Audit finds problems in choosing cities for downtown rehabilitation

JEFFERSON CITY, Mo. -- A state panel did not have a rational basis for bypassing certain cities in favor of others in a program to help rebuild downtown communities, a state audit released Monday said.

Gov. Matt Blunt last summer touted a new approach to make it easier and faster for cities to redevelop their downtown areas.

The plan is nicknamed DREAM, for Downtown Revitalization Economic Assistance for Missouri. The state Department of Economic Development, the Missouri Development Finance Board and the Missouri Housing Development Commission are to work together to help simplify the process of rebuilding a downtown area by making various programs and services available in one place.

Blunt announced the first batch of cities to participate in September. They were Cape Girardeau, Excelsior Springs, Hannibal, Hermann, Kennett, Neosho, Sedalia, St. Joseph, Washington and West Plains.

The state audit found that after the applicants were reviewed, two cities that were unanimously recommended by the department, the finance board and the housing commission -- Chillicothe and Maryville -- were replaced with two others that earned two of three votes -- Excelsior Springs and Hermann. Seven other cities also were recommended by two of the three groups but were not ultimately selected.

The audit said the agencies had no objective criteria for evaluating the 89 applicants and did not document why they turned away two of the 10 unanimous recommendations. Cape Girardeau was unanimously selected.

The finance board said in a written response to the audit that it was considering geographic balance and cities most likely to succeed, among other factors.

The board also rejected the auditor's recommendation of developing an objective points-based system to select cities in the future, saying it would not help smaller communities.

"Why add more rolls of bureaucratic red tape when you don't have to?" Economic Development Department spokesman Spence Jackson said Monday. "We spend more time talking to economic developers at all levels than anyone else."

The audit of the Missouri Development Finance Board also said the board raised fees to cover its expenses in January 2006 in one tax credit program, potentially hurting the projects funded through it, when it had a large unused balance in another program.

The audit questioned the need to increase fees. Auditors said fees collected for another tax credit program, aimed at large-scale developments, total about $381,000 a year while program costs amount to only about $100,000 a year.

At the end of the 2006 fiscal year, the board had cash and investments totaling $24.7 million and operating expenses of $1.8 million, the audit found.

The board responded that it evaluates its fees annually, and the fee increase in one tax credit program came as many others were reduced and one held steady.

The audit also said the board spent more than $101,000 for chartered air travel for members, attorneys and staff to meetings around the state over three years that ended June 30, 2006. If the board had simply reimbursed for mileage rather than providing flights for members and staff, it could have saved $90,000, the audit found.

The board said providing air travel is needed to reduce time required for volunteer board members to conduct business.

---

Auditor: http://www.auditor.mo.gov

Missouri Development Finance Board: http://www.mdfb.org