the funds was planned to overstate the surplus and keep taxes low. As I remember Linda was an elected offical during all these years. She has to be investigated about her role in these errors. Ignorance about what was going on is not a defense for an elected offical in office.
By westhamptonboy (227), Westhampton on May 6, 09 1:25 PM
So the money is there, has been all along, just in another account. And these guys never noticed for the past 18 months? In November we need a change.
By Hampton (50), Westhampton on May 6, 09 1:32 PM
While Linda has to fix this I'm surprised most of the comments are blaming her.
Only one person mentions Heaney! Come on, Skip was the skipper at the time and the fault rests there and along with the personnel who knew of this but apparently did not come forward in reporting the problem. I've been in government budgeting for 23 years and the one commentator is right - this doesn't happen by accident. It was policy from the top and it was planned.
Budgeting is an aecane business, more auditing ...more
By North of Highway (280), Westhampton Beach on May 6, 09 1:34 PM
Sorry, I have to agree with Kabot. If the Town WAS run like a real corporation, the comptroller would be solely responsible. This is why a company hires employees. If that employee screws up, they get FIRED. Unfortunately, Town employees cannot be fired, so their attitude is they don't really care. They get paid just for showing up & breathing. As a side note - I hope whoever was in charge of obtaining those 72-H properties had the intelligence to check titles.
By Ms. Jane Q. Public (147), Southampton on May 6, 09 1:48 PM
Think Doug Penny said it very nicely back awhile ago....bring back the Southampton Party. One could only hope that he would step up and run..they were fiscially responsible to the community during their time in office.
By BeachGal (72), Hampton Bays on May 6, 09 2:41 PM
The future of Southampton depends upon affordable housing for teachers, hospital workers, firefighters, police and rescue . . . Think of how many affordable homes could be funded with these "missing" dollars. We seem to keep hearing "Little did we know" from Miss Kabot
By dagdavid (646), southampton on May 6, 09 4:09 PM
Well again Linda knows nothing.Just like she did not know about the phone call her husband made to a radio station.Just lke she did not know she had over housing with illegals.seens like Linda spent YEARS working for not just the town but us and she works for the people which she seems to have forgotten.Also they are useing this money to buy vacant land??? Strange things going on in Southampton but that is same old story
By sjd (420), Westhampton Beach on May 6, 09 4:51 PM
I get a kick out of this statement: "If a municipal corporation was held to the same standard as a public company is under federal law, then the CEO and the comptroller of that company would be held criminally responsible for misrepresenting the financial condition of that company."

How many banks have been misrepresenting their books lately? Exactly how many cases were brought by the SEC over the past several years? There's plenty of evidence that the SEC knew about Madoff and they just ...more
By number19 (111), Westhampton on May 6, 09 6:12 PM
Bring back Doug Penny!! Are you kidding he left a long time ago!! Doug Penny was for Doug Penny and no one else. He made his money in Hampton Bays and them took an exit.I don't remember any thing he did that was positive for Southampton Town!!
By bayview (160), Southampton on May 6, 09 8:56 PM
Just get rid of all the damned Republicans in office and let's change this thing.
By landarchi (33), Southampton on May 6, 09 9:36 PM
All I hear people is talking about affordable houses for teachers and police? Please how about the rest of the working peolpe in the town of southampton! Teachers and police and hwy superintants make excellent money. How about lowering our taxes and being accountable for the tax money that the town recieves. That way we don't have to have rent out our basements, or have "accessory apartments" for them(police and fire personal, & etc.
By frmr 1203 hauler (6), HB on May 6, 09 11:01 PM
Who were in charge of the town in 2005-2007? Heaney, Nuzzi, Kabot, Graboski and Kenny.
Kagel used the policy of not transferring money into proper accounts, and the Town Board was blind to what was going on?
By Bob Whyte (48), Hampton Bays on May 7, 09 6:27 AM
Maybe when Linda was worrying about Ms. Throne-Holst's dog she should have been worrying about where this money is. Its ok, now that they screwed up, Linda will hire another town employee to be in charge of the affordable housing funding. Eastquogueguy, I cannot agree with you more when you say November cannot come soon enough. Hopefully Linda doesn't run the town too far into the ground by then!
By courtesy (43), Southampton on May 7, 09 6:40 AM
What appears to have happened is that Linda and Co. never noticed the money was there, just in another account, and they approved a budget for 2009 and 2010 that is now problematic for them. So she is blaming the former comptroller as a smoke and mirrors tactic because it is an election year.
By Hampton (50), Westhampton on May 7, 09 8:33 AM
Bayview, what have you done for Southampton Town? Spewing your anger and vitriol in this forum doesn't count. Looking at your comments, you seem to enjoy taking shots at anyone and eveyone. These public servants you attack can't hide behind the cloak of anonymity that you abuse. I noticed that the few times Doug Penny has left comments in this forum he has the courage to put his name behind them. Why don't you? Is the view nice from the cheap seats?
By Good Ground (24), Hampton Bays on May 7, 09 9:46 AM
Democrat, Republican, Martian....it doesn't really matter. What matters is that OUR money, supposedly cared for by our elected officials was not where it was supposed to be. Who on earth "forgets" to move TWO MILLION DOLLARS into it's proper account? I can just hear it now:

"Oops oh man what a dummy I am! I'm so busy what with my day to day life that I just up and forgot all about that two million bucks I was supposed to be taking care of! Dang human error....my bad!"

If the ...more
By Agawam Yacht Club (69), Southampton on May 7, 09 9:50 AM
I just figured out how the Town is going to "locate" some extra money - anyone else get their reassessment notice yet? Holy crap! Guess I'll be going back to working 3 jobs just to eat. The Whitbys still giving out food?
By Ms. Jane Q. Public (147), Southampton on May 7, 09 11:02 AM
Let us give credit to Anna Throne-Holst for her continued diligence toward these financial matters. She is the board member who has been asking for accurate accounting for over a year…only to be stone walled by the supervisor. It is because of her efforts that this financial mess was uncovered. Now she has uncovered yet another problem created by this, and past administrations.
Good work Anna!
By SHNative (554), Southampton on May 7, 09 11:15 AM
Thank you Sally for bringing in the NYS Auditors. They can't get here soon enough.
By Bob Whyte (48), Hampton Bays on May 7, 09 11:42 AM
Madorff would be proud of the Town's latest shell game! Makes you wonder if anyone from the Town Board has been to Vegas or AC lately...
By ride the truth wave (125), southampton on May 7, 09 1:30 PM
Finances is under the control of the Supervisor…lets not start to include “The Town Board” in this especially it was the board members, Throne-Holst & Pope, who pushed hard to uncover these financial problems. We need to support them so that they can continue to work for the people of the town.
By SHNative (554), Southampton on May 7, 09 2:24 PM
We have to look at the 2005 board, but do not forget, they are all responsible!! even the democrats.
All this people are the same, with no exceptions, they are all in the same BED!!

.LEVY ELECTED HEANEY FOR "WORKFORCE" HOUSEING! and Heaney helped get NUZZI elected...and Holtz is very friendly with both --just to add friends now with Suskind!
By Bel (86), southampton on May 7, 09 4:41 PM
Get darker before it gets lighter -- and on whose watch! Ms. Kabot may not have been the Superviser all the time, but she was in office. I don't know how that woman can get up in the morning and look at herself in the mirror. This looks like it is only going to get worse -- we will be as bad off as East Hampton Town before we know it.
By workingmomof4 (21), Southampton on May 9, 09 10:36 PM
Not quite right workingmomof4...at least East Hampton members fight to keep the beauty and the right for all to enjoy the Hamptons while Southampton sells it off to the highest bidder and ruins communities by allowing Greed to continue.
By UNITED states CITIZEN (207), SOUTHAMPTON on May 10, 09 7:34 AM
Yet both towns are run by a group of elitists.
By squeaky (291), hampton bays on May 10, 09 7:48 AM
Did you see Newsday today-can you believe that Linda would even consider running for re-election. Maybe she's not aware of the financial problems in Southampton.

Linda-you had your 2 years-IT'S OVER-ask Yogi
By Lefty46 (56), Westhampton on May 10, 09 12:25 PM
I agree with Sally Pope. These were intentional acts of wrongdoing. All involved should be criminally investigated. This is out and out fraud by elected officials. And forget about creating new affordable housing. What about the current residents? I just got a reassessment letter stating the value of my house increased by $63,000 in one year. Are you kidding me? in this market? The town can make me an offer based on their assessment. I'd be thrilled to sell to them for that price because I ...more
By lol@hb (20), hampton bays on May 12, 09 12:21 PM
Linda Kabot said:

“Little did we know, until now.”

Got a mouse in your pocket? What is with the "We", it's on you Linda, no one else.
By Terry (380), Southampton on May 12, 09 2:11 PM
Its impossible for any home in Southampton to have increased in value from 2007 to 2008 unless there were major improvements. Any exact same house decreased in market value about 15%. The reassement is a sham.
By Lefty46 (56), Westhampton on May 12, 09 4:12 PM
I think everyone needs to understand that assessments are based from July 07 to July 08 before the big downturn. This timeframe is mandated by the state.
Yes there are errors becuase not every home gets a site inspection. I t pays to go to Town Hall and grieve or hire a service to do it. Chances are good that you will be readjusted.

I think that everyone should contact their state representative and tell them to restructure the timeframe assessments are calculated becuase obviously ...more
By ridiculous (214), hampton bays on May 15, 09 5:01 PM