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Auditors from the state Comptroller’s Office sharply criticized the Lancaster Town Board for its handling of the $1.6 million purchase of a commercial property eight years ago and for allowing the town’s four fire districts to store up more than $5 million in reserves.
The auditors, in a report released Friday, said the Town Board “likely wasted” much of the $2.5 million spent since 2003 on the former Colecraft building, a structure that was to serve as the town’s new police and courts building but has sat largely unused since then.
While Town Board Democrats have defended the purchase as the right decision at the time, a small group of residents has for years argued that town officials erred badly in buying the property, and the audit largely backs up this position.
“It’s official now: The taxpayers were misled. Taxpayer money was wasted. This was bad government,” said Supervisor Dino J. Fudoli, a Republican who took office in January and who slammed the Colecraft purchase during his campaign.
The audit also takes the Town Board to task for approving annual increases in funding for the four fire districts that provide coverage in the town without reviewing the districts’ finances – including unnecessarily large reserve funds.
Town officials say the fire districts save this money to pay for expensive new vehicles and equipment, but they are planning to more closely scrutinize the budgets of organizations that get town funding.
“I welcome those criticisms from the audit,” said Councilman Ronald Ruffino Sr. “We need to be doing what’s best for this community, for the taxpayers.”
The audit echoes criticism of the Colecraft purchase that has been reported at length in The Buffalo News. The town bought the 40-year-old, 73,000-square-foot building on Walden Avenue to convert it to a new public safety building.
The town did not request an appraisal of the building’s value and did not seek a feasibility study of its plans for the building until after committing to purchase the Colecraft property, the auditors concluded.
By 2004, when the same company produced a design study for the project, the estimated cost, including the purchase price, had risen to $11.4 million from $8.5 million.
That increase in cost and a lawsuit filed by residents – the former town attorney advised not moving forward until the case was resolved – prompted lengthy delays.
By 2011, after changes in building codes promised to make the project even more expensive, the Town Board opted to cut its losses and build a new complex on Pavement Road.
The audit concludes the town has spent $2.5 million on the Colecraft project, including about $500,000 in interest bond payments. The town, county and Lancaster Central School District also have foregone $440,000 in property taxes since 2003, the audit found.
Ruffino, who was on the Town Board at the time, said he and his colleagues relied on the advice of their consultant in purchasing the Colecraft building. He said it was the option that made the most sense then.
The building is on the market, and Town Board members hope to recoup much of the money invested in the project.
As for the fire districts, the audit notes that the four companies – Bowmansville, Twin District, Town Line and Millgrove – between 2007 and 2010 received annual increases in their tax levies of between 3.9 percent and 5.8 percent. The four districts, which receive funding through contracts with the town, had a combined $5.03 million in their reserve funds at the end of 2010, an amount the audit termed “excessive.”
Auditors said town officials didn’t sufficiently review the fire companies’ budgets before approving funding.
Town officials respond that much of the money in the companies’ reserves will be used to pay for new fire trucks, turnout gear and other required items while avoiding the cost of borrowing for those purchases.
“We believe we’re being fiscally responsible by looking long-term,” said Ronald Rozler, Twin District’s president.
They also noted the Town Board earlier this year reached a two-year contract that includes no increase in payments to the companies for 2012 and 2013.
Aquino and Fudoli signed the town’s official response to the audit, though the supervisor distanced himself from the response by noting that he took office in January and that the statement represents the views of the other members of the Town Board.
The town must produce a corrective action plan that takes into account the findings of the audit within 90 days.
Councilman John Abraham Jr. has started working on a resolution he hopes to introduce Nov. 5. It would direct any organization that receives town money to submit financial information to the town, and it would require that the supervisor, members of the Town Board’s finance committee and the town’s director of administration and finance review those documents each year before the town budget is filed, Abraham said.
The audit can be found at: www.osc.state.ny.us/localgov/audits/towns/2012/lancaster.htm.

email: swatson@buffnews.com