Isophoric News · Tuesday, October 27, 2026
A state audit found 37 of Oswego's 65 business loans behind on payments and the city unable to say whether most of the promised jobs were created
The State Comptroller's 2015 audit of the City of Oswego's community development work found that 37 of the 65 loans in its revolving business loan program were delinquent as of Oct. 31, 2014, with $1.03 million outstanding on them and $551,308 overdue, between two and 80 months. It also found the city did not know whether most of the jobs it lent money to create had been created. The audit, which covers 2013 and the first ten months of 2014, also looked at two houses the city gave to a private nonprofit in 2012, and found the city had no legal authority to give them away. The report was issued in November 2015. The loan program does not appear in the partial 2025 and 2026 city records the newsroom holds.
The loan program lends federal and state development money to companies for equipment, buildings, renovation, working capital and inventory, and a company agrees when it borrows to create or keep a stated number of jobs. The department "made 26 loans totaling $1.57 million from 2010 through 2012 to companies that projected they would create 106 full-time equivalent jobs." The report says the department "did not obtain employee questionnaires or payroll data for any other companies" than one, and that for the other 25 loans, totaling $889,210 and 66.5 of the projected jobs, "City officials do not know whether jobs were created." The one borrower that did report, the company the director asked for data because the state wanted it for a separate grant, had projected 39.5 jobs and created 56.5. The Comptroller also said that 13 of the companies, with 44.5 of the promised jobs, had not made payments for eight months or longer, and that, according to department officials, two had filed for bankruptcy.
Of the 65 loans, which totaled $2,387,602, 37 or 57 percent were delinquent. The department sent late payment notices inconsistently: it sent them four times in a nine-month period in 2014, and the September notices went to "only 14 of the 37 companies (38 percent)" that were behind. According to the report, the director's secretary told the Comptroller she stops sending notices after two years of non-payment, and the director said she had not held the meetings with borrowers the department's guidelines call for. The department's guidelines require borrowers to pledge collateral and generally to give personal guarantees. Among 14 delinquent loans the Comptroller reviewed in detail, with $674,316 outstanding, the department "has made no attempt to recover the collateral for nine of these delinquent loans (64 percent)," totaling $184,292; for one $5,268 loan, the report says the secretary could not find the borrower's folder. For the other five loans the department did try, and took possession of some collateral, which the report says it estimated at $287,155, mostly real property worth an estimated $275,000, but had not sold it for cash or reduced the loan balances.
Twenty-one of the 37 delinquent loans "have had no payments for over three years," with $655,147 still owed on them. The Comptroller wrote that it is questionable whether more payments will come, and that the department had no process for writing off uncollectible loans. If the city sold the repossessed collateral for its estimated value, the report says, the questionable amount would be $367,992, so the receivable balance is "likely overstated by about $368,000" and the loans are worth approximately $2 million, not the $2.4 million reported. The department gave the Council no performance reports. The loan review board, five people appointed by the mayor and two ex-officio members, met twice during the audit period and received a status report that gave the cash available, the number of loans and the number delinquent, but not borrower names, amounts owed, jobs against goals, overdue amounts or missed payments. "While the Loan Review Board is responsible for the approval of loans," the Comptroller wrote, "the Council is ultimately responsible for the overall effectiveness of the loan program." The program is a revolving fund, so, the report says, "if loans are not repaid, moneys are not available for other companies to further the City's economic development goals." The city's budgeted appropriations were about $40 million for 2014 and $41 million for 2015.
The audit also examined a decision that reached the Council in March 2012. The Council passed a resolution to donate two tax-acquired properties to the Oswego City Revitalization Corporation for a "Rehab and Resell" program, and the city transferred them in July 2012. The properties had a full market value of $72,700 and carried about $20,900 in unpaid taxes (the report gives the figure as $20,929 in some places and $20,949 in others), which the city expected to receive when the corporation sold them. The Comptroller found that state law does not authorize a city to give real property to a private entity for urban renewal, that property generally has to be sold at the "highest marketable price" unless it goes to a designated qualified and eligible sponsor, and that "we found no documentation that supported the designation of OCRC as a qualified and eligible sponsor." There was no written agreement between the city and the corporation, so "there is no guarantee that the City will receive the $20,949 in unpaid taxes if the properties are sold." The corporation is a separate private nonprofit whose 11-member board includes the mayor, a Council member and the community development director.
The report also explains how it happened, in the Comptroller's words: "Some of the Council members and City officials told us that they did not realize OCRC was a separate entity from the City and thought the arrangement of donating the properties to OCRC was a way to reduce the tax-acquired properties in the City and to collect an amount equal to the taxes owed once the properties were sold." In June 2014 the Council asked the corporation to return one of the properties because it had not started work on it in over two years. "However, OCRC is a separate, private nonprofit corporation. OCRC's Board decided not to return the property." The Comptroller recommended that the Council make sure the director follows the loan guidelines, set up procedures for losses, and stop making gifts of real property without written agreements. In a four-sentence letter to the Comptroller dated Oct. 26, 2015, and printed in the report, Mayor Thomas W. Gillen wrote that the Mayor's Office, the Community Development Office and the Chamberlain's Office "will initiate and prepare a written Corrective Action Plan that addresses the findings and recommendations in the report," and that "The City of Oswego does not dispute the findings, and will follow the recommendations in the correction action plan" (the phrase is the letter's own wording). The report said a written corrective action plan was to be forwarded to the Comptroller's office within 90 days, under Section 35 of the General Municipal Law, and encouraged the Council to make the plan available for public review in the Clerk's office. The newsroom has not seen that plan or a follow-up report. Isophoric News asked the city on Oct. 23 whether the plan was prepared and filed and whether the loan program still operates, and invited the city to say what has changed in the years since; the mayor replied on Oct. 26, directing the newsroom to file a request under the Freedom of Information Law to obtain the information requested. Isophoric News re-sent the questions to the city's Economic and Community Development Office on Oct. 26, after an automatic reply said the earlier recipient had left, and that office replied the same day directing the newsroom to file a Freedom of Information Law request. The questions and the invitation were not otherwise answered.
This audit covers activity before the current mayor took office, during the administration of Mayor Gillen, who signed the city's response; Robert A. Corradino took office on Jan. 1, 2024, according to WRVO Public Media.