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What you need to know for 01/24/2017

Fulton County IDA may be owed thousands, state audit finds

Fulton County IDA may be owed thousands, state audit finds

A state audit of the Fulton County Industrial Development Agency determined it may be owed nearly $8

A state audit of the Fulton County Industrial Development Agency determined it may be owed nearly $80,000 by the Fulton County Economic Development Corporation.

At issue are overpayments to EDC for commissions and possibly also reimbursement pertaining to industrial parkland sales dating to the late 1980s.

The findings, which included a determination that EDC may also owe the city of Johnstown $137,000 for its share of industrial park property sales, were identified in the annual report of the state Authorities Budget Office, released last week.

The only problem with the audit findings, various officials said Monday, is that the ABO’s calculations were based on old written agreements that appear to have been superseded by later verbal agreements between several agency boards.

A second complicating factor is that the agreements predate almost everyone in city office or serving at the economic agencies today.

Johnstown Mayor Sarah Slingerland — in office six years — said she was unaware of the issue involving Johnstown. City Treasurer Michael Gifford, who took office in 1996, said it appears that agreements ultimately executed on land sale commissions to the city may not have been as formal as they should have been.

Regarding ABO’s finding that IDA overpaid EDC about $68,000 over the years, Fulton County IDA Director James Mraz said it is his board’s position that ABO auditors misinterpreted the agreements governing more than 20 property sales from 1989 to 2007.

Mraz does agree with the ABO audit in regard to the sale of the original Fulton County Incubator Building, built in 1989 in the Crossroads Industrial Park in Gloversville. At that time, Mraz said, EDC decided to build the structure with a goal of attracting occupants. EDC formed its subsidiary real estate arm, Crossroads Incubator Corp., to build and operate the facility.

But, Mraz said, CIC was new and had no money. The land in the park was owned by IDA, which developed Crossroads.

Under terms of the agreement, IDA provided the land for the incubator with the provision that if the land were ever sold, CIC would pay IDA for the land. The land was sold by CIC in 2007 to a Boston real estate firm that paid about $31 million for a number of industrial park buildings.

“Everybody forgot about it,” Mraz said of the issue of payment to IDA.

IDA Chairman Joseph Gillis said there was no dollar figure set for the land, but ABO estimates IDA is owed about $11,000 for the incubator site, which does not include the building that sits on it.

Mraz and Gillis said IDA is negotiating with EDC for payment on the incubator deal.

Michael Reese, CEO of EDC, said agency officials are examining old meeting minutes to try to understand what agreements were in place at the time of the transactions.

In its annual report, ABO concluded “the county and IDA have acquiesced in this relationship [with EDC] and appear reluctant to hold the FCEDC accountable, even though the decisions made by FCEDC involve public funds, tax exemptions and other forms of taxpayer assistance.”

Michael Farrar, deputy director for compliance at ABO, said his agency assumed that IDA and the city of Johnstown would act on the audit findings when they were released last year. Instead, he said, it appears there is little action being taken to recover any money.

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