Purpose of Audit

The purpose of our audit was to review the Agency’s process for evaluating, approving and monitoring projects for the period January 1, 2013 through October 10, 2014.

Background

The County of Orleans Industrial Development Agency is an independent public benefit corporation created to promote, develop and assist industrial, manufacturing, warehousing, commercial, research and recreation facilities. The Agency is governed by a seven-member Board which is appointed by the Orleans County Legislature.

Key Findings

• The Board and management did not formally document and adopt procedures for calculations of cost-benefit ratios and the determination of contractual time periods for businesses seeking financial assistance.
• None of the open projects’ PILOT agreements reviewed contained a "recapture of benefits" clause holding businesses accountable for delivering promised benefits to the community in exchange for tax abatements.
• Officials billed one business using a PILOT billing schedule different from the Board-approved schedule, resulting in the under-billing of $246,000 in the 12 years since the PILOT agreement inception.

Key Recommendations

• Develop, adopt and document cost-benefit ratios that meet community needs, reflect the economic environment and provide for an appropriate and reasonable measurement of each applicant’s performance, and adopt a policy to define the basis for the time periods awarded in PILOT agreements and document how they are calculated for each project.
• Consider including a recapture-of-benefits clause in agreements to protect the community and taxpayers.
• Ensure that all PILOT billing and payments are made in accordance with agreements and consult with legal counsel and, if feasible, pursue the recovery of under-billed PILOTs and subsequently remit the money to the affected taxing jurisdictions.