VIRGINIA BEACH — The city completed its first internal audit of the Virginia Beach Development Authority in a decade in November 2018.
Despite accounting records described as “very sound” and “the accounting quality for the VBDA” characterized as “excellent,” the audit recommended a dozen changes to Development Authority processes — half of which pertained to the city’s Economic Development Investment Program.
The city’s director of Economic Development Taylor Adams will brief City Council Tuesday on those six changes to EDIP procedures, which were recommended as part of the audit performed by City Auditor Lyndon Remias.
EDIP is a grant program intended to induce new businesses to locate in Virginia Beach or stimulate growth among the city’s existing businesses, according to a presentation Taylor Adams, the city’s director of Economic Development, will give to City Council Tuesday. The EDIP is funded through the cigarette tax, and “awards are approved by the Development Authority based on the director’s discretion,” according to the audit.
The Development Authority has been administering that program on behalf of the City Council since 1994.
The EDIP requires that companies awarded grants through the program create or retain jobs or invest new capital. The Development Authority has had issues following its own EDIP policies, according to the audit, which is why half of the recommended changes to come from the Development Authority’s audit relate only to the EDIP grant program.
The audit report put forth by Remias’s office criticized a $150,000 EDIP grant to Urology of VA. Although Urology of VA met the minimum capital investment needed to qualify for the grant, the actual capital investment was below what the Development Authority approved in a resolution.
According to the Nov. 21, 2017 Development Authority minutes, members of the Development Authority were briefed on the company falling short of its stated capital investment — which still met the minimum criteria, and the Development Authority awarded the entire grant regardless.
The audit report recommends Development Authority commissioners re-vote if a company cannot meet its original investment requirements, which will keep the public informed of any changes.
Other proposed changes to EDIP policies include clarifying the definition of “capital investment,” and making the Development Authority’s discretion more explicit in determining what meets that definition, according to the presentation.
To read through the full audit report of the Development Authority and the proposed changes to the EDIP policy, click here.
City Council will vote on whether to approve the updates to the EDIP policy during their March 19 meeting.