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Amador Economic Development Corp.

Reason for Review

The Grand Jury has jurisdiction to review the books and records of any non-profit corporation operated on behalf of a public entity pursuant to Penal Code 933.6.

Background

The Amador Economic Development Corporation (AEDC) incorporated on May 15, 1980.  Its mission is ďto promote and facilitate a local economy that is innovative, resilient and diverse, by creating business formation, developing skilled jobs and supporting existing local businesses, while maintaining the areaís rural character and quality of life.Ē

Methodology

Members of the Grand Jury conducted interviews and reviewed pertinent documents.  

Persons interviewed:

Documents examined:

Facts

1.       AEDCís stated purpose is to attract new businesses to the County and support existing businesses.  It has complete freedom in the methods it uses to do this.  In the past it has attended trade-shows, published newsletters, created promotional literature, marketed Small Business Administration (SBA) programs, and provided SBA financing for small businesses within the County.

2.       AEDCís income is derived from two sources:

3.       AEDCís total gross income for fiscal year 2000 was $99,200.

4.       Amador County funded $25,000 to AEDC in each of the fiscal years 1999 and 2000.  Prior to 1999, the County funded $20,000 annually to AEDC.

5.       AEDCís Form RRF-1, which is filed with the Attorney Generalís office, states no government funding was received for fiscal year 2000.

6.       The County has no procedure or mechanism in place to assure Countyís subsidization of this entity is a cost-effective investment for the County.

7.       There is no mechanism to ensure that the County funds provided annually to AEDC are used for purposes in the interest of the County.

8.       An Amador County Supervisor and Amador County Planning Commissioner are serving or have served on AEDCís Board of Directors.

Findings

1.       It is unclear whether Amador Countyís funding to AEDC is cost-effective for the County and warrants subsidization.

2.       Due to the lack of a mechanism to ensure that County funds provided to AEDC are used in the best interest of the County means that there is no accountability to the taxpayers or County administration.

3.       There is a discrepancy between what the AEDC reported as funds received from the government for fiscal year 2000 and the funds actually received.

4.       There is a perception or potential for conflict of interest when elected or appointed County officials serve on the Boards of private entities receiving County funds.

Recommendations

To AEDC:

1.       Amend past filings that contain erroneous information, such as the RRF-1 Forms that are filed with the Attorney Generalís office.

2.       Establish procedures to ensure that forms are properly filled out and filed. 

To the Board:

3.         Before providing future funding to AEDC, develop and perform a cost-effectiveness evaluation of using County funds to subsidize this entity.

4.         Perform the cost-effectiveness evaluation on a regular basis, for example, every two or three years.

5.         Make the cost-effectiveness evaluation a prerequisite to initiate each new round of funding to AEDC.

6.         Define a goal for the Countyís expected benefit from this alliance and make the annual amount funded to AEDC proportional to the AEDCís achievement of that goal.

7.         To assure the highest and best use of County resources, establish procedures for periodic review of entities receiving County funds.

Response Required

As required in Section 933.05 of the Penal Code, AEDC and the Board of Supervisors must respond to the recommendations addressed to them