C UNCILMAN JASON ARP200 E. BERR ST STE 120, FORT WAYNE, IN 46802

February 20, 2017

Examiner Paul Joyce, CPA

Indiana State Board of Accounts

302 West Washington Street - Room E4 8

Indianapolis, IN 46204-2765

Dear Examiner Joyce,

The City of Fort Wayne is experiencing g owth in the size and scope of its operations. Much of this

growth is in the realm of economic deve opment. Most of the economic development activity is

managed in the community developmen department in conjunction with the Redevelopment

Commission. As you are aware, the rol of the redevelopment commission has been evolving and it is

currently embarking on new ground. Tr ditionally, redevelopment commissions have been involved in

issuing facade grants, providing financin for infrastructure improvements and in recent years acting as

a conduit for bond financing of economi development projects. Novel applications include facilitation

of loan repayment from the City's Community Legacy Fund, as proposed in a recent application to the

Legacy Review Committee.

The Redevelopment Commission has a p rtfolio of real estate assets it finances and maintains. These

properties are of a diverse nature rangin from parking garages, apartment buildings, industrial parksand farm ground to a ball park. There ar thirty-five (35) separate funds under management. In 2016the Fort Wayne Redevelopment Commis ion received $26.5 Million in funding, roughly $15 Million of

which was taxes collected through Tax In rement Financing Districts (TIF), and made $27.8 Million in

disbursements.

The Redevelopment Commission's respo sibilities will likely expand as investment in large scale

economic development projects such as he Landing, the General Electric Campus redevelopment, andthe proposed downtown arena get under ay.

Recently, the City of Fort Wayne conduct d an internal audit of the Redevelopment Commission. The

limited scope and breadth audit revealed ubstantiallack of controls. For example, a $1.8 Million

purchase of real estate was not recorded i the city's asset management system, despite a wire transfer

of that amount being disbursed. The smal number of transactions yielded enough items for review that

an expansion of the scope and scale woul be warranted if the Internal Audit department had the

resources. Internal Audit performs audits f all the departments of the City of Fort Wayne on a three (3)year cycle. You will find a copy ofthat audit report attached.

The Indiana State Board of Accounts cond cts a review of the City's financial activities annually in order

to sign off on the Comprehensive Annual F nancial Reports (CAFR). It is my understanding that some ofthe transactions that came up as items for eview in the internal audit were within the scope oftheannual Board of Accounts review.

On January 3rd 2017, Iwas appointed by Fort Wayne City Council to serve on the city's Redevelopment

Commission. As of my writing of this let er, there have been no meetings of the Redevelopment

Commission since my appointment. De pite the lack of meetings, the Redevelopment Commission has

pledged $2..5 Million of financing to the 32 Million Landing project in downtown Fort Wayne. The

arrangement does not appear in the Ag nda of any of the meetings of the Commission in 2016. This

commitment was listed in a Legacy Fun loan application that was approved by the Fort Wayne CityCouncil (January 24th, 2017) by a vote of 7-2. As of this writing there are no details available to City

Council for this $2.5 Million transaction, after repeated requests over a month's time. This shows a

demonstrative lack of adherence to poli ies and procedures as well as any internal controls.

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In light of the findings of the Internal Au it staff, and given the potential growth in the size and scope of

the operations of the Redevelopment C mmission, it would be prudent to perform an expanded audit

by staff with the State Board of Account . My hope, as a Fort Wayne City Councilman, as a board

member of the Redevelopment Commis ion and a member of the Legacy Fund Investment Committee,

is that the State Board of Accounts caul help to develop policies and procedures as well as internal

controls that would help to ensure the s undness of the City of Fort Wayne during this period of growth

and development.

Sincerely,

CCVOr:Y Jason Arp

Councilman - 4th District

City of Fort Wayne

CC: Indiana State Auditor Tera Klutz

Controller City of Fort Wayne Len Poehler

Fort Wayne Redevelopment Com ission

Fort Wayne City Council

Fort Wayne City Council Attorney Joseph Bonahoom