City Council members demanded answers Wednesday from Jacksonville Economic Development Commission interim executive director Paul Crawford about questions stemming from a critical Council audit that called the commission’s practices and oversight into question.
Meanwhile, Mayor Alvin Brown appointed a compliance task force Wednesday, charging the eight members to make recommendations about ensuring accountability in the City’s economic development efforts.
In late December, the Council Auditor released the results of an audit it conducted of the JEDC covering 2007-10. It was strongly critical of JEDC efforts to ensure that companies that receive incentives comply with the necessary requirements.
The initial audit released Dec. 21 said the organization lacked oversight of economic incentive agreements, which cost the City money.
Before starting to answer questions, Crawford addressed a lack of communication between the JEDC and the Auditor’s Office and apologized for it.
The Council Audit Subcommittee met for about two hours, questioning Crawford and the City’s Procurement Division about seven areas relating to concerns in communication, control and compliance.
“We want to be open, we want to be transparent, we want to protect the taxpayer because we realize the buck stops here,” Crawford said.
The first questions addressed the JEDC’s plan to recover $116,000 identified as incentive overpayment to a company that reported out-of-state jobs as local jobs on its reports. The committee also questioned the JEDC’s plans for job verification and recovering overpayments.
Crawford said the company in question was Advantus, which signed a redevelopment agreement with the City in 2002, and the JEDC and the company are at impasse. Crawford said JEDC has worked with the Office of General Counsel to find alternative forms of collection.
Crawford said the disagreement was whether the jobs in the agreement were filled locally.
Language in the bill was “rather loose” compared to what is present in contracts today, Crawford said.
Concerning job verification and the recovery of payments, Crawford said that JEDC staff will make onsite visits to the companies and their human resources departments rather than rely on submitted job reports.
Crawford said there are 81 active agreements and the inquiries will begin from the oldest agreements first, before they become inactive.
For those no longer active, Crawford said he will discuss potential action with the general counsel.
The lack of advertisements for contracts also was scrutinized, such as a more than $7.5 million Cecil Commerce management contract awarded after only one bid was received.
Crawford said such requests for proposals will be advertised in multiple publications, on the Internet and potentially sent to entities with “a high reputation of excellence.”
“We’re going to go ahead and ratchet that up,” Crawford said.
The bidding of the Cecil Commerce maintenance contract was another point of discussion. The current contract expires at the end of January. Requests for Proposal will be available Feb. 15 and Crawford said the JEDC is working with the current contract owner on a six-month extension, instead of a one-year extension, to ensure the process works.
Questionable expenses, including newspaper subscriptions, DirecTV service, decorative brass egg and sphere stands, coffeemakers and more, also were cited in the audit, as well as overpayments.
Council member Bill Gulliford suggested potential punitive action for companies filing improper expenses be written into future contracts.
“We expect that what you submit to us is absolutely correct,” Gulliford said of companies submitting expense forms.
Crawford said the JEDC has begun to review expenses and will review reports monthly to recoup improper payments.
“It will be meticulous,” Crawford said.
Lease administration, communication with the state and a lack of operating procedure, all areas of concern with the Council auditors, have or will be addressed, Crawford said.
Crawford said JEDC compliance efforts were weakened over time because of attrition and budget cuts that trimmed staff from 42 to 15 people in six years.
The audit subcommittee will meet again Tuesday with suggestions and recommendations from Council Auditor Kirk Sherman on how to best review all of the JEDC records.
Sherman said the audit discussion has taken 1,855 work hours so far. That is equivalent to one person working more than 46 weeks full time.
He said a further look will take time but the template has been set.
Brown’s compliance task force will look at accountability and compliance for the City’s economic development efforts under his administration. Brown took office in July.
“Jacksonville deserves better,” Brown said after discussing the audit results. “Taxpayers deserve to feel that their resources and investments are safe in our city.”
The task force will review the current monitoring process of economic development and present Brown with recommendations on compliance standards and procedures for his new Economic Development Office.
Rogers Towers attorney Bill Scheu will chair the eight-person task force, which will present results within 90-120 days. It will begin meeting in February.
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