Purpose of Audit
The purpose of our audit was to determine whether IDA Boards provided effective oversight of the IDAs’ operations for the period January 1, 2014 through May 31, 2015.
An IDA is an independent public benefit corporation whose purpose is to promote, develop, encourage and assist in the acquiring, constructing, reconstructing, improving, maintaining, equipping and furnishing of industrial, manufacturing, warehousing, commercial, research and recreation and certain other facilities. The overall goal of an IDA is to advance the job opportunities, health, general prosperity and economic welfare of the people of the State. An IDA’s Board is responsible for the IDA’s general management and control.
In June 2016, new legislation became effective to increase the accountability and improve the efficiency and transparency of IDA operations 1. For new projects, the law requires standard application forms for requests for financial assistance, uniform criteria for the evaluation and selection for each category of projects for which financial assistance is provided, uniform project agreements, annual assessments on project progress including job creation and retention, as well as policies to recapture, discontinue or modify financial assistance or tax exemptions. While many of the areas we reviewed were not requirements during our audit period, they were considered good business practices and, therefore, included as a part of our review.
1 Chapter 563 of the Laws of 2015.
- Orange’s Board acted outside of its authority when it accepted and agreed to administer a $1 million grant.
- 49 of 155 projects reviewed contained incorrect information, including inaccurate job creation and retention numbers, project status and transfer information.
- 24 of 35 projects reviewed did not include terms for recapture or termination of financial assistance when project goals were not met or maintained.
- While all IDAs adopted a Uniform Tax Exemption Policy (UTEP), which includes provisions for the recapture of financial assistance, they had not established UTEP implementation procedures for claw-backs of financial assistance.
- 127 of 196 project owners reviewed reported they created and retained the jobs they agreed to, while the remaining 69 reported they did not. Their 2014 annual reports indicated they would create or retain 13,818 jobs, but they actually created or retained 10,209 jobs, a shortfall of 26 percent.
- Ensure the IDAs’ actions are consistent with their statutory authorities.
- Develop policies and procedures for obtaining and reporting reliable project information for the IDAs’ annual report.
- Develop policies to recapture, discontinue or modify financial assistance or tax exemptions.
- Develop and implement UTEP implementation policies and procedures, including but not limited to, clearly defining when a claw-back should occur and repercussions when project owners do not provide annual status reports.
- Develop and implement project monitoring policies and procedures to determine whether project owners are meeting the goals included in their agreements, such as job creation and retention goals.