Redevelopment audit criticized

An audit that came out this month criticizing Carson City's redevelopment program is baseless because no city policy regulating the program exists, according to a response to the audit.

Former City Auditor Sue Johnson failed to recognize the fact that the redevelopment authority doesn't have to follow city policy because it is a public agency separate from the city, said City Manager Larry Werner and City Economic Development

Manager Joe McCarthy in a response to the audit.

The work of the redevelopment authority and its staff are only regulated by state law, they said. If the program had any further rules, they said, those would only have to be adopted by the redevelopment authority itself.

The city audit committee will review the response to the audit this afternoon.

Members could send the audit to the board of supervisors with recommendations.

The redevelopment authority helps attract, retain and expand business in two zones downtown and on the south side of the city. It is funded by part of the property taxes collected in those zones.

But there are many examples of problems with the redevelopment program, according to the internal audit that reviewed work occurring between July 2005 and May 2008. Members of the redevelopment authority include McCarthy, City Deputy Economic Development Manager Tammy Westergard and the managing Carson City Redevelopment Authority, which is made up of the board of supervisors.

Staff spent money without approval, operated with little policy or oversight and mismanaged projects on several occasions, the audit said.

Johnson pointed to problems including times when she said redevelopment staff:

- Spent $26,000 on design fees for Daddy Dick's Tavern in 2005, a business that seemed to have closed before the work could have been done.

- Paid Steven Saylor about $48,000 apparently for marketing services even though he had no license to do business in Carson City.

- Gave about $68,000 to First Presbyterian Church to remodel its building even though only about $48,000 was approved by the redevelopment authority.

But city policy, including limits that would regulate these actions and keep spending to $25,000 without approval by supervisors, does not apply to redevelopment staff, Werner and McCarthy said.

"There are no established polices and procedures to circumvent," they said in their response to the audit. "The appropriate controls must be adopted by the Carson City Redevelopment Authority before staff can be expected to follow them."

They did say they agreed with the audit's recommendations, however, to adopt policy and procedures regulating how and why money is spent.

Staff members will work to try to have official policies ready by the end of January, they said.

But redevelopment members need to follow city rules like city employees in any other department, said Pete Livermore, supervisor and audit committee member.

"The response doesn't excite me at all," he said. "I think it's a cop out."

The redevelopment staff needs to work with Werner and the redevelopment authority to reform how they operate, he said, instead of trying to blame the city for the redevelopment program's problems.

"So the kids got out and we didn't build them a big enough fence to keep them out of trouble?" he said.

Richard Staub, another audit committee member and supervisor, said the response showed that city staff didn't understand the audit had criticized rules that redevelopment staff had already agreed to accept.

They "totally missed the mark" with their response, he said.

The audit shows that Werner needs to work with redevelopment staff, who are also city staff, to help them learn how to run a city department, Staub said.

"They really don't know what they're doing," he said.

- Contact reporter Dave Frank at dfrank@nevadaappeal.com or 881-1212.