A special investigation by the state auditor’s office has identified conflicts of interest and a lack of documentation for how the City of Hamburg spent some of its flood recovery money.
State Auditor Rob Sand said the investigation found family members of a Hamburg City Council member and a city employee may have unfairly benefitted from grants and a forgivable loan program. “It’s common in our small towns for many people to wear many different hats,” Sand said, “but these examples of conflicts of interest are pretty egregious.”
Nearly 18 feet of water flooded into Hamburg in March of 2019. More than 70 homes were torn down afterwards. During an online news conference late this morning, Sand said the special investigation identified several instances of what might be considered intentional or reckless use of public funds.
“Whenever there’s a potential conflict of interest, elected officials need to step away from the project so that there is no benefit to themselves or their friends,” Sand said, “and so that the public is reassured that the government is working for the public, not for private interests.”
Due to a lack of record keeping, auditors say it’s unclear if other people applied for the grants that were available for Hamburg’s flood recovery. The investigation also found the city provided money build two new homes in Hamburg — and one home was owned by a city council member who transferred ownership to a family member. “We’re talking about a town here where we had tens of thousands of dollars given out for flood recovery work for these houses and there’s really no excuse for it to have been going to people connected to city government,” Sand said.
According to Sand’s report, auditors could not find records showing the owners of the two homes had repaid any portion of the loans. The special investigation has been forwarded to the state and local law enforcement as well as the Iowa Economic Development Authority and the Iowa Department of Homeland Security and Emergency Management.
“This was not a routine review. We had numerous legally qualifying requests come in from the City of Hamburg,” Sand said. “I won’t be any more specific than that because i don’t want to potentially provide any information that would help people identify whistleblowers.”
Sand indicated that in the fall of 2022 and early 2023 his office received several complaints from people who raised concerns about the lack of transparency about how Hamburg’s flood recovery money was being spent, as well as allegations that Hamburg City Council members had gotten preferential treatment. Officials from the state auditor’s office tried to speak with Hamburg’s former city clerk, its former public works director and a former city council member to discuss the transactions, but were unable to arrange meetings and, according to the report released today, another person declined to speak without a lawyer present.