Purpose of Audit

The purpose of our audit was to evaluate the Dutchess County Industrial Development Agency (DCIDA) management practices for the period January 1, 2012 to May 31, 2013.

Background

The DCIDA was established in 1976 and is governed by a Board which comprises seven members who are appointed by the Dutchess County Legislature. DCIDA reported 33 active projects including 22 active bonds and 12 PILOT agreements with 21 businesses.

Key Findings

• The Dutchess County Industrial Development Agency (DCIDA) Board did not design or implement an adequate system to monitor, evaluate, and control benefits and incentives granted to businesses. Ten of the 21 businesses receiving DCIDA benefits have not met their employment goals. Job creation was less than the agreed-upon amount by 1,398 jobs. Six of these 10 companies will receive tax exemption incentives over the life of their contracts, in part, because of their plan to create jobs in Dutchess County. Therefore, taxpayers may not be receiving expected benefits.
• DCIDA did not properly bill, collect and distribute the PILOT amounts for three of seven projects that required that DCIDA control the PILOT amounts. Additionally, none of the 12 PILOT agreements reviewed had a recapture clause. The annual report submitted by the DCIDA was not accurate or complete.
• Of the 10 projects with PILOT agreements, five totaling $14,351,627 were not reported on the Public Authorities Reporting Information System report. Furthermore, two projects that were reported were not correct. Finally, the employee statistical information was reported incorrectly by 14 of 21 project owners.

Key Recommendations

• Put a process in place to enforce job creation expectations.
• Ensure that all PILOT agreements contain a recapture clause and invoke the recapture provision, as appropriate, if a recipient does not meet performance expectations.
• Establish and implement policies and procedures to ensure that PILOT bills are accurately prepared.
• Ensure that DCIDA officials file a complete and accurate annual financial report.