Council committee hears plan to pay $2.5 million in property tax arrears; questions remain about ARPA spending and stalled 509 Michigan project

Acting Finance Commissioner Ray Miles told the Buffalo City Council finance committee on a January 2025 meeting day that staff have identified $2.5 million in American Rescue Plan Act (ARPA) funds to pay property tax arrears and are preparing transfers and invoice payments in the city financial system.

The plan matters because it turns a long-running set of unresolved ARPA encumbrances into immediate vendor and tax-bill payments, but council members pressed administrators for details about which projects remain unfinished, how recipient nonprofits will be paid and why a neighborhood project known as 509 Michigan remains delayed.

"There was about $311,000 that was left in an account balance for the 509 Michigan project," Ray Miles, acting finance commissioner, said, adding that the contract for that work is in litigation and the city may need to change vendors. Miles described other leftover balances, including "around $30,000 in our cultural institution supports" and a small remainder in a cybersecurity line. He said staff can reclassify unspent amounts under Treasury guidance so projects can continue and that the 2.5 million transfer for property tax arrears "is currently underway" and will be uploaded to Munis and reflected as invoice payments once posted.

Deputy Comptroller Delano Dowell told the committee the comptroller had filed a memo showing certain ARPA- and bond-related balances as appearing available in the city's Munis accounting system. "When you go into the Munis system, there are balances still showing as available," Dowell said, and he asked to be notified when the journal entries are complete so the comptroller's office can confirm the funds are no longer shown as available within Munis.

Deputy Commissioner Nate Martin, who has been working on affected projects, said the city has declared the contractor on the 509 Michigan contract nonresponsive as part of litigation, making that contractor ineligible for future work on the project. "We do anticipate maybe a different contractor going forward," Martin said, adding that corporation counsel, the contractor's attorneys, insurers and bond counsel were in conversations about next steps.

Council members pressed staff on speed and fairness. One council member, who did not give a full name on the record for this discussion, said the delay on 509 Michigan has been ongoing and that the work is in a historic African American heritage corridor; that member added they would "beat the drum on this every two weeks until I hear something differently." Council member White said the comptroller has raised valid questions and asked for transparent documentation of how the $2.5 million list of property owners was compiled and who had access to it.

City staff described how the list was prepared: tax and assessment compiled a list of eligible property owners, MIS verified the list, and staff totaled the invoices to be paid. Martin said the proposed ARPA payments to property owners are "direct pay bill payments," not grants that require reimbursement to the city. "There is no action needed," he said in response to a council question about whether owners must reimburse the city.

On legal authority for reallocating unobligated ARPA balances, Miles and staff cited a March 2024 U.S. Department of the Treasury FAQ (item 17.19) that the administration said allows reclassification of funds from obligated contracts under certain circumstances. Miles said the city also obtained an outside legal opinion backing the approach and said staff can provide the supporting documents to the council on request.

Council members repeatedly urged staff to speed payments to nonprofit recipients and to consider amending contracts or payment terms. Finance staff said many ARPA subrecipient agreements included a 25% upfront payment clause and required reimbursement documentation for later draws. "Once the backup documentation is received, we will process the payments promptly," an administration official said; the office also said it would consider contract amendments but cautioned that amending dozens of contracts would be a heavy administrative lift.

Deputy Comptroller Dowell said the comptroller's office will continue to file monthly reports showing where balances appear in Munis and will work with the administration to verify when funds are fully encumbered in the system. The committee recorded motions to open and to table the items under discussion; staff said they would return with follow-up details and documentation.

Ending: Committee members asked for a written follow-up showing the full invoice list for the property tax arrears, a timeline for the 509 Michigan procurement or vendor replacement, and copies of the Treasury FAQ citation and the outside legal opinion that the administration referenced.