FBI, HUD probing Lyons’, Colorado spending on 2013 flood recovery

Denver Post – FBI, HUD probing Lyons’, Colorado spending on 2013 flood recovery

LYONS — The FBI and the U.S. Department of Housing and Urban Development are conducting a twin probe into how this small town north of Boulder has been spending and accounting for money meant to rebuild a community devastated by an epic flood more than three years ago.

The Lyons Town Council on Wednesday held a special meeting that brought a standing-room only audience to its tiny town hall. But beyond revealing that agents from the FBI and officials from HUD searched town computers Tuesday, little light was shed on the federal government’s investigation into Lyons’ handling of $36 million in grant money it was awarded to help it dig out from a September 2013 storm that played havoc with this community of 2,000.

Wednesday’s meeting lasted barely 10 minutes.

That left a few residents frustrated and in search of answers as to why federal agents were in town examining Lyons’ books.

“That’s what you call transparent,” Craig Ferguson, a 25-year resident, said with more than a little sarcasm. “FBI agents are in my town hall and I don’t know why.”

Janet Orback, who has lived her entire 67-year life in Lyons, said her home was badly damaged by rushing waters three years ago. She said her Confluence neighborhood was hit hard by the storm and that she and her neighbors “have been through a lot.”

“I’m really interested to see what’s really taking place,” she said. “We want to get on with being a normal neighborhood.”

Asked whether the presence of the FBI in town had her worried that there was more than potentially sloppy bookkeeping at issue, Orback resisted making conjectures.

“I don’t want to think they did,” she said.

Lyons Mayor Connie Sullivan was circumspect on details but emphasized that the town is cooperating with the investigation. As a precautionary measure, it placed the town administrator and town clerk on paid administrative leave Tuesday to ensure an impartial investigation.

The council on Wednesday named finance director Tony Cavalier as acting town administrator.

“We’re trying to let citizens know we have a plan for going forward while we’re in this investigation,” Sullivan said.

The U.S. Office of Inspector General with the Department of Homeland Security in April issued a report that took the town to task for not properly managing the first $9 million of a $36 million in federal grants. Lyons didn’t “comply with federal procurement rules when contracting for FEMA-funded work,” the report concluded.

Specifically, the agency cited the town for not relocating its public works facility, which would have helped with flood recovery; for paying for leased equipment that it did not use consistently; for not fully complying with all environmental requirements in the rebuilding of a flood-damaged park; and for not consistently complying with federal procurement rules when contracting for Federal Emergency Management Agency-funded work.

“FEMA should direct Colorado to continue to provide technical assistance and monitoring frequently to ensure the town follows federal regulations and avoids misspending the $27 million of remaining grant funds,” the Office of Inspector General recommended in its report.

The report said it came to its findings primarily because officials in Lyons “did not have experience with major, federally declared disasters and were not sufficiently familiar with applicable federal regulations and FEMA guidelines.”

It pointed out that the Colorado Division of Homeland Security and Emergency Management “is responsible for ensuring that (the town) is aware of and complies with these requirements, as well as for providing technical
assistance and monitoring grant activities.”

The state emergency management office sent The Denver Post a response it had written to the Office of Inspector General saying that it and FEMA “have taken actions to ensure that the town better understands and complies with federal procurement requirements.”

Katie Arrington, with the Boulder County Flood Recovery Center, said the county was not contacted about the investigation in Lyons and that Lyons’ flood recovery program is “completely separate” from those in unincorporated parts of the county.

“As for Boulder County’s flood recovery programs, the county has received a regularly administered OIG Audit report that found that Boulder County was ‘adequate,’ which in OIG terms means that there are no issues with the processes and procedures Boulder County used in administering the FEMA programs,” she wrote in an email.

Wednesday’s meeting was not the first time Lyons has dealt with complications after the flood, which killed 10 people and caused nearly $4 billion in damage across 24 counties in Colorado. Lyons was one of the hardest hit towns in the state.

A year ago, residents crowded town hall to demand that Lyons officials pick up the pace in issuing permits for home rebuilding and repairs. Sullivan on Wednesday said new pavement is finally expected to be rolled on the dirt streets of the Confluence neighborhood, starting next week.