BMHA Audit Brings Status of $3.4 Million Debt Into Question

Executive Director Sanders-Garrett denies knowledge of “vanishing” debt at council hearing

By Matt Ricchiazzi

Last Monday a special meeting of the Common Council’s Finance Committee was held to investigate a $3.4 million Buffalo Municipal Housing Authority debt accumulated from unpaid utilities from 2005-2009.

Councilman Richard Fontana (who chairs the Finance Committee) called the meeting following a request by BMHA Executive Director Dawn Sanders-Garrett for a $250,000 grant that Councilmen Darius Pridgen and Rasheed Wyatt said would be used “to help poor people” at the BMHA-owned Fredrick Douglass Towers on Clinton Street on Buffalo’s East Side.

Before approving the $250,000 grant request, Comptroller Mark Schroeder wanted to alert the Council of the longstanding $3.4 debt owed to the city.

However an audit commissioned by BMHA makes the claim that the housing authority does not owe the $3.4 million to the city after all.

An apparent point of conflict arose when Pat Curry, the executive assistant to Comptroller Schroeder, pointed out to Sanders-Garrett that the authority’s annual Independent Auditor’s Report (performed by Clifton Larson Allen LLP of Baltimore MD.) claimed the $3.4 million is not due to the city.

The audit wrote off the entire $3.4 million BMHA debt by declaring that its management unilaterally claimed that an exactly similar amount ($3.4 million) is due from the city to the BMHA but without showing any supporting documentation.

The BMHA audit states: “The Authority recognized $3,467,714 as income during the current fiscal year as a result of writing off old outstanding payables to the City of Buffalo for water, sewer, and other services. Management has determined that the Authority has offsetting amounts due from the City to reimburse operating deficits incurred during the fiscal years 2004 through 2010.”

As Curry handed a copy of the BMHA audit to Sanders-Garrett, pointing out the questionable passage which dismissed some $3.4 million in debt, Curry asked, “How can you write off debt that you still owe?”

With the audit in hand, BMHA Executive Director Sanders-Garrett responded “I don’t know what that is,” and handed back the BMHA audit to Curry.

The following day, on Tuesday, the Comptroller received a check for $650,000 check from BMHA for police services delivered during 2015.  According to one BMHA commissioner, the BMHA stills owes a past due balance for police services from 2013 for $650,000.

By Tuesday evening, the Council approved the $250,000 grant to the BMHA despite the $3.4 million in debt/offset being undetermined.

“I’m disappointed that the Common Council approved a bailout for BMHA even though the authority owes taxpayers millions of dollars,” Schroeder wrote on social media.

Tenant elected BMHA housing commissioner Joe Mascia questioned the odd bookkeeping methodology of the BMHA and the potential conflict relationship with the Chairman of the BMHA Michael Seaman who is also in charge of the City’s Collections Department.

“The BMHA owes city taxpayers years’ worth of debt and, with the stroke of a pen on an audit paid for by the BMHA – under Chairman Mike Seaman –  they make $3.4 million disappear. Meantime as Seaman directs $3.4 million of BMHA debt to vanish, he is the same person in charge of collecting or not collecting the $3.4 million for the city,” Mascia said. “The debtor is also the debt collector! The common council have a fiduciary responsibility to the taxpayers to collect any outstanding debt. The whole situation calls for an independent, thorough, and fully transparent review.” 

Michael Seaman did not return a call from Artvoice.

Click here to read full auditor's report.