BUFFALO, N.Y. — Has the City of Buffalo been shorted?
That's the question being asked by the Buffalo Common Council after an audit by the city's comptroller found that the operator of the Erie Basin Marina has only paid $10 in rent since taking over 10 years ago.
According to contract details laid out in the comptroller's audit, back in 2014, the city selected Smith Boys, a local boat company to operate the marina.
The terms of that contract stated Smith Boys would pay $1 rent for the first year. The next year would be $1 rent plus 10% net profit exceeding $80,000, and from 2018 on, $1 plus 20% net profit over that same threshold.
The audit pointed out that at no time was a portion of net profit ever paid to the city, but they couldn't say why.
That's because according to Chief Auditor Kevin Kaufman, the city Department of Public Works, which was responsible for the contract, didn't have any of the required financial or insurance reports they were supposed to.
Kaufman spoke during a Tuesday meeting of the Council Finance Committee.
"What went down in the Department of Public Works, where they weren't collecting this information, or verifying someone who was renting or leasing out a city marina and didn't have proof of insurance?" Fillmore District Council member Mitch Nowakowski said.
2 On Your Side posed that question to Department of Public Works Commissioner Nate Marton.
"We're trying to dig into where that information exchange was kind of tricky, but we've been able to review it now," Marton said.
Marton said the reason the city never received more than a dollar per year in rent was because Smith Boys only saw net profit above $80,0000 twice over the past 10 years. And even then the city's share was only in the several hundred dollars range.
The comptroller's audit estimated that Smith Boys gross revenue, which does not include expenses, was on average $900,000.
"To hear that we're getting $1 when they are potentially netting bigger profits and not holding up their end of the deal, that's something we have to look into, and maybe there are explanations for that. You know I want to give them a fair chance and look at it," Lovejoy District Council member Bryan Bollman said.
On Wednesday, 2 On Your Side spoke with Smith Boys general manager Jim Marinello over the phone.
Marinello said the audit caught them by surprise.
He said Smith Boys sent financial records to the city DPW back in April when requested, but then re-sent them Tuesday when everything came out, which is how Commissioner Marton was able to cite the company's financial records.
Marinello confirmed that because of high maintenance costs, repairs after severe storms in recent years, and the cost of labor, they haven't really profited while operating the Erie Basin Marina. At least not much above $80,000.
The Common Council tabled the audit on Tuesday and said it wants to hear more from the DPW and Smith Boys. Its next scheduled meeting is on Dec. 19.