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Audit report finds no fraud in Brownfield program

  

JEFFERSON CITY, Mo – An audit released today of the Brownfield Remediation Tax Credits by Auditor Tom Schweich found 4 problems with the way the program is administered by the state, but found no fraud or illegalities on the part of the property owners or developers who use the program.

“We found no fraud or criminal activity in the brownfield program,” said Schweich.

Further, Schweich stated that although he found four issues with the way in which the program is administered, he feels the program provides a real value to the state, saying “Brownfield’s are among the nastiest sites in Missouri. We’re talking about asbestos chemicals – and they are eye sores that create hazards. The fact that there is a program to help clean these up and return them to productive use is a very good thing.”

The four issues Schweich cited with the state included: increased requirements for competitive bidding, avoiding conflicts of interest, verification by an independent source that the work is completed properly, and better job verification.

State Auditor Tom Schweich
State Auditor Tom Schweich

Initial reaction in the development community was positive to the audit, especially on the point of wanting to have better verification of the projects. As far as the fourth point, Schweich states that although most economic development programs over state Brownfield’s can still do better.

“They almost never award the credits based on the jobs created, but we feel if it is a component, it should be better,” he said.

While the audit showed several important elements of the program, the overall Brownfield rating was “poor.” The Department of Economic Development has released proposed rule changes that would alter the basic workings of the program.

There is a current debate that is creating a backlash against the Department of Economic Development that would effectively kill the program by attacking the “design build” for performing this clean up work.

Schweich, who has a background in contract law prior to being elected State Auditor, feels there can be both in a economic development program.

“You can have competition within the design build concept and see good results,” Schweich said.

The Brownfield program issues tax credits for up to 100% of project remediation costs of environmental cleanup sites for development, such as Pinnacle and ExpressScripts. Other past projects have included the cleanup of former gas stations, lead sites, and dumping sites for the use of future establishments.

The National Lead site was cleaned of contamination and created 1,300 permanent jobs and 1,000 union construction jobs in Phase 1 and another construction jobs in Phase 2 through the brownfield tax credit program in South St. Louis County.

Transforming National Lead into River City was tremendous for South County,” said Rep. Bob Burns, D-St. Louis. “They do so much benevolent work it is unbelievable. I’ll stand up to anyone who attacks the Brownfield credits that make it possible.”