LANSING – The Michigan Economic Development Corporation did not do enough to ensure that renaissance zones were creating jobs or that the businesses in them were complying with development agreements, a report from Auditor General Thomas McTavish said.

The performance audit of the Renaissance Zone Program, for the period October 1, 2008, through September 30, 2011, found that the MEDC had not created a system to evaluate the program.

Auditors estimated that $820 million in state taxes had been abated in the zones around the state, but they said the MEDC did not have enough information to support its claim that the zones had attracted 12,632 jobs and $4.5 billion in private investment since they were first created in 1997.

The MEDC also had not compiled information on the taxes abated or other costs of the program.

The agency agreed that its reporting efforts had been insufficient and said it was expanding its data collection efforts to better report job creation and investment for companies under development agreements, as well as to get voluntary reports from companies that do not have agreements.

But the MEDC disagreed with an audit finding that it was required to contract with a university to review the accuracy of its reports. Officials said the state did not provide funding for such a report.

Auditors agreed there was not money specifically appropriated for the university review, but said there was nothing to prevent the MEDC from using other funds for the purpose.

Companies not complying with their development agreements were still receiving the tax advantages because the MEDC was not ensuring they were complying, auditors said.

Where the MEDC received data from the zones, it did not verify that data, the audit said. They found five instances where employment was over-reported.

The MEDC also did not compile the data in a central location, so some compliance information had to be compiled by hand.

The agency agreed that it had not been properly tracking those out of compliance and would do so in a timelier manner. It would also report those out of compliance to a subcommittee of the Strategic Fund Board, which would decide how to address the noncompliance.

But it also noted that one company in noncompliance had repaid some of its abatement in an agreement with the Department of Treasury.

Auditors reviewed conduct by the MEDC from October 1, 2008, through September 30, 2011 – prior to the repeal of the Renaissance Zone program and mostly during the tenure of former Governor Jennifer Granholm. During that period, the MEDC had three different CEOs: James Epolito, Greg Main and Mike Finney, in place since 2011 and part of Governor Rick Snyder’s administration.

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