Monroe County

Disbursements for the Promotion of Economic Development
Executive Summary

Monroe County (County) is located in the western region of New York State and has approximately 735,000 residents. In 2005, the County’s budget was approximately $982 million.

The County contracts with various organizations to administer economic development programs. Through private, State, Federal, and County financial resources, the County’s Economic Development Division (Division) supports businesses, developers, units of local government, and major County facilities. The Division provides administrative support to the County of Monroe Industrial Development Agency (COMIDA) and the Monroe County Industrial Development Corporation. Services provided by the Division include administration of business financing programs, technical assistance to businesses interested in undertaking expansion or relocating to the area, and implementation of tax incentives.

Scope and Objective

The objective of our audit was to review the County’s Economic Development Division’s operations for the period January 1, 2002 to December 31, 2005. Our audit addressed the following related questions:

• Was the County’s role in facilitating a $2.5 million payment of State grant funds to COMIDA for subsidizing a low-cost airline proper?
• Has the County complied with General Municipal Law (GML) by using subsequent funding for capital projects to repay the debt that the County originally issued to pay for the capital projects?

Audit Results

County officials used COMIDA, a third-party public benefit corporation, to provide State grant funds (to which the County was entitled) to AirTran Airways, a private business enterprise. The County agreed to permit COMIDA to receive $2.5 million in State grants that were intended to be reimbursement payments to the County for a capital improvement project for Airport improvements. The County partially funded the Airport improvements through the proceeds of County obligations. The County did not use the funds for their intended purpose, but instead agreed that COMIDA would be the recipient of the moneys. At the County’s request and with its agreement, COMIDA paid $2.5 million to AirTran Airways, a low-cost airline, in the form of a subsidy. These payments represent an indirect gift of County funds to a private entity. Neither the County nor COMIDA is authorized to make outright cash subsidies of its moneys to private entities.

The County has no statutory authority to use County funds for these purposes. Article VIII, Section 1 of the State Constitution prohibits municipalities from making gifts of municipal moneys to private entities. County officials should not have circumvented this fundamental principle of the State Constitution by permitting COMIDA to use public funds, to which the County was entitled, to perform a function that under the State Constitution the County could not legally do on its own.

Furthermore, because the County paid for the Airport improvements by issuing a bond, it should have placed the reimbursement moneys in a reserve fund and used the moneys to pay the outstanding debt that the County originally issued to pay for the capital improvement project, as required by General Municipal Law.1 However, because COMIDA received the grant moneys, the County avoided this GML requirement to use grant money for debt repayment and instead used local taxpayer moneys to repay the debt.

Comments of Local Officials

The results of our audit and recommendations have been discussed with County officials and their comments, which appear in Appendix A, have been considered in preparing this report. County officials disagreed with many of the recommendations included in the report. Appendix B includes our comments on the issues raised in the County’s response letter.