{"id":44381,"date":"2018-09-12T10:34:47","date_gmt":"2018-09-12T14:34:47","guid":{"rendered":"https:\/\/acprimetime.com\/?p=44381"},"modified":"2018-09-12T16:14:48","modified_gmt":"2018-09-12T20:14:48","slug":"long-awaited-crda-audit-released-findings-much-worse-than-predicted","status":"publish","type":"post","link":"https:\/\/acprimetime.com\/long-awaited-crda-audit-released-findings-much-worse-than-predicted\/","title":{"rendered":"Long Awaited CRDA Audit Released. Findings Much Worse Than Predicted."},"content":{"rendered":"
\"CRDA
Horrific CRDA Audit Released. Jaw-Dropping Malfeasance.<\/figcaption><\/figure>\n

Hey Atlantic City, just about everything you suspected about the infamous CRDA, Casino Reinvestment Development Authority looks to be true. Actually, some of their exploits are much worse than anyone could imagine. That’s according to the recently released CRDA audit, conducted by the NJ State Auditor and Office of Legislative Services.<\/p>\n

The CRDA audit is ugly. Especially if you’re an Atlantic City resident, taxpayer, business owner or investor.<\/h2>\n

Below are a mix of excerpts, some edited for clarity, along with our commentary:<\/p>\n

An audit of the Casino Reinvestment Development Authority (CRDA or authority), was done from January 1, 2014 to December 31, 2017. Our audit included financial activities accounted for in the CRDA\u2019s accounting systems.<\/p>\n

CRDA Governmental activities include authority operations and programs, including the administration of community and economic development projects.<\/p>\n

CRDA Business-type activities include the financing and operation of a garage and the operations of the Convention Center Division and the Special Improvement District Division.<\/p>\n

Major components of revenue were luxury tax, grant revenue, parking fees, marketing fees, hotel room fees, and entertainment retail district grants. The authority is also the fiduciary for Investment Alternative Tax obligations paid by casino licensees.<\/p>\n

    \n
  • CRDA limited access to original documentation.<\/li>\n
  • CRDA held back documentation.<\/li>\n
  • CRDA fulfilled requests with photocopied documents.<\/li>\n
  • CRDA also thwarted State’s ability to audit legal expenses, by redacting invoices.<\/li>\n<\/ul>\n

    Objectives of CRDA AUDIT.<\/strong>
    \nThe objectives of the CRDA audit were to determine whether financial transactions were reasonable and were recorded properly in the accounting systems.<\/p>\n

    Additional objectives included determination of whether the CRDA ensured efficient and effective use of CRDA funds.<\/p>\n

    Methodology<\/strong>
    \nThe CRDA audit was conducted in accordance with Government Auditing Standards. The NJ State auditors studied legislation, the administrative code, executive orders, and policies and procedures of the CRDA.<\/p>\n

    Interviews, observations, and review of the CRDA\u2019s records. CRDA board agendas and minutes, reviewed financial trends, and interviewed personnel to obtain understanding of various functions, the internal control structure, and monitoring procedures.<\/p>\n

    State also reviewed annual audit reports issued by public accountants.<\/p>\n

    Conclusions<\/strong><\/p>\n

    The CRDA did not always ensure an effective and efficient use of funds.<\/h3>\n

    The CRDA lacked a process to monitor compliance with contract terms resulting in overpayments, lost revenue, and potentially lost deliverables, as well as not being able to use measurable results in future contract negotiations.<\/p>\n

    The CRDA materially modified certain contracts with terms not consistent with authorizing board resolutions which resulted in unauthorized payments.<\/p>\n

    State auditors found:<\/p>\n

      \n
    • Improper uses of emergency procurement. Contracts were awarded to highest bidder<\/li>\n
    • Improper approval of a direct investment project<\/li>\n
    • Improper calculation of sponsorship fees<\/li>\n
    • Payment for board members\u2019 waived compensation<\/li>\n
    • All of the above, resulting in potential overpayments.<\/li>\n<\/ul>\n

      Background<\/strong><\/p>\n

      The CRDA was established in 1984 to provide capital investment funds for economic development and community development projects in Atlantic City and the State of New Jersey. Monies came from the casinos.<\/p>\n

      The CRDA is governed by a board of directors that include local socialite, Gary Hill, the Atlantic City Mayor, Casino execs, Atlantic County, etc.<\/p>\n

      In February 2011, the scope of CRDA\u2019s responsibilities expanded with the creation of the Atlantic City Tourism District. All casino hotels, the boardwalk, all major commercial districts, CRDA-owned properties, and Bader Field (a former general aviation airport). The district\u2019s purpose is to facilitate a clean, safe, and marketable city in order to attract tourists and investors. This law designated that all available assets and revenues of the authority shall be devoted to the purposes of the tourism district and community development in Atlantic City.<\/p>\n

      The law also transferred all functions, powers, and duties of the ACCVA to the CRDA and directed, as appropriate, for the authority to assume all functions, powers, and duties of Atlantic City, and of any agency or instrumentality, thereof, with respect to the ACSID. As a result, the authority increased its workforce from 29 to approximately 135 employees by the end of 2013.<\/p>\n

      New CRDA responsibilities included:<\/p>\n

        \n
      • Maintaining Boardwalk Hall and Convention Center<\/li>\n
      • Attract visitors to Atlantic City<\/li>\n
      • Promote convention, resort, and tourism<\/li>\n
      • Maintenance and safe initiatives within tourism district<\/li>\n
      • Overseeing land use planning. Division run by Lance Landgraf<\/li>\n<\/ul>\n
        \"CRDA
        CRDA’s Lance Landgraf<\/figcaption><\/figure>\n

        In 2014, the CRDA created of a separate not-for- profit entity (Meet AC) and entered into a public-private partnership agreement to primarily fund that entity.<\/p>\n

        In May 2016, the Casino Property Taxation Stabilization Act (State Take-over) was signed into law. It redirected the moneys received by the State Treasurer from the payment of the IAT to the City of Atlantic City for the purposes of paying debt service on bonds. Without these funds, the CRDA\u2019s role in development will be limited until the end of 2026, when the funds may be redirected back to the CRDA.<\/p>\n