Audit faults NY tourism promotion after damaging storms

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ALBANY, N.Y. (AP) — Gov. Andrew Cuomo's administration failed to properly oversee $22 million spent to promote tourism in areas affected by three damaging storms, federal auditors said.

New York officials did not comply with procurement rules and failed to ensure money was spent effectively, the report from the Department of Housing and Urban Development's Office of Inspector General concluded. The audit, which was published online Friday, said the lapses amount to a "significant deficiency."

"State officials did not always establish and maintain financial and administrative controls to ensure efficient and effective program administration," the audit concluded. The auditors recommended that HUD demand additional documentation from the state about how the money was spent.

The Democratic governor's Office of Storm Recovery disputed the audit's findings in a formal response. A spokesman for the state's economic development agency, which oversaw the promotional campaign, said it will work with federal officials to clear up what he said amount to a misunderstanding.

"It's clear the issues raised stem from an incorrect interpretation of federal regulation" by the inspector general, said Jason Conwall, spokesman for Empire State Development.

The audit is the third this summer to fault economic development programs run by Cuomo's administration. Two earlier reports from Democratic state Comptroller Thomas DiNapoli raised concerns about the handling of a job creation tax credit as well as a program that awards low-cost power to companies who promise to retain or create jobs.

The tourism promotion funds were initially given to the state by the federal government as part of its disaster aid following Hurricane Irene and Tropical Storm Lee in 2011 and Superstorm Sandy in 2012. New York successfully sought federal permission to spend up to $30 million of the funds on advertising and marketing to promote tourism in areas still recovering from the storms.

The audit found that the state failed to conduct independent cost estimates or monitor how the money was being spent. In one case, the audit found the state chose to extend an existing tourism promotion contract with a New York City advertising firm rather than seek other bidders.

Conwall said the program was a success and helped increase tourism to storm-affected vacation regions by nearly 14 percent.

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