Audit: Street's anti-blight program made major financial errors

City Controller Alan Butkovitz is set to release an audit report today that details severe accounting and management problems within the $300 million Neighborhood Transformation Initiative, the signature anti-blight program of former Mayor John Street.

According to a draft copy of the report obtained by the Daily News, limited oversight and financial tracking led to major financial errors at NTI - including the overspending of $13 million in bond money.

"The lack of adequate controls to safeguard and account for NTI land acquisition funds, along with not having accurate and timely reporting of land assembly information had adverse consequences," the report states.

The audit, done by the controller's office with the help of accounting firm WithumSmith+Brown, was the first major review of the NTI program. According to the report, it took 15 months to complete the analysis of NTI activity from mid-2002 to mid-2008.

NTI was Street's plan to revitalize city neighborhoods by knocking down blighted buildings, cleaning blocks and packaging property for development. Street borrowed $300 million in bond money for the project, which he unveiled in 2001.

Street, who left office in January 2008, e-mailed to say that he could not directly comment on the audit because he hasn't seen it, but added, "I believe the NTI program continues to have a positive impact on neighborhoods throughout the city. It's a program that is greatly missed."

In 2008, the Nutter administration froze all land acquisitions at NTI, after an internal review revealed serious accounting problems. After that announcement, Mayor Nutter put top aide Terry Gillen in charge of the Redevelopment Authority (RDA), which oversaw much of the NTI program.

Earlier this year, the RDA announced plans to launch another audit, under the direction of city Inspector General Amy Kurland. But Gillen said they had not yet started that audit, which she said was to take a more detailed look at the management of the RDA. Gillen said the RDA wanted to first see the results of the controller study.

Gillen yesterday said that she had not seen the final report from the controller.

The audit does not point fingers at managers or staff at the RDA, instead focusing on spending and property acquisitions. Among the revelations:

* Under Street, there were no regular reports on NTI spending.

* The records provided to auditors were filled with reporting errors, inconsistencies and omitted information.

* NTI committed $13 million it didn't have, because it was not tracking what types of funding were available. That means that payments for 1,500 properties have not been made.

Among the audit's recommendations: Begin providing annual reports, make a plan to fund the unfinished projects and develop a methodology for tracking NTI activity.