C UNCILMAN JASON ARP

200 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 parks
and farm ground to a ball park. There ar thirty-five (35) separate funds under management. In 2016
the 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, and
the 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 of
the transactions that came up as items for eview in the internal audit were within the scope ofthe
annual Board of Accounts review.
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On January 3rd 2017, I was 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 City
th
Council (January 24 , 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.

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,

CCVO
r: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