State audit critical of Glen Cove IDA’s monitoring of projects

An audit report released last month by the state comptroller’s office found critical issues with the Glen Cove Industrial Development Agency’s operations, leading some residents to question its role and practices. Agency heads, however, have said that many of the report’s findings have already been addressed.

Mayor Tim Tenke, who chairs the IDA board, called for the audit when he took office in January 2018. “As the chairperson,” he said, “I wanted to understand what was happening with the IDA.”

The audit report, issued July 23, covered the period from January 2017 to September 2019, and found that during that time, the “board and officials did not properly approve and monitor projects or take action when goals were not met.” Additionally, the report states, “required annual financial disclosure statements meant to identify conflicts of interest were not filed,” and that in some instances, payments in lieu of taxes were not monitored or correctly allocated to affected taxing jurisdictions.

The lack of oversight has cost the city more than $600,000, according to the report. Nassau County received nearly $376,000 that should have stayed in Glen Cove: Just over $75,000 should have gone to the city, and the school district and library should have been paid nearly $301,000. The audit also determined that 52 of 115 payments were late, and that late fees totaling over $259,000 were not billed or collected.

While Tenke and IDA Executive Director Ann Fangmann acknowledged that these problems needed to be fixed, Tenke said that recent criticism of the IDA board was “not justified,” because the agency had already implemented changes, and because these issues predate the current board and administration.

Incorporated in 1974, the IDA is a nonprofit public-benefit corporation that has the authority to help nonprofit and other qualified businesses relocate, expand and build in the city. The mayor serves as board chair, and volunteers comprise the rest of the five-member board. Tenke appointed three new board members in 2018, and last year he expanded the board to seven members, all of them city residents. The board chair also has the authority to appoint directors, and Tenke chose Fangmann as executive director in 2018. Until then, she had worked as the agency’s administrative director since September 2016, strictly overseeing the waterfront development project.

When the audit began, Fangmann was already pointing out deficiencies and implementing changes, Tenke said, including how the city controller was overseeing payments. “That was a big issue,” Tenke said.

Fangmann met with Controller Mike Piccirillo when he took over the job in January 2020. “One of the first things we discussed was the allocation of the PILOT payments between the taxing jurisdictions,” Fangmann recalled, “and we had actually addressed it to the IDA counsel at the time to get an opinion. These are some of the same items that came out of the audit report, and quite frankly, I learned how much more of an oversight role the IDA should have had those years, because it had all been done down in [the Finance Department], and it had all been set up by a previous controller.”

By the time the audit had some initial findings, Fangmann said, she and Piccirillo had already begun implementing procedural changes. Tenke said that the county has been made aware of the misallocation of payments.

“I’m relying on our controller to negotiate with the county to recoup that money that was erroneously sent to the county and should’ve stayed here with our taxing jurisdiction,” Tenke said. “Mainly our schools.”

Criticism of the IDA has increased because the report was released in the midst of a public discussion of a PILOT agreement for the Livingston Corp.’s Villa Project on Glen Cove Avenue. The 10-year PILOT — which may be extended by two years if certain conditions are met — was granted July 29, the first on awarded during Tenke’s three and a half years in office and as chair of the IDA board.

“Before that, I had not given out any PILOTs,” Tenke said. “And this is the shortest PILOT given for a project of this size in Glen Cove in the history of our IDA. What people fail to realize is that if Glen Cove did not have an IDA, this type of project would have gone to the county, and the county would have given them a 20-year PILOT.”

The mayor also said that the term payment in lieu of taxes is misleading, because it implies that taxes are lost instead of gained. “That’s not the case at all,” he said. “If you have a piece of property generating no taxes, then you allow them to build, with a PILOT, it brings in the tax dollars plus the additional money that will be spent in Glen Cove while the project is being constructed.”

Another problem the audit found was that historically, the Glen Cove IDA has not created many jobs. Its most recent project is a residential apartment complex, with an estimated six permanent jobs. “We don’t have the space to do industrial — the industry in Glen Cove is gone,” Tenke said. “So what we’re left with is areas of the city that will be developed, but they’ll be developed residentially. So either we say no to all these projects or we allow them to build residential, as long as they’re apartments.”

One area has long been seen as a potential space for industry: the former Photocircuits plant, a 25-acre site on Sea Cliff Avenue. The site has been deemed contaminated, however, so the cleanup would take years, and would come at a price.

“Glen Cove is still recovering from an industrial legacy,” Fangmann said, “which polluted many different sites here in the city.”

City Councilwoman Marsha Silverman, who has been critical of the IDA’s operations for several years, said she was disheartened by the findings.  “I was really disappointed that a lot of my thoughts were validated in this report of the poor performance of the Glen Cove IDA,” she said.

“There are ways to remedy this,” Silverman added. “The question is, will the leadership take a role to remedy it? If there were individuals who were responsible for missing out on $600,000 over two and a half years, I would think there should be some accountability, and I don’t see that occurring yet.”

Silverman has suggested placing a moratorium on granting further tax breaks until  “the appropriate metrics, policies and protections are established which correspond to and address those issues cited by the OSC audit and are put into operation.”

She also disputed Tenke’s claim that granting a PILOT for residential use is in taxpayers’ best interests, because the city still has to pay for services and utilities that new residents will use. Silverman said that while vacant land is not ideal, granting a PILOT still falls on the backs of taxpayers and benefits the developer. “I just want everyone to pay their fair share,” she said.

“Based on the results of this audit,” she added, “this was clearly not the time to grant more PILOTs.”