Wednesday, March 7, 2012

PCSD Named in Complaint to NYS Comptroller

    Potsdam Central School is among three entities named in a complaint to the NYS Comptroller. The complaint, recently filed by Richard and Jane Hollister, centers around the use of public monies to build and support the Building Blocks Day Care Center – formerly known as Potsdam Day Care Center (PDCC).  The Hollisters allege “financial misconduct, false statements to taxpayers, and pure fabrications.” 
    According to the complaint, “Financing for the facility was to come from $330,000 in Community Development Application funds through the Potsdam Village and $170,000 in HUD funds.” At the time, the Hollisters challenged the legality of the deal via a complaint to the NYS Commissioner of Education. The Commissioner found for the district because, in a sworn deposition (from the then superintendent and Board president) sent to the Commissioner, it was stated that the benefit to the PCSD (a legal requirement) was that after two ten-year leases (the maximum permissible by State Ed. Law), the school district would own the $500,000 building free and clear.
    Near the end of the first ten-year lease, in 2003, the Hollisters approached then PCSD Superintendent of Schools, Sylvia Root, and told her that the paperwork signed by the BOE back in 1993, made the PCSD co-signers to the day care center’s loans - a violation of NYS Education law. Thus, the daycare center, with a history of insolvency, could walk away from its mortgage debt at the end of the second ten-year lease and hand the building and the debt (hundreds of thousands in remaining mortgage) to school district taxpayers. Attorneys for the PCSD found that the Hollisters were correct in their assertion and, subsequently, legal agreements were drawn up by school district attorneys to ensure that the PCSD taxpayers would not be liable (at the end of the second lease period - 2013) for unpaid Building Blocks mortgage obligations. 
    The day care center is now nearing the end of its second ten-year lease and its officials have  publicized that they will build a new million-dollar daycare center.  That leaves the PCSD with a building, the daycare heading on to bigger and better - despite not coming close to paying its current mortgage, and the Village with a huge unpaid debt.

    As a post script, on 11/2/09 the Village of Potsdam "adjusted the original principal amount of a loan made to Potsdam Day Care, Inc. and its successor - Building Blocks, Inc. to $330,000. Further to alter the terms of the loan to zero percent interest as per the leasehold mortgage modification agreement signed on June 8, 2004. The total amount of payments made toward this loan shall be deducted from this principal resulting in a loan balance of $242,426.34 as of October 31, 2009." The interest on the mortgage appears to have been forgiven.
    As an additional post script,  I was on the PCS Board of Education back in 1993 when the Board approved the agreement to lease school property to this private, not-for-profit day care center. Fortunately, I did not vote to approve the deal primarily because Mr. and Mrs. Hollister cast significant doubt on the legitimacy of the agreement. Interested members of the public can FOIL for a copy of the complaint from the office of the NYS Comptroller - Thomas DiNapoli. 

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