A city council member in the flood-ravaged town of Hamburg received government recovery funds to build a home on property he owned and transferred to his daughter, according to a state audit published Wednesday.
The Iowa State Auditor’s Office published a 28-page report on the special investigation, which was requested by two state agencies after whistleblowers raised concerns that grant funds and a forgivable loan received by the City of Hamburg following a devastating flood in 2019 were being misused by local officials.
The complaints alleged that city officials, employees and their family members and friends were receiving direct benefit from the government relief funds that had been awarded to the city, according to the audit.
Dozens of homes were destroyed and downtown businesses damaged when the Missouri River flooded Hamburg in March of 2019. The city applied for and received funding from the Iowa Department of Homeland Security and Emergency Management through the Federal FEMA program and from the Iowa Economic Development Authority.
Hamburg has a population of 889, according to the 2020 U.S. Census. That is down from 1,200 in the 2010 Census, which reflects population prior to damaging floods in 2011 and 2019.
The State Auditor’s report found:
The auditor’s investigation also found that not all disbursements were approved by the Hamburg City Council, records were not consistently kept for disbursements, there were inconsistencies in program cost records end explanations from the city and economic development organization, and some disbursements from the city’s bank account did not have an explanation.
“Based on our observations and the procedures we performed, we determined that City officials failed to exercise proper fiduciary oversight,” the auditor report says. It adds shortly after, “Oversight by City officials is essential and should be an ongoing effort. City officials should exercise due care and act in the best interest of the City, not their own private interest or advantage. City officials should also ensure sufficient information is prepared and maintained related to all decision-making.”
The Iowa Auditor’s Office has recommended the City of Hamburg work with lawyers and the Iowa Economic Development Authority, and any other granting agencies to seek repayment of the nearly $200,000 in relief funds used for private home construction.
The report has been filed with the Iowa Division of Criminal Investigation, the Fremont County Attorney’s Office, the Fremont County Sheriff’s Office, and the Iowa Attorney General’s Office.
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The Iowa State Auditor’s Office published a 28-page report on the special investigation, which was requested by two state agencies after whistleblowers raised concerns that grant funds and a forgivable loan received by the City of Hamburg following a devastating flood in 2019 were being misused by local officials.
The complaints alleged that city officials, employees and their family members and friends were receiving direct benefit from the government relief funds that had been awarded to the city, according to the audit.
Dozens of homes were destroyed and downtown businesses damaged when the Missouri River flooded Hamburg in March of 2019. The city applied for and received funding from the Iowa Department of Homeland Security and Emergency Management through the Federal FEMA program and from the Iowa Economic Development Authority.
Hamburg has a population of 889, according to the 2020 U.S. Census. That is down from 1,200 in the 2010 Census, which reflects population prior to damaging floods in 2011 and 2019.
The State Auditor’s report found:
- Two privately owned homes received funding from the city — even though under the program funds were designed to support home construction on city-owned property.
- One home built using relief funding was owned by Hamburg City Council member Kent Benefiel, who transferred ownership to his daughter.
- If funds are used for projects owned by private citizens, the homeowners are to repay the funds to the city, according to the audit report. But the City of Hamburg paid 60 percent of the construction costs for the two privately owned homes, totaling nearly $200,000. The audit found no evidence that the owners repaid any of those funds.
- Another grant program was facilitated by the Hamburg Economic Development Council, which was a violation of the agreement between the City of Hamburg and the Iowa Economic Development Authority, according to the audit report. Benefiel applied for funds related to two properties on Main Street and received the largest share of the grant funds.
- Three siblings and a parent of City of Hamburg Public Works Director Alan Dovel received a majority of grant funds — $128,000 — available through the city’s nuisance property acquisition.
- Six properties were purchased by a Hamburg economic development organization instead of the city, even though the city and not the economic development group was awarded the grant.
The auditor’s investigation also found that not all disbursements were approved by the Hamburg City Council, records were not consistently kept for disbursements, there were inconsistencies in program cost records end explanations from the city and economic development organization, and some disbursements from the city’s bank account did not have an explanation.
“Based on our observations and the procedures we performed, we determined that City officials failed to exercise proper fiduciary oversight,” the auditor report says. It adds shortly after, “Oversight by City officials is essential and should be an ongoing effort. City officials should exercise due care and act in the best interest of the City, not their own private interest or advantage. City officials should also ensure sufficient information is prepared and maintained related to all decision-making.”
The Iowa Auditor’s Office has recommended the City of Hamburg work with lawyers and the Iowa Economic Development Authority, and any other granting agencies to seek repayment of the nearly $200,000 in relief funds used for private home construction.
The report has been filed with the Iowa Division of Criminal Investigation, the Fremont County Attorney’s Office, the Fremont County Sheriff’s Office, and the Iowa Attorney General’s Office.
Audit: Local officials in flood-ravaged town guided relief funding to selves, family
A report from the Iowa State Auditor’s Office says city officials from Hamburg, Iowa guided flood relief funds to themselves and family members after the 2019 flooding that devastated the small community.
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