City of El Paso audit shows ‘breakdowns’ to economic incentives policy

EL PASO, Texas (KVIA) -- An audit by the City of El Paso on its own economic incentives policy shows there were "control breakdowns and violations."

That's according to the report conducted by the Internal Audit Department on the Department of Economic Development.

The audit focused on incentives packages offered to owners of properties in downtown El Paso and around the airport.

It found a handful of issues.

One: there were changes made in 2021 to the policy.

One revision allowed business owners who were requesting financial incentives from the city to provide documentation of their business' stability "upon request."

It had once been mandatory.

The auditors found that, because of that change, six of the seven agreements that were reviewed did not provide documentation of financial stability.

That led to city council not getting "a true representation of the dollar amount of all incentives provided."

The auditors found there were no deadlines or "key dates" in the agreements, and that some businesses received incentives despite not following through on their agreements, but there was nothing in writing in the contracts allowing the city of El Paso to "recapture" the incentives.

Those incentives can range from fee waivers, to tax rebates, to reimbursement of property tax payments.

The auditors recommended the economic development department require agreements to contain a recapture clause.

The head of the city's financial oversight and advisory committee, city rep brian kennedy, said in a statement that his committee "is now working with current city management to enforce controls and provide a regular reporting structure to ensure that contractual benchmarks are being met by our business partners and that we are correctly disbursing incentives."

Adding that reviews and audits of agreements will become standard practice going forward.