The state Department of Community and Economic Development's fiscal monitoring review explained how a $500,000 New Communities Program anchor building grant was spent, citing most of the expenditures as "not allowable."
As for who is responsible for the "not allowable" activities, that topic has been tossed around like a hot potato.
In an interview with the Times Observer last week, Warren Mayor Mark Phillips, who also served as GRO-Warren board president, said that GRO-Warren had applied for the funding as a loan and "didn't have any recognition of the stipulations associated with it" and received "no guidance" on the guidelines of the grant-to-loan program.
While quick to point out that he was not the city's representative to GRO-Warren as council had never passed a resolution appointing him, Phillips said the city has paid professionals who are tasked with ensuring compliance on how grant monies are spent and "this is all they do."
In a letter last month, GRO-Warren Secretary Harvey Stone also claimed that the economic development entity that dissolved last year acted responsibly.
"As this was a loan to GRO-Warren at 4 percent interest, not a grant, it was understood that the money could be spent as GRO-Warren wished," he wrote. Stone also said, "Coming after the fact and finding that expenditures did not meet the guidelines that were never provided to GRO-Warren is like closing the barn door after the cows have gotten out."
The DCED report is highly critical of the city's monitoring effort. "The City of Warren was not monitoring its sub-contractors," the report said. "...Good internal controls suggest that a grantee provide sub-contractor monitoring so it can provide guidance and ensure the funds were expended in accordance with the contract."
When asked for comment on Monday, Acting City Manager Mary Ann Nau cited a clause in the contract between the city and GRO-Warren that reads, "GRO-Warren, Inc. agrees to develop the Anchor Building Project and expend the subject loan proceeds in a manner consistent with the specific requirements of the program, and in compliance with all applicable laws and regulations."
Nau declined to elaborate "as this matter has been referred to legal counsel representing the city."
The New Communities Program guidelines obtained from DCED do not offer much clarity.
The guidelines define an anchor building project as "renovations to a significant downtown building, usually provided as a grant to the applicant and as a loan to the developer." In this case, the City of Warren is the applicant and GRO-Warren is the developer.
"Eligible activities for Anchor Building grants-to-loans can be used for up to 30 percent of the total project investment required to acquire and renovate the building," the guidelines state, but do not provide any additional specificity as to how the money can be used.
Multiple calls to DCED by the Times Observer requesting expenditure criteria were not returned.