BernCo audit finds inadequate project monitoring
Report cites business property tax breaks
An internal audit of Bernalillo County’s economic development programs concluded that as of February, the county was not adequately monitoring several projects that provide property tax breaks for businesses.
According to the audit report, which was compiled by Albuquerque accounting and business consulting firm REDW, annual reports had not been submitted by companies in four of the 10 projects examined by auditors. The four companies did not have reporting requirements in their agreements with the county.
REDW characterized the potential risk as “high” and recommended the county evaluate agreements on all current projects.
“There may be a risk that the county is not receiving the level of economic benefits agreed to in the application,” REDW wrote in the audit. “In addition, clawback provisions may be applicable and not caught without proper monitoring procedures in place.”
The county’s Economic Development Department, which oversees the programs, said in an email through a county spokesman that “the audit conducted by REDW, in January, accomplished its intended purpose, which is to review internal policies and procedures to identify areas where improvements can be made.”
The spokesman said the department is now including reporting requirements in all program contracts and that the companies that did not submit reports have all agreed to submit them either annually or semiannually.
Those companies are Hotel Chaco, Los Poblanos Historic Inn & Organic Farm, Sennheiser New Mexico and Vitality Works, according to the county.
Matthew Rembe, executive director and co-owner of Los Poblanos, told the Journal he would willingly provide the county with any necessary documentation. The other businesses could not immediately be reached for comment.
A spokesman for REDW declined to comment.
The projects in question involve industrial revenue bonds, also known as IRBs, which function as a property tax
abatement. The county told the Journal in February that commissioners had approved 26 IRB packages over the past five years as an incentive for new and expanding companies to relocate or maintain operations within the county.
Those deals represent $441 million in privately funded bonds and 2,022 jobs. The county has said it does not maintain a total of all the tax abatements represented by those bonds — the information is disclosed for each project per year in an annual financial report — though typically the value of the abatement is significantly smaller than the value of the bonds, and also involves payments in lieu of taxes.
Economic development officials have described the county’s IRB program as a critical tool for increasing employment in the area. Others, including some county commissioners, have argued the program is too permissive as currently administered.
The audit report contained some conclusions that cast the department in a positive light, in particular that “(IRB) applications were completed with all required information prior to submission, and the review process appeared to be appropriately assessing the applications prior to issuing IRBs.” Payments in lieu of taxes were accurately calculated and billed, according to the report.