OGDENSBURG — The city’s housing program woes go beyond the property at 819 Knox St.

The sale of city-owned property at 2 Grove St. is also the subject of a City Council investigation because the city’s policy for selling city-owned property may not have been followed by City Manager Arthur J. Sciorra.

“We’re making sure procedures were being followed in the selection of the buyer,” said Deputy Mayor Michael D. Morley. “I want to make sure it went through the lottery.”

Like 819 Knox St., the house at 2 Grove St. was inhabited by renters when the city moved to take title to the property in June 2007 for nonpayment of taxes. The tenants on Grove Street were also allowed to remain in their home for a time while the city owned it.

In a July 2008 memorandum, former City Attorney Katherine H. Wears wrote that the city planner and the manager allowed the resident to stay there through the month to try to secure financing to buy the property. However, city council members were not briefed by the city manager about the issue.

“I had no idea anybody was living in it,” said Mr. Morley. “If we were doing that, it was something that got by me.”

According to Mrs. Wears’s memo, the tenants were required to pay rent to the city during their time in the house.

When the family was not able to arrange financing, the city evicted them.

“They paid rent and tried to find the money,” said City Comptroller Philip A. Cosmo. “Then we kicked them out.”

Less than a year later, tenants at 819 Knox St. were allowed to live in a city-owned property rent- and tax-free for three years while the city renovated the house.

“It (the Grove Street foreclosure) was before the Neighborhood Stabilization Program came into effect,” Mr. Morley said.

By the time the property entered the program, the tenants had left.

“When the property came to the housing program, it was empty,” said J. Justin Woods, former city planner, “compared to 819 Knox St., which had residents when it came to the program.”

James A. O’Neill, president of C.W. Augustine, the DeKalb Junction firm that administers Ogdensburg’s housing program, said that he couldn’t imagine tenants living in the house.

“It was a tax foreclosure that didn’t look like it was livable,” said Mr. O’Neill. “When we came on the scene, 2 Grove St. was vacant.”

The building was originally slated for demolition. However, in 2010 it was renovated using more than $59,000 in U.S. Department of Housing and Urban Development Neighborhood Stabilization Program funds.

“When the program was originally designed, there were a number of houses that were scheduled to be rehabilitated that went south in the interim while we waited for funding,” said Mr. O’Neill. “Those houses that they originally intended to rehabilitate ended up having to be demolished. We were desperate to find something because we had to meet the goals under the program. Because 2 Grove St. was small, we could do an extensive rehabilitation for a fairly reasonable amount of money.”

Through June 2011, the city spent over $105,000 rehabilitating the property, according to documents from Ogdensburg’s housing program.

“The back addition of the property was demolished and the original portion was rehabilitated,” Mr. Woods said.

Before the rehabilitation, the house was assessed at $21,900. This year’s city taxes were also paid using Neighborhood Stabilization program funds. The house now has an assessed value of $71,300, according to Assessor’s Office records.

Mr. Sciorra told City Council members he would bring the sale of the property before them in September.

“We were told probably late May, early June that there would be two purchase agreements coming to us for 2 Grove St. and 819 Knox St.,” Mr. Morley said. “I said, ‘Who purchased them and how?’ I wanted to know what was going on.”

Mr. Morley asked for the sales process to be investigated after it appeared that Mr. Sciorra was signing purchase agreements for the properties without following City Council policy, which requires that rehabilitated properties be put into a lottery where eligible buyers are selected at random.

“I believe we did have a purchase agreement,” Mr. O’Neill said. “It hasn’t sold. We’re waiting on the city. There’s a whole ordeal over the sales procedure.”

Mr. Morley believes the sale fell through.

“I know there was a purchase agreement talked about, but we’ve never seen it,” Mr. Morley said. “I think it was another one of those deals where Mr. Sciorra and Mr. Woods had an owner picked out without going through the lottery. The whole 819 Knox St. affair broke, the guy got scared and backed out of the deal.”

Mr. Sciorra declined comment Tuesday.

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