AUDIT COMMITTEE SUMMARY
April 22, 2014
Audit of Tax Increment Financing Program
Report Issued April 7, 2014
Background
Tax Increment Financing is a special funding tool used by the City to promote public and private investment areas where little to no private sector investment is currently taking place. A portion of collected taxes are contributed to a fund that is used to help revitalize a designated area called a Tax Increment Zone (TIRZ).
Once a TIRZ has been established, the City enters into written interlocal agreements with all participating taxing entities to specify: (1) the conditions for payment of the tax increment into a tax increment fund, (2) the portion of the tax increment to be paid by each entity into the tax increment fund, and (3) the term of the interlocal agreement. As illustrated in Table 1 below, incremental real property taxes resulting from new construction, public improvements and redevelopment efforts accrue to the TIF fund. The funds are used to build and repair roads and infrastructure and rehabilitate historic facilities and existing vacant buildings. Currently managed by the Planning & Community Development Department (DPCD), the TIF program began in 1998.
Audit Objective
Are there appropriate controls and governance structures in place to properly manage the Tax Increment Financing (TIF) Program?
Audit Scope & Methodology
Scope: The audit scope was FY 2013
Methodology: Interviewed management and staff from both the DPCD and Finance. We performed walkthroughs and documented the initiation and administrative processes and internal controls associated with the creation and administration of a TIRZ within the TIF program. We obtained and reviewed copies of development agreements, financial plans, invoices, and other supporting documentation pertinent to the TIF program.
Audit Conclusions
No, the City does not have appropriate governance structures in place to properly manage the TIF program. Specif...
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