By DANNY RESTIVO
The state auditor’s office said it will perform an audit of an economic agreement between the city and Youngstown.
On Thursday, Michael Maurer, a spokesman from Auditor Dave Yost’s office, said the state will review the joint-economic agreement from the V&M Star expansion project during a general audit of Youngstown’s finances.
“This is great news for the city of Girard and its residents,” said Mayor James J. Melfi. “I’m pleased with the auditor’s decision because it’s something that must be done to ensure Girard receives the money it’s due.”
The decision is a result of Melfi’s formal request for a special audit that was sent Jan. 11 to Yost’s office.
On Feb. 5, the auditor’s office rejected his request in a letter. It said his “concerns are not ones for which we would initiate a special audit. We recommend you consider employing private professionals to assess the parties’ compliance.”
Melfi said he contacted the auditor’s office after receiving the letter and informed them of the special circumstances the city was facing.
“This is an unusual and rare agreement we have with Youngstown,” Melfi said. “The state is familiar with Youngstown’s revenue stream, and I believe they would be able to pick up a budget and notice any discrepancies better than a private firm.”
Based on Melfi’s concerns and after further discussions, the auditor’s office decided it was fair to examine the agreement during a regular audit of Youngstown, Maurer said.
“They are going to specifically look at the [joint- economic district] and make a determination following the audit,” Maurer said.
Girard’s request for an audit stems from a shortfall in estimated revenue from the V&M expansion project. The city has received roughly $1.6 million from construction income-tax wages and permit fees. Melfi said V&M told the city it would receive roughly $3 million during the 2009 negotiation process.
The mayor said his concerns were heightened after he found out the projected $650 million project turned out to be $1.1 billion.
During the negotiation process, V&M officials said the project could create $5.5 million in tax revenue during the construction.
Based on the joint- economic agreement, Girard and Youngstown agreed that Girard would receive 55 percent of the income-tax revenue, while Youngstown would take 45 percent of the first $3 million. The two entities then would split evenly any revenue above $3 million. Melfi said the agreement stipulates that V&M would direct all income-tax revenue to Youngstown, which would dole out the appropriate amount to Girard.
The auditor’s office said Youngstown and Girard will split the cost of the audit, which will be determined after the report is completed.
Melfi said he already has requested that the auditor’s office look at income-tax revenue from construction wages as well as permit fees.
“I believe permit monies were not distributed evenly, and as far as income taxes, we have concerns,” Melfi said.