A state audit has slammed the Lake Champlain Lake George Regional Planning Board over repeated failures to follow rules and regulations with its business loan fund.
The state Comptroller’s Office found numerous procedural and policy concerns, including a failure to ensure proper collateral for loans and a lack of oversight once they were granted, according to a draft audit report obtained by The Post-Star.
The audit looked at loan practices between January 2015 and July 2018, the latter date being when concerns of local elected officials about the Regional Planning Board’s loan program operations resulted in wholesale leadership changes. The longtime executive director, Walter Young, retired, and the board of directors and loan committee were overhauled.
Problems that were found included questionable loans to a planning board member’s relatives, lack of collection on outstanding loans and lack of documentation for applications. Those issues led the Comptroller’s Office to begin an audit, which was completed in recent weeks.
The 14-page report examined 26 loans approved between 2015 and 2018. It was released late last week, and the findings included the following:
* Numerous loans were approved even though the applications were incomplete.
* 15 loans lacked sufficient collateral to protect the Regional Planning Board in case of a default.
* 18 loans were approved in which real estate was used as collateral, but only one applicant had an appraisal done as required.
* 14 loans had $10,829 in late fees waived for reasons that were not documented.
* Three loans were approved that were to be used for ineligible purposes, such as purchase of property or to pay off a third-party loan.
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* The Regional Planning Board apparently did not approve loan write-offs, with Young writing off $110,000 in principal, late fees and interest on two loans with no apparent communication with the board.
* Loan payment schedules were “inadequately enforced,” and Young agreed to defer payments for some loan recipients without board approval or any noted “justification.”
The Regional Planning Board has re-organized, and its chairman, Hampton Supervisor Dave O’Brien, said the organization’s leadership agrees with the state findings. Procedural problems that were found have been corrected, he said.
“We are confident that with the new policies, procedures, board of directors. loan committee members and staff in place, the LCLGRPB will once again provide adequate oversight and governance over the revolving loan fund,” O’Brien wrote.
The Regional Planning Board has picked up collection efforts on numerous bad debtors, including filing lawsuits against several.
O'Brien added in an email that he was heartened to see that the state agency took no issue with the LCLGRPB's organization and procedures related to its efforts to assist communities and organizations with planning, grants and economic development.
Travis Whitehead, the Queensbury resident and candidate for Town Board whose questions about the loans started the investigation, said he had concerns about the lack of penalties when an audit finds problems.
“What’s to stop an organization like this from doing it again?” he asked.
The Regional Planning Board is based in Lake George.