The City of Yonkers is on the hook for millions of dollars from a troubled loan program that was supposed to create jobs and spur economic development.
Instead, the federal Section 108 Loan Guarantee program left a mess, thanks to sloppy bookkeeping, inadequate oversight and a recession that forced some builders to bail on their ambitious plans.
And those jobs it created? Who knows how many, if any, ever materialized after the bureaucratic bungle?
The city wisely stopped giving out these loans and must now redouble its efforts to recoup the losses. It should do all it can to minimize the cost to taxpayers and further depletion of the city's community development block grant program, which it is now using to repay the U.S. Department of Housing and Urban Development. Those block grant funds serve an important role in revitalizing parts of the city.
The loan program began in 1996 to provide incentives and financing for housing, job creation and economic development in low-to-middle income communities, notably downtown Yonkers and its waterfront area, which are in the midst of a turnaround.
HUD first raised concerns in 2009, after it found serious oversight failures by the city going back to 2005. The city -- which effectively vouched for the businesses it was giving money to, including six developers who defaulted on roughly $6.5 million, -- was left holding the bag on the lousy loans. With interest, Yonkers must repay about $9 million.
In a report published earlier this week, Inspector General Kitley Covill characterized the record-keeping as "haphazard" and "disorganized." She wrote that a more thorough analysis wasn't feasible because of unreliable documentation, missing information and limited resources in her office.
That's too bad, especially since in the past year, the city hired a loan officer and lawyer to manage the remaining loan portfolio and help in recovering the money.
Mayor Mike Spano, who is spending his first term in an uphill battle to get city finances in order, said he hoped to "shine a light" on the poor practices of the past.
That light, however, won't be enough to collect on those debts.