Editorial: Yonkers deserves answers on bad housing loans
The City of Yonkers is going after deadbeat developers. It's about time, since taxpayers are on the hook for millions in loans the city vouched for through a federal job-creation program from the U.S. Department of Housing and Urban Development.
Mayor Mike Spano's administration has already sued one developer who received $3 million in HUD loans as part of a failed effort to turn a contaminated 16-acre manufacturing site into a mix of condominiums and townhouses, as well as another entity that was unsuccessful in transforming a downtown office building into a high-tech hub. Neither one delivered as promised, despite the generous financial aid.
Citing litigation, the city isn't saying much to explain why these housing projects failed. However, the lawsuits have opened a small window to help the public see the problems. Now more lawsuits are expected as Yonkers tries to recover about $12 million from 16 businesses that took part in the Section 108 Loan Guarantee Program going back as far as 2005.
The federal government first informed the city in 2009 about some administrative problems and more recently Spano was made aware of issues after a commission headed by former Lt. Gov. Richard Ravitch and former Assemb. Richard Brodsky said this is a "matter requiring additional factual information and swift action."
While legal action is one avenue for correcting any errors by the city, it remains unclear how much money Yonkers will get back, if anything.
That shouldn't stop the mayor, or the public, from seeking answers to basic questions: Who benefited from these loans? Were the businesses were properly vetted by the city?
Other unknowns are whether the city required the necessary guarantors and collateral from the loan beneficiaries or whether it properly addressed a series of "serious administrative failures" that HUD cited in a 2009 audit that covered four years of the program.
Yonkers Inspector General Kitley Covill said her office is "extremely active" in an investigation that she expects will lay out the facts. Covill hopes to have a report completed in a few months, and that can't come soon enough.
There are a lot of questions surrounding the city's administration of this loan program. Taxpayers deserve a full accounting of the errors.