From KY FORWARD August 29, 2014
The Bluegrass Area Development District today took ownership of the office building it has been leasing since 1994, bringing an end to a controversial arrangement that was at the center of a scathing report by State Auditor Adam Edelen in March.
“I clearly laid out ownership of the building as a critical indication of real reform within the Bluegrass ADD. The board and (Executive Director) David Duttlinger are to be congratulated on this important milestone,” Edelen said this morning.
At the invitation of the BGADD board last summer, Edelen examined the beleaguered agency’s books and found numerous issues mostly around board oversight and governance, accounting procedures and what he called “mission creep.” But the examination’s most scathing criticism addressed the issue of ownership of the office building BGADD leased from the Bluegrass Industrial Foundation for more than $250,000 a year, an amount to date that would have more than paid for the property.
“We were grateful that Auditor Edelen brought this issue to light and the Board of Directors has aggressively pursued all corrective action measures, but this one in particular has special meaning because of the direct benefit of almost $2.4 million that it brings to the taxpaying citizens of our region,” said Duttlinger. “Taking ownership of the building is, I believe, the most visible effort of reform that we have taken since the issuance of the APA report.”
BGADD was able to avoid potential lengthy litigation after coming to an agreement with the foundation’s board, which included paying $300,000 for the property at Alumni Drive and New Circle Road in Lexington. The foundation is using the proceeds to retire the remaining mortgage – about $250,000 – and pay its legal and accountant fees.
In addition to taking ownership of the office building, Duttlinger and the board have put in place new accounting procedures and policies and created a mission statement to establish best practices. The board also participated in training on governance conducted by an outside consultant.
“We are doing everything we can to address the issues outlined in the auditor’s examination,” Duttlinger said. “Signing the final papers today is a clear indication we’re on the right track.”
Area development districts were created to assist local governments in regional planning for economic growth. The BGADD, based in Lexington, serves 17 counties in Central Kentucky. It has an annual budget of more than $24.4 million, 90 percent of which comes from federal and state grants. Its board includes mayors and judge-executives from each of the counties.