Purpose of Audit

The purpose of our audit was to review the Agency’s process for evaluating and monitoring projects for the period January 1, 2013 through August 31, 2014.

Background

The Schenectady County Industrial Development Agency is an independent public development corporation whose purpose is to promote, develop and assist industrial, manufacturing, warehousing, commercial, research and recreation facilities. The Agency, which was created in 1978, is governed by a seven-member Board of Directors appointed by the Schenectady County Legislature. Benefits available to companies that receive Agency support include State mortgage and sales tax exemptions, real property tax abatement and low interest bonds. The Agency reported benefits totaling approximately $1.5 million for 29 projects for 2013.

Key Findings

• The Agency did not include provisions in the agreements it enters into with businesses to recapture benefits provided to the businesses when the businesses do not meet their employment goals.
• The Agency provided benefits to a property management and redevelopment company rather than directly to the businesses leasing those properties and creating jobs.
• The Agency does not have a process in place to adequately monitor payments in lieu of taxes (PILOTs) made by recipients of Agency benefits to affected local governments and school districts.

Key Recommendations

• Ensure that all project agreements contain a recapture clause that would allow the Agency to recover financial incentives if business do not produce the intended benefits.
• Provide financial benefits directly to the businesses providing jobs and not to leasing agents.
• Establish and implement procedures to ensure that PILOT payments are made accurately and timely.