Audit delay costs Bellevue $400k

&emsp;&emsp;Bellevue officials' inability to follow the rules has finally caught up with the borough. State and regional agencies have confirmed that the borough lost an estimated $400,000 in guaranteed funding — and came within hours of losing a similar amount — because officials failed to timely file annual financial audits required not only by state law, but by the borough's own home rule charter.&emsp;&emsp;The source of the lost funding is the additional 1 percent sales tax paid by people in Allegheny County. A 1993 state law authorized the additional sales tax, and created a Regional Asset District to administer half of the funds. The half retained by RAD is spent by the agency on various cultural and recreational assets that benefit the county as a whole. The other half of the tax proceeds is turned over to the Pennsylvania Department of Community and Economic Development (DCED), and is distributed to each municipality in the region based on a specific funding formula. According to RAD, "This funding has been used to shift the tax burden away from property taxes, permanently eliminate the personal property tax, and support a variety of local government services."&emsp;&emsp;Both state law and Bellevue's home rule charter require that municipalities file with the state — and publish within their communities — financial audits by April 1 of each year. Each audit covers the preceding fiscal year, which runs from Jan.1 to Dec. 31.&emsp;&emsp;The DCED is even more generous with its filing deadline. Municipalities remain eligible to receive RAD funds as long as their audits are filed by June 1 of the following year. For instance, although Bellevue was required to file the 2022 audit by April 1, 2023 to remain in compliance with its charter and state law, it has until June 1, 2024 to file the 2022 audit with the DCED to secure RAD funding, a period of 17 months following the end of the fiscal year.&emsp;&emsp;The audits are performed and filed by professional auditors retained by each municipality and school district in Pennsylvania. In Bellevue's case, audits have been performed for many years by a partner in one of the area's top accounting firms.&emsp;&emsp;Bellevue's compliance problems began with the 2020 fiscal year. For the five-year period 2014-2018, state records indicate that the borough's audits were filed prior to the April 1 deadline in most cases. In two years, the audits were filed within just a couple months of the April deadline, and well before the DCED deadline.&emsp;&emsp;The borough's 2019 audit was not received by the DCED until May 18, 2021, more than a year after the April deadline and just weeks before the DCED deadline. In 2019, the audit indicates, Bellevue received $411,754 in RAD funds from the PA Treasury. Because the DCED operates on a July 1-June 30 fiscal year, funds disbursed during a fiscal year are at least a year behind the municipal fiscal year for which they were awarded.&emsp;&emsp;That is why Bellevue's 2020 audit shows that the borough received $390,925 during the borough's fiscal year. That audit, however, was not received by the DCED until July 21, 2022, nearly two months after the 17-month deadline allowed by the DCED, and more than two years after the April deadline set by state law and borough charter.&emsp;&emsp;According to a DCED spokesperson, the failure to file the audit means that "Bellevue Borough lost their RAD disbursement for period July 2022-June 2023."&emsp;&emsp;Director of Administrative Services Cindy Bahn, who was hired in March of 2020, received a warning letter from the DCED. On March 23, 2022, the following letter was sent to Bahn:&emsp;&emsp;"According to our records, the Department of Community and Economic Development (DCED) has not received the following statutorily required filing from your municipality:"2020 Municipal Annual Audit and Financial Report (DCED-CLGS-30), due 4/1/2021&emsp;&emsp;"The primary goal of this requirement is to make sure that the Annual Financial Report (AFR) information is complete and accurate for all Pennsylvania local governments. This information is used by legislative and executive agencies for legislative, policy and funding considerations, as well as many outside organizations for research and comparative analysis. &emsp;&emsp;"You should also be aware that all municipalities in Allegheny County share in the Allegheny County Regional Asset District (RAD) distribution which is a means of distributing the 1% sales tax that is levied in the County. This year's distribution is based on a formula which uses data from the 2020 AFR.&emsp;&emsp;"Your municipality's audit data will be needed, in the form of the DCED 2020 AFR, for the RAD distribution calculations which we will begin preparing in June. The deadline for the requested information is May 31, 2022, otherwise your municipality will not qualify to receive its share of the Allegheny Regional Asset District distribution. Your municipality will also continue to be ineligible for DCED grant funding until your AFR is filed.&emsp;&emsp;"Please note that your municipality cannot be included in the RAD distribution if your AFR is received after the deadline. This is because calculations are based on a weighted tax percentage which impacts all municipalities that share in this allocation."&emsp;&emsp;Bellevue's lack of compliance also was caught by RAD's controller, who, according to a RAD spokesperson, notified the agency's executive director, who then contacted the DCED.&emsp;&emsp;In 2021, Bellevue received $435,963 in RAD funding, but the audit for that year was filed within hours of the DCED 17-month deadline, which would have cost the borough yet another $400,000 disbursement. The audit actually due on April 1, 2022, and mandated to be filed by June 1, 2023 for grant eligibility, was received by the DCED on May 31, 2023.&emsp;&emsp;Since 2020, the lack of audit compliance has been pointed out at Bellevue Council meetings by the public. Bahn has reported problems with the borough's ability to produce the records necessary for the professional auditors to complete their work. At one point, council authorized the expenditure of some $7,000 to hire a temporary financial expert to address the borough's problems.&emsp;&emsp;Bahn did not directly respond to The Citizen's request for comment on the noncompliance and loss of funds.&emsp;&emsp;The Citizen also requested information related to the Commonwealth Financing Agency's (CFA) blight remediation grant issued in May, 2021 and specifically directed toward paying for the demolition of three abandoned properties located on East Roseridge, Kendall and Ridge avenues. The grant of $61,000 was due to expire in June of 2023, but none of the money was ever spent by that time. Bahn explained the following in a July 24, 2023 e-mail to a concerned citizen:&emsp;&emsp;"Since the grant was submitted, 40 Kendall was purchased at Sheriff's sale and 146 Ridge was acquired through the VPRP.&emsp;&emsp;"Because the grant funding was for 3 properties, 2 of which are no longer in need of demolition because they are being rehabilitated, I reached out to the grant project manager via phone call to discuss our options. We proposed substituting another property.&emsp;&emsp;"That request to amend the grant agreement has not yet been approved by the State.&emsp;&emsp;"That is all the information I have regarding this grant at this time. We cannot move forward with the demolition of 31 E. Roseridge until the State approves the amended agreement."&emsp;&emsp;That resident also was told by borough staff via e-mail that the grant period had been extended for one year.&emsp;&emsp;The DCED, which administers the CFA grants, while confirming the grant time extension, said that "The grantee's extension request letter stated they were experiencing challenges surrounding ownership status of the subject properties and additional time is needed to work through those issues."&emsp;&emsp;According to the DCED spokesperson, Bellevue has not proposed a substitution of properties or notified DCED that substitution was necessary.&emsp;&emsp;&emsp;&emsp;&emsp;&emsp;&emsp;&emsp;