Yesterday I included tidbits in this post and this full story from the City Council committee meeting on the audit that found fraud at the Southeastern Economic Development Corp.

But there were a number of other points made during the hearing that I found interesting. So here are a few:

  • Denise Callahan, who oversaw the audit for Macias Consulting Group, said outgoing SEDC President Carolyn Y. Smith had given herself the authority to override existing policies and procedures at the agency.
  • Callahan recommended that the city examine the feasibility of reclaiming the employee bonuses and extra compensation that was not properly authorized. She also said the city should look at the boost given to employee pensions by the bonuses to presumably see if that was recoverable as well. City Attorney Mike Aguirre recently dropped a suit that attempted to recover $260,000 in extra pay from Smith.
  • Newly appointed SEDC board member Richard Lawrence said this: “We normally find as board members that we can rely on staff and this audit suggests that we cannot.”
  • Councilman Tony Young said he requested the SEDC audit because he suspected that the agency wasn’t performing to the level that the residents in his district, which largely overlaps with SEDC’s redevelopment area, expect.

He said this:

Now seeing this audit it’s pretty clear why were not getting those projects done. It’s pretty clear why Imperial Avenue hasn’t been developed.

Areas that have been bought up through the Redevelopment Agency though SEDC are basically lying dormant or vacant. If you drive through my district, I can give you five, six maybe eight properties that are owned by the city for redevelopment that are just lying dormant.

Young asked Callahan how SEDC matched up to other redevelopment agencies she’d audited. She responded:

In terms of day-to-day operations, I think it would rank at the bottom of the redevelopment agencies that we’ve examined.

She also said that its overall performance ranked low compared to other redevelopment agencies.

  • Young asked Callahan if the audit looked at SEDC’s legal representation. Callahan said some board members interviewed “felt that [corporate counsel Regina Petty] would convey info they didn’t believe was quite accurate but there wasn’t anything we could verify and wasn’t in our contract to look at it.”
  • There was a lot of discussion about consultants. Smith had authority to unilaterally assign consultant contracts smaller than $50,000, but she didn’t disclose the awarding of these contracts to her board, as she was required to, the audit said.

Young said this:

(They are) basically feeding at the trough. And when you’re feeding at the trough you’re definitely going to find ways to protect the situation and so you’re going to have some people who are going to fight to protect the agency that they’ve been feeding off of the trough for so long.


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