Did city agencies misuse federal funds?

BUFFALO, N.Y. (WIVB) - Did Buffalo economic development agencies misuse federal funds to give special advantages to a City Hall insider?

Serious questions are being raised about One Sunset Bar and Grille, which is now out of business.

Three Common Council members are calling for a federal investigation into the city's use, or misuse of federal anti-poverty money, with the failed One Sunset as their backdrop.

Niagara District Councilmember David Rivera said, "This is money that is supposed to go to the poorest of the poor in the City of Buffalo."

The city's two main economic development agencies pumped more than $100,000 dollars into the local nightspot through grants and loans, even though board members of one of the agencies rejected One Sunset for a larger loan because it was considered too risky.

Delaware District Councilmember Michael Locurto said, "So the question then becomes, who else? Is that a pattern? Are there other businesses that got loans that way?"

South District councilmember Michael Kearns, who is also challenging Mayor Byron Brown in the Democratic primary, is baffled at the absence of outrage.

And the Department of Housing and Urban Development, the federal agency dispensing the Community Development block grants, is dismissing the controversy as a "matter between the Mayor and City Council."

Kearns said, "We are the third poorest city in this country, and any time we squander these funds, they must be used at the highest, and the best possible use."

Administration and Finance Commissioner Janet Penksa told News 4, HUD is working with the city to correct problems with the block grants going back to previous administrations.

Regarding the current controversy, Penksa said, "It causes me to question what the motives are. If we've already got acknowledgement from HUD that we are making progress, that we have complied in a timely fashion with all their requests."

News 4's Al Vaughters asked Michael Kearns if he is suggesting, implying, or charging misuse of anti-poverty money.

Kearns said, "I am suggesting and implying, both."