Purpose of Audit

The purpose of our audit was to evaluate the Putnam County Industrial Development Agency’s (PCIDA) management practices for the period January 1, 2012 to May 3, 2013.

Background

The PCIDA was established in 1995 and is governed by a Board which comprises seven members who are appointed by the Putnam County Legislature. The PCIDA reported 14 active industrial development projects in its 2012 annual report submitted to the Office of the State Comptroller.

Key Findings

• In 1996, the PCIDA Board established criteria for approving projects, and for evaluating and recapturing benefits from projects that fail to meet their goals. However, the policy has not been evaluated since, and therefore does not reflect changes made by the Board to the recapture provisions that the Board should follow.
• PCIDA officials do not have project approval criteria that is specific to the County, and they approve individual projects despite a lack of information such as the additional police or emergency services required, the number of existing jobs, or a cost-benefit analysis.
• Officials do not conduct annual visitations to businesses to determine if projects meet their goals or recapture benefits when they do not.
• Officials also do not obtain sales tax exemption or capital investment amounts annually, and therefore cannot determine if projects are meeting their related goals or accurately report this information to the Office of the State Comptroller.

Key Recommendations

• Develop specific project evaluation criteria and document its rationale for approving or denying benefits to each applicant.
• Perform a documented cost-benefit analysis for each proposed project prior to its approval taking into consideration factors such as jobs created or retained, sales tax exemptions and capital investment.
• Perform and document client visits to determine if businesses are creating and retaining jobs as they agreed to in their applications.
• Compare the sales tax exemptions and capital investments business owners are claiming on their ST-340s to the amounts stated on the businesses’ applications and investigate any significant variances.