Tag Archives: Doug Hoffer

Does the Vermont Remote Worker Grant Program Earn Its Keep?

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The Vermont Remote Worker Grant program is the latest “incentive” give-away to fall under the critical eye of Vermont’s intrepid state auditor, Doug Hoffer.

Auditor Hoffer has just released an audit report that suggests that the governor and enabling legislature have once again put the cart before the horse, failing to establish meaningful benchmarks and sufficiently detailed parameters to ensure that the program actually gives real value for the investment of tax dollars.

After evaluating the Agency’s “compliance with statutes and guidelines of the program, the report offers a summary of the “compliance and judgment” issues that were identified:

1 The Program used seven percent of its funds ($18,120) to reimburse grantees for security deposits, which are expenses that are also assets temporarily withheld and then returned by landlords if certain conditions are met. The Agency has no mechanism to recover these funds when grantees move and retrieve their deposits.


2 The Agency did not establish guidelines or caps for certain types of reimbursements. For example, one grantee enjoyed a prepaid year of high-speed internet. Another grantee received $5,000 for a 100-yard underground conduit for broadband cables, which adds value to the property and will not be recovered by the State at resale.


3 The Agency reimbursed some grantees for storage of possessions in Vermont covering storage periods prior to grant approval. 


4 The Agency did not verify the actual costs necessary for grantees to perform their jobs or whether such expenses were job-related.  


5 The Agency did not always exercise due diligence when verifying grantee claims. For example, the Agency permitted one grantee to sign as employee and employer, and it approved another grantee with inconsistent employer data.

While an audit report does not make recommendations, it does provide feedback on the existing program that should inform Legislative decisions about changes that might be needed to make it more effective; or if indeed it should be suspended altogether and the funding devoted to a different priority.

Mr. Hoffer’s findings are not encouraging.  It would seem that, urged on by Governor Scott, who has never met a growth incentive he can’t love, and in their haste to counter the narrative of a dwindling and aging Vermont workforce, the program’s framers too quickly seized upon an idea that was attractive on the surface but rather under-baked at its cored. Department of Economic Development Commissioner Joan Goldstein seemed to anticipate problems, early on, and the bill’s co-sponsor, Becca Balint, agreed last year that the program was not really ready for prime-time:

“It’s disappointing we didn’t do a thorough enough job for her to have the information she needs, but I don’t find this alarming,” Balint said. “When you have committees that only meet from January to May, there are going to be details that need to be dealt with and parts of legislation that need to be tweaked.”


Balint added that she believes the committee will be able to get Goldstein the information she needs next year, before anyone submits an application for reimbursement.


“If she feels like she has not gotten enough guidance from us, I believe her,” she said. “It was really uncharted territory. She has tried her utmost best to make sure this can launch successfully.”


As for Goldstein, if she doesn’t get the details she needs in time for the program launch, she said, “we’re going to proceed with the ambiguity, because what other choice do we have but to follow the law?”

As for Goldstein, if she doesn’t get the details she needs in time for the program launch, she said, “we’re going to proceed with the ambiguity, because what other choice do we have but to follow the law?”

…And so, apparently, they did.

This is precisely why input from the auditor’s office is of timely value, even if it does give a less than flattering impression of one of the governor’s pet programs.

Put up your dukes! St. Albans vs. State Auditor

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St. Albans City Manager, Dominic Cloud has picked an odd fight with State Auditor, Doug Hoffer over the findings of the auditor’s recent report on the City’s TIF district which identified multiple compliance issues.  

The controversy has seen City dignitaries, including Emerson Lynn, editor of the St. Albans Messenger join Mr. Cloud in circling the wagons of outraged denial with such fury that it invites comment.  Mr. Cloud has somehow enlisted the cooperation of VEPC (Vermont Economic Progress Council) to change the rules, after the fact; thus, bringing the City’s TIF decisions back into compliance.

That’s a pretty neat trick, one that many a private sector business would envy; but as a City taxpayer, I still have a few of questions.

The anger and vitriol exhibited by Mr. Cloud and his colleagues in their response to what is, after all, a professional opinion, is most unbecoming.  I have read the full report and see no cause for the tone of these responses.  

The City made some errors in administering its TIF.  VEPC’s decision to change the rules after the fact does not alter that simple fact.  We can choose to regard those as innocent errors rather than cynical manipulations to cheat the system, but it doesn’t help the situation to try and paint the auditor as some kind of villain. You know the old line about protesting too much?

The reason we have a State Auditor is that public entities in the same interest spheres as their economic “partners” (or clients) should not be relied upon to impartially judge the legal boundaries of how those “partners” manage the assets they have been given.  VEPC has rightly been characterized as a “partner” to the cities entrusted with TIF designation.  For that support, St. Albans City should rightly be grateful; but VEPC should not be in a position to arbitrarily move the boundary lines of compliance when one of its ‘clients’ oversteps. 

In any case, all of the issues raised by the audit report have not been resolved in the City’s favor.  VEPC has no jurisdiction over the taxes the City failed to pay for the Public Garage.  That issue has been conveniently omitted in the fevered reports of full exoneration.  What’s the story on that?

Auditor Hoffer looks at Clean Water investments.

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Clean water is one of the biggest challenges facing Vermont in the twenty-first century.

With an economy largely based on agriculture, we have some difficult choices to make as to how best we direct our limited financial resources in order to address the challenge.

Having lived in the Lake Champlain watershed for close to forty years now, I can say we have made disappointing progress on that front.

As part of their mission to hold government accountable, Doug Hoffer and the State Auditor’s Office recently undertook to provide a non-audit report to the Legislature, reflecting on how well our clean water investments are serving the most pressing needs of Vermont’s waterways and wetlands.

(I will admit from the start that I do not have the technical background to do justice to the topic, so this is a pretty superficial effort. I will gratefully accept correction if I have misunderstood or omitted crucial details.) 

Not surprisingly, Auditor Hoffer finds reason to question the state’s funding priorities, as they seem to be skewed more toward urban and suburban wastewater projects and less toward agricultural runoff which represents the greater environmental threat in Vermont.

Since municipalities are better resourced and more highly motivated to engage with the state and other sources for scarce funding than are farmers, guess who gets the “lion’s share” of mitigation dollars?

So, while the deposit of phosphorus on the floor of St. Albans Bay stubbornly continues to put forth noxious algae blooms to choke Lake Champlain, sewer treatment and wastewater projects intended not just to support existing populations but also to service new development seem to have the edge in clean water budgeting.

According to the Auditor’s office:
“…wastewater projects received the largest
share of State clean water funding in the (Lake Champlain) Basin
even though the share of phosphorous pollution
from this source is the lowest by far. Wastewater
accounts for 4% of phosphorus pollution, but
wastewater projects accounted for 35% of
expenditures.”

In responding to the Auditor’s observations,  Emily Boedecker of the Vermont Dept. of Environmental Conservation says that the auditor’s report places too much emphasis on phosphorus reduction, overlooking, for instance, the benefits to general sanitation and public health that arise from new sewer and wastewater infrastructure.

There is value from improvements to general sanitation, but the priority of Vermont’s Clean Water mandate should be to address the most critical threat to our waterways which, for many years, has been from unchecked agricultural sources. Subject to statutory limitations on funding sources, one would think that there would lie the obvious priority.

It should not be a matter of either/or, but it could be argued that it is the job of the Legislature, local municipalities and developers to come up with additional funding so that all of the state’s clean water priorities can be adequately addressed.  

The purview of the auditor, in this case, is to assess how effectively the state’s environmental priorities have been addressed with the limited funding available.

It is clear from the dialogue between Auditor Hoffer and Commissioner Boedecker that additional tools must be developed so that the cost-effectiveness of different approaches to water quality management may be assessed in greater detail.

As always, a checkup by the state auditor is rather like a visit to the dentist:  a little pain is to be expected; but, in the long run, the patient gets the benefit of some necessary and healthy perspective.


St. Albans City Manager Objects to TIF Audit

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St. Albans City Manager, Dominic Cloud takes umbrage at the TIF audit report generated by the Office of State Auditor Doug Hoffer.

In a public letter, Mr. Cloud expresses his displeasure at great length, finding even the factual title objectionable.  The City’s website omits the actual audit report, including only Mr. Cloud’s defensive arguments. St. Albans Messenger editor Emerson Lynn piled-on in a blistering editorial that appeared in the paper before the story of the audit report was even covered. Now that’s teamwork!

For its part, the City has made the curious decision to omit Mr. Hoffer’s audit report from their website while including Mr. Cloud’s angry response to the report.

Voters in St. Albans should not be expected to be familiar with the TIF statutes.  The information we received before voting did not address the possible conflicts associated with stretching TIF debt assigned for brownfield clean-up to pay for costs associated with developing a private hotel on the site.  Apparently, those disallowed uses were not even clearly stated in the City’s application for funding.  It should have therefore come as no surprise that a state audit would call them into question.

Mr. Cloud uses interactions by the City with it’s “partner” The Vermont Economic Progress Council, mostly after-the-fact, to deflect his responsibility for mismanagement of the TIF district.  According to statute, VEPEC is not supposed to be a ‘partner’ with the City, but rather an overseer,  charged with evaluating the City’s requests to utilize TIF funding in specific ways,, and with enforcement in the case of non-compliance.

Mr. Cloud insists that it is a “moot point” if the repayment terms were not clearly communicated to voters in a timely manner, because “… the City Council has ratified any irregularities related to the call of the meeting.”  Nice for the City Council, but how does that fix the information gap?

Objections to using $1 million of TIF debt to pay debt service on TIF debt and over $4 million of costs for a private hotel are not based on “arcane, technical questions” as Mr. Cloud says, but on statutes that may be rather easily understood in terms of the overarching purpose of TIF funding.  What is “arcane” is the baroque twist to the statutes that the City has employed to defeat that purpose. 

Wrong is wrong, period.

It is quite true that the audit highlights some shortcomings in the statutes governing TIF administration, which contributed to the problems in St. Albans.  That is one of the values of audits conducted on behalf of the public interest.

But no matter how much civic leaders may wish to lean on these shortcomings as excuses for mismanagement,  the inescapable fact remains that people entrusted by the public with responsibility beyond the scope of the average citizen, knowingly skated on the edge of legitimacy in interpreting the TIF regulations to their best advantage.  

Like more than a few other city taxpayers, I attended those informational meetings at City Hall and regrettably did not have the chops to raise pertinent questions at the right times; nor to recognize when we were not provided with all the information to cast an informed vote.  I had my suspicions and so voted against the TIF expenditures, but I can’t claim that my vote was informed by more than a hunch that it was all a little too good to be true.

We have little choice but to rely on the guidance of our paid City Manager and other professionals who are entrusted with administering the city’s resources. There is a duty of service on the part of those professionals, which no amount of deflection can undo.

Defenses expressed by the City Manager in his rebuttal concentrate only on deficiencies in the codification of TIF rules, but completely ignore the issues of obvious tax diversion, financial irregularities, cost overruns, no-bid contract awards, and sweetheart deals for private profit.  The practice seems to have been “do what you will and get permission later.”

Any one of those issues could possibly be excused as an error, but surely not all of them!  And when the City Manager goes ballistic at the criticism, it sounds a little like guilt speaking.

Dominic Cloud  accuses Auditor Hoffer of bias and suggest he should mind his own business,  But this is his business; it is the whole state’s business.  When Mr. Cloud got all creative with the rules, he essentially gamed the entire state’s Education Fund.

I love my hometown as much as the next guy, but I don’t think its fair for my neighbors in St. Albans TOWN, or Swanton or elsewhere in Vermont where they don’t enjoy the largesse of TIF funding, to be cheated of the taxes that were meant to be generated by the new City Public Parking Garage.  Built with TIF dollars, the parking garage essentially double-dipped on the Education Fund when it claimed  special status as a tax-free entity.  The implicit promise of TIF is that investments made with money withheld from the Education Fund ultimately will be returned two-fold by the taxes generated from new development, such as the City Public Parking Garage.  

Contrary to Mr. Cloud’s assertions, the audit did not apply novel interpretations of long standing rules.  According to the report, the auditor’s office consulted with the AGO when it came to interpretation of the statutes, and applied that guidance.  But even without that guidance, there is evidence in the record from which one might reach the same conclusions as are contained in the St. Albans audit.   In the case of Winooski’s TIF funded parking garage, the legislature rejected two efforts by that City to have the statutes  amended to make the parking garage tax exempt.  Why would the City of St. Albans be any different?

Outrage in the face of discovery doesn’t become our City Manager.  Dominic Cloud is a sophisticated business mind who understands these principles all too well.  

The question remains:  after all the egregious mismanagement of TIF funds, including a huge sum paid to a private agent in order to facilitate the sale of property to a private entity, will there be enough left in the TIF to fund the largest component that it was intended to support, ie. the Multi-Modal Connector, which has not yet even broken ground?

I, for one, would like to thank Auditor Hoffer for bringing this mess to our attention.  For TIF funding to return full value to the state, it must be rigorously patrolled against abuse.  Otherwise it is just welfare for developers at the expense of our children’s education.

Doug Hoffer is just doing his job.

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Apparently Doug Hoffer struck a few nerves when, in his recent op-ed, he attempted to correct  some misconceptions concerning VEGI awards and other economic development incentives.

One of those nerves connected to St. Albans City Manager, Dominic Cloud, who responded very defensively in his own op-ed, which claims that the state auditor is biased against such incentives and therefore unfit to audit these programs.  

Sorry, Mr. Cloud, but that is his job.  

As City Manager, your job and that of everyone on your team is to promote the City and whatever you believe will serve the near-term interests of the City.  Hopefully, those near-term interests will not jeopardize long-term interests, but that is where politics complicate decision-making. 

The job of any business negotiator is to promote the immediate interests of the company, and that includes seizing on any available financial incentive.

The job of the state auditor is to assess, however possible, the net value of state invest

ments wherever they occur.  If the auditor genuinely cares for the interests of the citizenry, he/she goes one step further and attempts to explain the metrics involved in his assessments so that informed voters can do a better job of evaluating the performance of those who hold the purse strings.  Auditor Hoffer is to be applauded for his commitment to truth and transparency, even when that truth may be less flattering than others might hope.

It isn’t his job to be a cheer-leader for the state.  We have plenty of elected and appointed officials who need no coaxing to fill that role.  

We don’t need to look any further than the EB-5 scandal for evidence that incentive programs can be abused.  We need only look a little further back to remember when the Milton TIF went off the rails.

We need the cold hard gaze of an unromantic number cruncher like Doug Hoffer to offset

the overly rosy picture of opportunity that local politicians are inclined to paint.

What Mr. Hoffer is reminding us is that these economic incentive programs may look like easy wins; but the devil is in the details, of which we often have an insufficient grasp.  Outlining some of those considerations for taxpayers to weigh may look like “bias” to Mr. Cloud.  To me, it looks like responsible stewardship and an auditor’s job well-done.

Could it be that Mr. Cloud is trying to throw a little shade on Hoffer in anticipation that the   audit of St. Albans’s TIF will prove unfavorable?

OneCare Vermont chafes under additional scrutiny

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The state legislature would like to have another pair of eyes cast over the books of Vermont’s fledgling all-payer, OneCare Vermont.   That collective pair of eyes belongs to Doug Hoffer and the state auditor’s office.  OneCare argues that this is unnecessary since the Green Mountain Care Board already regulates the organization.

Additional scrutiny may not be welcome at OneCare, but when you consider they’ve just been approved for a budget of $900 million public dollars, interest from the auditor’s office is not surprising. 

Even though OneCare Vermont is a private entity in the usual sense, the state of Vermont has a particular interest in determining the success or failure of managing healthcare costs through this all-payer model.  Healthcare costs represent a huge and growing public funding challenge; and all possible models are subject to debate. For that reason alone, an  audit of OneCare Vermont is a legitimate interest for the Auditor’s office.

Add to that, the fact that OneCare Vermont is a “freshman” enterprise and already being criticized for lack of transparency and for adding a new layer of bureaucracy to the system  rather than reducing it.  It can only benefit public confidence in OneCare Vermont’s management of their healthcare dollars to have the state’s own auditor take a look under the hood.

Auditor Hoffer is known for his political independence, investigative vigor and commitment to public service.  With everything that both the Green Mountain Care Board and the hospital partners have on their respective plates, they should welcome an assist in oversight from their state counterpart.

Celebrating civility

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Perhaps under the poisonous influence of Donald Trump , civility seems in short supply this election season, even in some of Vermont’s statewide elections.

Randy Brock  has taken the low road in challenging Dave Zuckerman for the office of Lieutenant Governor (see below), and rather than focusing on policy, has chosen to run ads distorting Zuckerman’s words and assassinating his character.

I found that a pretty pathetic sign of the times..

So I was pleased to hear the high tone that Marina Brown, the Liberty Union candidate for Auditor of Accounts, adopted in an interview on VPR yesterday.

She explained that she wants the auditor’s office to create a web portal through which members of the public might more easily access all manner of government records. She says her goal is to improve transparency.

When asked what issues she has with two-term Auditor Doug Hoffer (D/P), Marina Brown (LU) said simply that she thinks he is doing a good job.

A minor party challenger complimenting the incumbent while simply presenting how she thinks the office could be improved would not usually be cause for much discussion; however, in this poisonous election cycle, it was as welcome to my Trump-weary ears as caroling on a snowy Christmas Eve.

Thank you Marina Brown.

Doug Hoffer on EB-5

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Green Mountain Daily is pleased to host this op-ed, written by our  state auditor, Doug Hoffer, who has been an occasional contributor to our pages for many years:  

The unfortunate situation with the EB-5 program presents an opportunity to reflect on the State’s approach to economic development. Among other responsibilities, the State Auditor’s office examines various programs to determine whether they achieve the goals established by the legislature. That is, are we getting our money’s worth?

To answer the question, we conduct performance audits according to Generally Accepted Government Auditing Standards. To do this, we need evidence that is sufficient and appropriate (i.e., quantity and quality). In the absence of such evidence, we cannot reach meaningful conclusions or make recommendations.

Unfortunately, some economic development programs present serious challenges. Here are some examples.

 
1.  By statute, the Vermont Training Program may only award grants for training that is supplemental rather than replacement. That is, taxpayers should not pay for training that would have occurred anyway. For example, if a company routinely trains new hires, it would be difficult to justify a training grant intended for new employees. Although applicants are asked about the nature of the proposed training, their statements are not validated. Therefore, we cannot determine the program’s effectiveness because there is no evidence that the grants are only for supplemental training.

 
2.  The primary performance measure of the Department of Tourism & Marketing (T&M) is the annual increase in rooms and meals tax revenues. This assumes that growth in revenue is due to T&M spending. However, the legislature’s economist reported in 2015 that “current taxpayer-financed advertising expenditures for the tourism sector are estimated to represent a mere 3% of total industry advertising expenditures.” Thus, it is impossible to evaluate the impact of state spending when it represents such a tiny percentage of the total.

 
3.  The statute that created the Enterprise Fund (e.g., $1 million to Global Foundries) required the administration to submit a memo to the Emergency Board making the case for the award. Among other things, the Board was supposed to consider whether the information presented was sufficient for the State Auditor to conduct a performance audit. I reviewed those confidential memos and the answer was no. As a result, we cannot audit the impact of the grants.

 
4. The Vermont Employment Growth Incentive (VEGI) is predicated on a statement from applicants that “but for” the incentive, the promised jobs and capital investment would not occur, or would occur in a significantly different and less desirable manner. However, such statements are subjective and cannot be audited. Therefore, it is impossible to know whether some of the economic activity would have occurred without the program. That means that claims about the program’s impact cannot be verified.

 
The EB-5 situation highlighted another area of concern with some economic development programs; namely, the inherent conflict of interest between promotion and regulation. Bureaucrats charged with promoting development are unlikely to be unbiased in their oversight of those viewed as “partners.” In addition to EB-5, we see this in the decades-long relationship between the state and the ski areas that lease public lands.

 
Clearly, the state has an important role to play in creating and enhancing conditions for job creation. As the legislature and the new governor consider their options as to how best to allocate scarce resources, I hope they will insist that all programs are designed to provide the evidence necessary to measure their effectiveness. Without that critical information, how can Vermonters know whether we are getting a fair return on our investment?

If we can’t measure a program’s performance, we’re left with faith, which I can’t audit.

Doug Hoffer

Shaking Entergy’s Piggy Bank

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Does anyone other than me find it a little disconcerting that Entergy has managed to spend-down fully 10% of its decommissioning fund for Vermont Yankee in 2015 alone?

I don’t know about you, but I would very much like Vermont Auditor Doug Hoffer to take a look at how the decommissioning fund is being managed. He’s done a masterful job of casting a dispassionate eye over the efficiency of many government agencies, so I think he has more than demonstrated his mastery of such matters.

So far, Vermonters have nothing to rely upon other than Entergy’s own say-so that growing the decommissioning fund is right on track.

I know that we don’t get to say thing-one about matters of safety…like, for instance the plan to keep thousands of spent fuel rods on site in unconcealed casks, easily visible to nefarious fly-overs; or the fact that emergency planning is about to go away.

But, as the decommissioning fund arguably belongs to Vermont as much as to Entergy,
it seems entirely appropriate to ask that our auditor take a gander at the books.

(I write this as me, myself and I. Although I am pleased to be associated with Fairewinds Energy Education in a purely non-technical capacity, this diary was written with no input from Fairewinds.)