EagleTribune.com, North Andover, MA

October 5, 2012

City fails to tax $33M in new building

$300K in revenue at stake; Councilor Rivera calls for mayor to fire building commissioner

By Keith Eddings keddings@eagletribune.com
The Eagle-Tribune

---- — LAWRENCE — More than $33 million in new development over the last two years was never placed on the city’s property tax rolls because building officials failed to report they had approved it, costing this nearly broke city $300,000 in property tax revenues, the city’s fiscal overseer said yesterday.

About $100,000 in taxes that should have been collected from 47 projects the Building Department approved but never reported to the Assessor’s Office in 2010 — a year when the city laid of dozens of cops and firefighters — will be written off, Robert Nunes, the state-appointed fiscal overseer, said in a letter disclosing the foul-up to the City Council. But the mistake was caught in time to fix the 2011 assessment roll by adding the 302 permits that were not reported that year, allowing the city to bill for $200,000 in taxes that otherwise would have gone uncollected.

Councilor Daniel Rivera, who chairs the council’s budget committee, responded by calling on Mayor William Lantigua to fire Building Commissioner Peter Blanchette.

Using some of his strongest language since taking command of city finances at the height of a fiscal crisis in 2010, Nunes said the failure to inform assessors of 349 new building projects over the two years was due to “the negligent practices and lax oversight that has apparently festered for years in the Building Department.” He said the department’s practices have been a drag on the city’s recovery and called for fundamental reforms in way it does business.

“Not only is this a flagrant affront to the taxpayers of Lawrence who can ill afford lost property values, it endangers the many advances we have made to strengthen Lawrence’s finances, (including) three balanced city budgets and improved bond ratings,” Nunes said.

Nunes said work already has begun to replace the Building Department’s archaic paper record-keeping systems with software that will be integrated with systems used by other departments at City Hall, including the Tax Assessor.

He said Budget Director Mark Ianello has agreed to hire outside auditors “to review the Building Department’s practices in previous years” and help implement the reforms. He said the auditors also should be asked to audit building permits issued in the years before 2010, which he said will expose “the full extent of Lawrence’s potential losses and determine if any additional remedies are needed. “

Nunes said he also is asking Mayor Lantigua to “take action” against employees responsible for the oversight, but did not name any.

Councilor Rivera said Blanchette should be the first to go.

“The mayor put someone in charge who isn’t qualified and is not doing the job,” Rivera said. “Peter Blanchette should step down or be fired for this.”

Rivera recalled Blanchette’s response to a recent request from the City Council for copies of building inspections and other records.

“He gave us a bunch of handwritten reports – that’s how they do things,” Rivera said about a system that let $300,000 in property taxes fall through the cracks. “Everything is handwritten in that office. There’s no computerized data there. We told Peter he had to fix that. He just got upset about it.”

Lantigua promoted Blanchette, a former inspector, to run the Building Department shortly after his election in 2009. His brother is Patrick Blanchette, a former City Council president who ran against Lantigua in a mayoral primary in 2009, then endorsed Lantigua after losing the primary. Lantigua named Patrick Blanchette economic development director.

Lantigua and Peter Blanchette did not return phone calls yesterday.

The discovery that Peter Blanchette was not informing tax assessors of tens of millions of dollars worth of new development his inspectors were approving was made by Breda Daou, the chairwoman of the city’s Board of Assessment. Daou reported the discovery to Nunes, Ianello and other top finance officials at a meeting attended by Lantigua on Sept. 19. At that point, she had discovered that 302 building permits authorizing $23 million worth of new construction in 2011 had not been reported.

Nunes responded by directing Peter Blanchette to audit the permits issued in 2010, which found another 47 permits authorizing $10.3 million worth of new development also had not been reported to assessors.

Yesterday, Daou referred a request for a list of the 349 properties to Ianello, the budget director, who referred the request to City Attorney Charles Boddy, whose aide referred it to City Clerk William Maloney.

City Council President Frank Moran said he is asking Ianello, Peter Blanchette and John Isensee, the public works director who oversees building issues, to attend the council’s next meeting on Oct. 16.

“We’ve got to figure out how it happened,” said Moran, who is the Democratic nominee for the statehouse seat in the 17th Essex District.

“We need to make sure corrective action is in place as soon as possible.”