NYS Comptroller's Audit of Metroplex - July 2009

http://www.osc.state.ny.us/localgov/audits/publicauth/2009/schenectadymetroplex.pdf

From the Executive Summary

Audit Results
As of December 31, 2007, the Metroplex showed no signs of  fi scal solvency problems. Sales tax
revenues, bond proceeds, restricted cash and other sources of funds
were sufficient to finance current operations, existing economic development projects, and long-term debt redemption. Its ability to accomplish its mission was enhanced by an increase in bonding authority approved by the New York
State Legislature.

However, we noted certain practices that Metroplex officials should carefully review. Non-capital
operations are drawing signifi cant moneys away from economic development projects. From 2006 to
2007, Metroplex expenses increased by over $628,000. At the same time, revenues decreased almost
$529,000. Parking lot operating expenses exceeded budgets every year we reviewed, and continue
to exceed operating revenues. Therefore, the parking operations require Metroplex funds that might
otherwise be available for economic development.
In addition, Metroplex has not updated its long-term capital project plan for economic development
since 2003. We also found that Metroplex officials could improve its application process for, and oversight of, economic development projects. Acceptable cost-benefit or return-on-investment ratios have not been established for objectively judging the cost-effectiveness of proposed projects and their funding.
Although guidelines have been developed to cap Metroplex participation at 50 percent of total project
costs; there is no guidance to help determine the amount, or mix, of fi nancial participation (up to the
cap) that is most benefi cial to the public. The limited guidelines that were in place were not adhered
to in all cases. For example, one project received assistance that exceeded 75 percent of the total
project cost. When the funding limit is exceeded, the public assumes more of the project risk than was
intended. Finally, we found that the rationale for project fi nancing decisions was not documented in
Board minutes or otherwise made available to the public.
Performance measures are included in project applications and reporting requirements are part of the
approved project plans. However, the Metroplex is not effectively monitoring project performance
against these measures. For example, there was only limited evidence that steps were taken by
Metroplex offi cials to ensure that sponsored projects reasonably met their employment projections as
indicated in their approved project plans. None of the 16 projects we reviewed had current employment
information on fi le as of December 31, 2007. The most current information reported to Metroplex was
through June 30, 2006 and that was only for fi ve of the 16 projects. The employment information was
out-dated and showed that none of the projects met their job projection goals. Although Metroplex
guidelines called for the imposition of penalties for non-compliance with award terms, the approved
project plans had no penalty provisions for non-compliance, and the Metroplex did not impose any
penalties in cases where projects failed to create or retain jobs as projected.

Finally, Metroplex procured the services of six professional service providers for almost $1.4
million during 2007.  Metroplex paid three of the providers a total of $750,900, without the benefi t
of competition. For two of the providers tested, Metroplex offi cials failed to obtain current written
agreements. Without current contracts in place, there is an increased risk of inaccurate or unauthorized
payments being made for these professional services.