An independent audit of the city’s Urban Renewal Authority requested by Mayor Steve Bach recommends the authority and city partner more closely.
The review, conducted by Hogan Lovells law firm, suggests the authority move into city offices and use city resources, such as planners and staff, in order to operate more efficiently.
Questions about two urban renewal projects, the Ivywild school and University Village shopping center, prompted the audit.
The review found that University Village, which depleted its bond reserves and defaulted on a bond repayment in December, will likely deplete its remaining bond reserves and default on another bond.
“The city and the URA have no obligation nor risk with regard to either the Series A or Series B bonds, or any default thereof,” according to the release.
The bonds were issued to pay for infrastructure improvements at the University Village shopping center. They were to be repaid incrementally with sales and property tax revenue generated from the project.
“Although clearly a vibrant and successful retail center, the project has not yet generated sufficient property and sales tax revenues to make payments on the bonds,” according to the release.
“CSURA’s position is that no one could have reasonably predicted the financial collapse in the United States which occurred in approximately September-October, 2008,” according to the letter from Hogan Lovells about the firm’s inspection. “As a result, the leasing of the University Village shopping center is well behind the forecasting provided in the limited offering memorandum that went to the institutional investors for this project.”
The firm suggested that the authority look at the University Village project as a lesson to help it better structure bond offerings on future projects, according to the press release.
Hogan Lovells also looked into issues with the Ivywild project and found that most of the frustrations were about high fees and poor communication.
“The city has recommended the URA take a careful look at its fees and its costs,” according to the release, “and consider the practices of other urban renewal authorities.”
In addition to combining efforts to save money, the firm suggested that the city and URA work together more closely on collaborating on a city redevelopment plan.