Purpose of Audit

The purpose of our audit was to evaluate the propriety of the Agency’s financial and operational activities for the period October 1, 2012 through March 12, 2015.

Background

The Village of Fairport Industrial Development Agency is an independent public benefit corporation which offers assistance, including commercial loans and exemptions from certain taxes, to attract, retain and expand businesses within the Village of Fairport. The Agency, which was created by State legislation in 1976, is governed by a five-member Board of Directors, appointed by the Village Board. Total expenses for the 2013-14 fiscal year were approximately $510,000.

Key Findings

• The Board manages the Agency as if it is a department of the Village of Fairport Office of Community and Economic Development, which inappropriately gives the appearance that the Agency is legally affiliated with the Village of Fairport Urban Renewal Agency and the Village of Fairport Local Development Company, and it inappropriately commingled bank accounts and accounting records for the three entities.
• The Agency retains additional rent payments from long-term leases that were executed prior to statutory amendments that require IDAs to return such funds to the affected taxing jurisdictions.
• The Agency made commercial loans of its own money without statutory authority.

Key Recommendations

• Direct the Agency’s operations as a separate and independent entity with its own governance structure and separate and distinct bank accounts and accounting records.
• Consider amending the Agency’s lease and payment in lieu of taxes agreements from the 1980s to distribute payments to the affected taxing jurisdictions consistent with statutory requirements.
• Cease making commercial loans directly.