City Council members eager to part ways with housing administrator C. W. Augustine of DeKalb Junction believe they have caught the company attempting to violate federal procurement regulations.

At a June committee of the whole meeting, James A. O’Neill, president of C. W. Augustine, offered to write the city’s 2012-2013 housing rehabilitation grants for $4,500 if his firm was guaranteed the right to administer the program. Mr. O’Neill said without the administration guarantee, he would charge the city more.

“We will write it at cost if we don’t,” he said. “If we write the grant and are not the administrator, chances are you will not get funded.”

That statement appeared to violate state law, said Deputy Mayor Michael D. Morley.

“If you don’t get administration, you can’t have a double standard with your rates,” he said. “Regulations don’t allow consultants to propose to prepare grants and offer reduced costs to administer programs. You can’t do it.”

The guidelines for the state Community Development Block Grant program prohibit ‘loss-leader’ arrangements, whereby a business offers goods or services below cost if the purchaser promises to buy something else at or above cost. Loss-leader arrangements also violate U.S. Department of Housing and Urban Development procurement regulations, which require “maximum open and free competition.”

The block grant funds originate with H.U.D.

Councilman William D. Hosmer expects the council to discuss the matter.

“This is something that is going to come up very shortly,” he said. “It clearly states that you cannot charge different rates for whether or not you’re an administrator. Mr. O’Neill is supposed to make sure the program follows these guidelines.”

Mr. O’Neill did not return calls for comment.

Ogdensburg received no housing rehabilitation funding for this year, despite having the second-highest scored grant application in the region. Mr. O’Neill has blamed lack of support from the city and political disarray on the council for the state’s reluctance to fund the program.

Council members Wayne L. Ashley and Jennifer Stevenson said there is more discussion to be had before the city goes forward with housing rehabilitation for 2012-2013.

Ms. Stevenson noted that the city agreed to allow Mr. O’Neill to write and administer a grant for the 2012 funding awards.

“I think there’s further discussion that will be had, but we did authorize him to go ahead with the grant,” she said. “I don’t think that decision has changed.”

A majority of council members say they are ready to change the direction of the city’s housing rehabilitation. “This housing program is a joke,” said Mr. Morley.

Later this year, Ogdensburg will issue a request for proposals to administer the program.

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