South Shore Tri-Town Development Corporation
May 13, 2013 · Read the full official report (PDF) ↗
Published May 13, 2013 Audit covers July 1, 2008 – June 30, 2011 Under Suzanne M. Bump · 2011–2023
source
“Our audit found that SSTTDC’s Board of Directors has not provided the oversight necessary to ensure that management accomplishes its mission of developing the Base for the benefits of the host communities.”
Read the plain-English breakdown
This is a state audit of the public corporation responsible for redeveloping the former South Weymouth Naval Air Station for Abington, Rockland, and Weymouth.
“Chapter 301 of the Acts of 1998, as amended by Chapter 303 of the Acts of 20081, established the South Shore Tri-Town Development Corporation (SSTTDC) as a governmental entity charged with the responsibility for the development of the former South Weymouth Naval Air Station (Base) on behalf of the Towns of Abington, Rockland, and Weymouth (host communities).”
The State Auditor reviewed whether SSTTDC had proper policies, controls, and spending practices for the redevelopment project.
“Our audit objectives were to (1) evaluate the adequacy of the policies and procedures SSTTDC had established for its oversight of the project as well as the internal controls over the activities associated with the project’s development and (2) test various SSTTDC expenditures to determine whether they are reasonable and allowable; pertain to its mission; and comply with applicable laws, rules, and regulations.”
The project depended on major public infrastructure, but SSTTDC had secured only part of the money needed for key work, putting the redevelopment schedule at risk.
“This lack of planning constitutes a risk to SSTTDC’s achievement of its primary mission of developing the Base within 12 years in accordance with the Reuse Plan.”
For local residents, the redevelopment was supposed to create housing, commercial space, recreation space, roads, and public benefits without pushing service costs onto the host towns.
“SSTTDC’s enabling legislation requires it to develop the Base with the goal of maximizing the fiscal benefit to the host communities and in a manner that imposes no costs to said towns for the provision of police, fire protection, emergency, water, sewer, and other municipal services.”
The auditor said SSTTDC needed to act immediately to meet its legal and contract duties, especially by making detailed financing plans for every phase of the project.
“SSTTDC should immediately take measures to ensure that it meets all of its contractual and statutory obligations regarding the development of the Base, including preparing comprehensive project financing plans with specific timelines for all development phases.”
The report recommends stronger board oversight, better planning, better controls over contracts and invoices, required updates from the advisory board, and on-time audited financial statements.
“SSTTDC’s Board of Directors should ensure that it exercises adequate oversight of SSTTDC’s management, including making sure that plans are developed to obtain sufficient financial resources to complete the development of the Base and holding management responsible for the development of proper internal controls.”
The audit is significant because the unfinished financing gap was large: the auditor said about $158.5 million more was needed for the parkway, infrastructure, and water/wastewater systems.
“The total cost of these projects has been estimated at approximately $220 million of which $62 million of financing has been secured.”
The DDA is the main agreement between SSTTDC and the private developer, spelling out who must do and pay for major parts of the redevelopment.
“The DDA defines the responsibilities of each party for various aspects of the site’s development.”
7 figure(s) pending source verification - not shown
What the Auditor checked
- Did not comply Evaluate the adequacy of the policies and procedures SSTTDC had established for its oversight of the project as well as the internal controls over the activities associated with the project’s development.
- Partially Test various SSTTDC expenditures to determine whether they are reasonable and allowable; pertain to its mission; and comply with applicable laws, rules, and regulations.
What the Auditor found
Why it matters: The lack of financing plans jeopardizes timely completion of the redevelopment and could increase costs or delay later project phases.
Standard: Section 18(a) of Chapter 301 of the Acts of 1998 and the Disposition and Development Agreement with LNR. ( Section 18(a) of Chapter 301 of the Acts of 1998; Article 7, Sections 7.1 and 7.2, of the Disposition and Development Agreement; Article 8, Section 8.1, of the Disposition and Development Agreement )
1 recommendation
- SSTTDC should immediately prepare comprehensive financing plans with specific timelines for all phases of the project and take measures to meet its contractual and statutory obligations.agency: disagreed
Agency response & Auditor reply
Agency: "The Report states that a comprehensive financial plan should have been undertaken by the Board of Directors as early as July, 2008."
Auditor: "To the contrary, multiyear planning is considered a best practice and can be a vital tool for local governments, especially those struggling with difficult financial conditions."
Why it matters: The lack of oversight increased the risk that SSTTDC would not meet its contractual and statutory obligations.
Standard: Chapter 301, Sections 8(a), 9(a), 9(e), and 10, of the Acts of 1998; Committee of Sponsoring Organizations of the Treadway Commission Internal Control-Integrated Framework. ( Chapter 301, Section 8(a), of the Acts of 1998; Chapter 301, Section 9(a), of the Acts of 1998; Chapter 301, Section 10, of the Acts of 1998 )
2 recommendations
- SSTTDC’s Board of Directors should exercise adequate oversight of management, ensure plans are developed to obtain sufficient financial resources, and hold management responsible for proper internal controls.agency: disagreed
- The SSTTDC Advisory Board should provide required comments and recommendations to the governor, Legislature, and local communities semiannually.agency: disagreed
Agency response & Auditor reply
Agency: "The SSTTDC through its staff, the Master Developer and various Parkway consultants have and continue to do on a regular basis communicate with the Governor’s Office, Cabinet Secretaries, Division heads, staff members and various Legislative Officials on a wide variety of topics all leading towards a successful completion of the project."
Auditor: "However, our report was critical of SSTTDC’s Advisory Board, not SSTTDC’s staff, for its lack of communication with the Governor and the Legislature about SSTTDC’s water/sewage and East-West Parkway costs, and its obligations for infrastructure funding."
Why it matters: SSTTDC could not ensure services were authorized, necessary, reasonable, or aligned with management’s objectives.
Standard: Generally accepted accounting principles requiring adequate internal control systems. ( Generally accepted accounting principles )
1 recommendation
- SSTTDC should develop adequate internal controls over procurement of services, including written contracts for all consultant services and adequate supporting documentation for all consultant charges.agency: partially agreed
Agency response & Auditor reply
Agency: "The Board of Directors agree that it should have had required the consultants to clearly indicate on each invoice submitted for payment, all services provided to the SSTTDC for which payment was secured."
Auditor: "Our audit finding concerned not the merits of procuring services from outside professionals, but the fact that consultant and legal service expenses were paid without the establishment of formal written contracts that identified the duties and responsibilities of all parties, the services to be performed, the levels of compensation for the services to be performed, and the terms of the agreement."
Verified dollar findings
Estimated or sample-projected amounts - shown separately because they are not a hard-identified dollar figure.