Audit critical of Carson City downtown makeover

Monday, Nov. 17, 2008 | 9:39 a.m.

CARSON CITY – Carson City, home of the state’s capitol, is trying to spruce up its downtown.

But it’s been wasting money and ignoring its own laws in the process.

For instance, it spent $26,189 for design of a tavern that never opened. And it ignored the rules in hiring firms that had no city business licenses and paying them without authorization.

This criticisms were raised in an internal audit of the Redevelopment Authority and Office of Business Development covering from July 2005 to May 2008.

The examination, conducted by the office of city auditor Sue Johnson, said taxpayer money was placed at risk because there was a lack of controls. The rules for city approval have “either been compromised or ignored at times.”

“The absence of competitive bid process puts at risk the independent selection process of whom the city conducts business with,” said the audit.

For instance, $26,189 was paid to Hannafin Design Associates for work on Daddy Dick’s Tavern but no application could be found. “The project died because the property owner and the business partnership could not agree on the terms of the lease,” the financial check said.

Without a file, there was no way to verify the design work was actually done.

City officials said there is a limit of $25,000 that staff can approve, without getting approval of the redevelopment authority composed of the mayor and city board of supervisors.

More than $105,000 was paid Curtis & Outland to bring new retail business such as Home Depot, Macy’s and Burlington Coat Factory. There was no approval by the authority for this extra payment, according to the audit. And Curtis & Outland did not have a city business license when it was hired.

A company called MacWest Marketing was hired for up to 25 hours a month at $90 an hour for advertising and public relations. There was never any approval by the redevelopment authority.

There were others where the staff, and not the authority, approved payments of more than $25,000. And some didn’t have city business licenses when they were hired.

“Based upon the findings of this compliance audit, there is a very clear deficiency in the ‘checks and balances’ of the redevelopment process and a pattern of consistent findings,” said the audit. “This places the city’s internal controls over the expenditure of taxpayers’ dollars at risk.”

The redevelopment authority got the audit and approved tightening the ship on Oct. 16. And it has asked for a report in the next 30-60 days.