LANSING – The Michigan Economic Development Corporation has mostly addressed oversight issues in how its Renaissance Zone Program evaluates the impact on creating new jobs, retaining jobs and stimulating capital investment within the state and determines compliance, according to a follow up report from the Office of the Auditor General.

Originally, Renaissance Zones were regions designated as virtually tax free for any business or individual residing in or moving into the region. The evolvement of the Michigan Renaissance Zone Act has shifted, though, away from geographic area designations and now focuses on company and parcel specific designations.

A company interested in staying, expanding or locating in Michigan can meet with MEDC staff to discuss a proposed project, and if convinced the project will have a positive economic impact on the local area and state, MEDC staff work with the company, local government and state agencies to develop an overall incentive package.

As of June 2011, there were 21 Geographic Renaissance Zones (with 157 active subzones), 50 specialty Renaissance Zones, and 28 Tool and Die Recovery Zones, the audit noted.

The original audit’s material conditions were that the MEDC had not established a comprehensive process to evaluate the program’s effectiveness and did not adequately monitor the compliance with the requirements of the development’s agreements.

Of the former, the audit concluded that based primarily on information provided by the Department of Treasury, some $82 million in state and local tax revenue was abated in relation to the program from its inception in fiscal year 1996-97 through fiscal year 2009-10.

On compliance monitoring, the original audit determined the MEDC did not validate the accuracy of the economic activity reported by the Renaissance Zones in their progress reports, nor had it requested supporting documentation, conducted routine site visits or performed other procedures to verify the data submitted. MEDC also did not follow up on overdue annual progress reports in a timely manner, receiving 4 of the 56 (7 percent) and 8 of the 54 (15 percent) reports for the calendar year 2010 and 2009 reporting periods, respectively, from 35 to 261 days after their due date.

In the follow up audit, auiditors said the benchmarking issue no longer applied due to the end of new geographic and tool and die renaissance zones. And auditors said the MEDC partially complied with the recommendation to improve monitoring of compliance with development agreements in all respects other than conducting site visits.

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