Audit panel’s report ‘scathing’

Oversight group deems violations found as ‘substantive’

The Internal Audit Commission presented a “scathing” report to Hartford’s Department of Development Services, including over the handling of a $30,000 check that sat for “months before being sent to the Treasury department for deposit.”

The Hartford commission is an oversight group to whom the auditors report and it sent the document titled “Special Review, Development Services, Community Benefits Program Related to Tax Abatements” to interim director of development services Randal P. Davis.

The Courant obtained a copy of the memorandum.

There were four bullet points presented to the Department of Developmental Services, with the second one listed referring to the check that was left and not sent to the treasury department for several months.

“There have been no written procedures related to the receipt, safeguarding and submittance to the Treasury Department for receipts from developers since its inception back in 2021,” the memo states.

“It was brought to Internal Audit’s attention that a $30,000 check received from a developer in April 2023 was held in a safe in DDS for about six months before being sent to the Treasury department for deposit.

“Prior management had not documented written procedures when the program was implemented. Current management has not documented the policy as of the time of this memo. This should be done immediately.”

“The violations in this report are substantive and need to be fixed immediately,” Bruce Rubenstein, the chairman of the Internal Audit Commission.

“Holding a check of $30,000 for six months was … negligence. All funds should be dealt with in the usual protocol in the manner where the treasurer has the role with the city. I’ve never seen anything like this before — not in this city.”

Rubenstein has been on the board for 10 years.

Davis did not return a request

for comment.

According to its website, the city’s Department of Developmental Services provides a variety of services, including reviewing plans; issuing permits; inspecting projects for compliance with building codes and zoning regulations; issuing business licenses; and responding to complaints about code violations.

The memorandum explains there are construction projects in the city that can contain a form of a tax abatement “for a defined period” and such an agreement between the city for “dwelling units constructed by a private, nonprofit corporation” are for “the public purpose of providing relocation housing under section 221 of the National Housing Act.”

Further, it notes, “such abatement contracts for real estate taxes shall be used solely to reduce rents below market levels, improve the quality of life and design of such housing, effective occupancy of such housing by persons and families of varying income levels and provide necessary related facilities and services in such housing.”

The purpose is to provide “an incentive to the project developer to take on the project.” The agreements are approved by the Hartford Abatement Committee and the City Council and since 2021 the Development Services Department was to “raise funds for community development” when a construction project was taking place and a clause in the abatement agreement placed by DDS management states “that the developer will remit an agreed amount of money to DDS to be put into the newly established MUNIS Community Benefits Program Fund.”

The report says there is $65,000 in the fund collected from three developers in 2022 and 2023 and fewer than 10 projects that contain the clause.

“They have a policy where they are asking folks on bigger projects to kick in to a community developmental fund but it’s not a uniform amount of money,” Rubenstein said. “We were asked by treasurer Carmen Sierra to do this audit because she got wind of these checks.”

Rubenstein said every check is supposed to go through to the treasurer.

“The department heads in developmental services bypassed the treasurer and put it in the safety deposit box,” Rubenstein said. “The treasurer is supposed to put it in MUNIS (Community Benefits Program Fund) that records the all of the financial transactions. This is one of the reasons why the (report) is rather scathing.

“This one fell through the cracks for sixth months.”

A call to Davis seeking comment was not returned, but the Department of Development Services and the city responded with an email to the Courant. According to the email, the check wasn’t held for six months but for 3 ½ months.

“As part of the Housing Division’s Tax Abatement program for affordable housing, developers are now asked to contribute to a portion of their abated taxes to the Housing Division to support activities with a community benefit,” the statement said.

“These were typically structured such that the benefit payment was made when the project was completed. The first of these, for Village at Park River Phase IV, was dated April 24, 2023, and delivered to the Housing Division on April 25, 2023,” the statement said. “Because this was a new program and required sign off from multiple departments and time to set up, the check was secured in a safe until it was deposited on Aug. 7, 2023.

“From an accounting perspective CBA funds are kept separate in a separate project that will require an approved budget to be disbursed, eliminating risk that the funds can be used on an ad hoc basis until such budget is approved.

“The need for a budget and a policy that defines how the funds will be used was identified as a need by the Housing Division in late 2023. Given the impending mayoral transition and transition in leadership at the Housing Division, implementation of the policy was deferred for the new administration to handle. We aim to have the policy in place soon.”

Rubenstein said the Internal Audit Commission will continue to be a watchdog and will find waste.

“We expect the mayor to tighten the ship at the Department of Developmental Services so this will never happen again,” Rubenstein said.