Salem city councilors to hear auditing update Monday

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A new performance audit of the city’s Urban Renewal Agency found the agency lacks a strategic plan and underestimates the value its development efforts bring to the city.

That report will be the subject of a Monday evening city council work session covering the city’s internal auditing program. 

At the work session councilors will also hear updates on an audit into city leadership, and an upcoming audit of the city’s risk management team. The updates will come from Moss Adams, an outside consulting and auditing firm, and the city’s finance committee which includes Mayor Julie Hoy and councilors Deanna Gwyn, Vanessa Nordyke, and Paul Tigan.  

The Urban Renewal Agency audit released by Moss Adams on April 17 found the agency lacks a strategic framework to guide upcoming efforts and decisions. Given the city’s multi-million dollar deficit, it is uncertain how Salem’s urban renewal areas will be maintained in the future. 

An urban renewal area is a financial tool that helps fund development projects and activities with the intent of making public investments in areas to remove blight, improve property value and leverage private investment, according to the Moss Adams report. 

Property values are “frozen” in urban renewal areas when they are created, and any new taxes generated by rising property values are returned to the area to finance development. The intent is to promote economic growth in the long-term.

The city of Salem has eight urban renewal areas managed by the agency including the Riverfront Downtown Urban Renewal area which was incorporated in 1975, and the McGilchrist Urban Renewal Area established in 2006. 

In 2020 the city added its newest urban renewal area, the Jory TIF District which helped finance the Jory Apartments in northeast Salem. 

The report said urban renewal areas in Salem have generated over a billion dollars in increased taxable property value in Salem and about $413 million in private investment to support redevelopment. 

However, the audit said the city has underestimated those benefits because certain economic, social and environmental impacts have not been properly assessed through tools like before and after comparisons.

The audit also found that the agency’s website is inconsistent and features outdated information making it harder for the agency to communicate its true value to the public. Finally the audit showed the agency does not adequately reimburse the city for costs associated with urban renewal. 

During the April 21 work session, city councilors will also get a general update on the city’s auditing program including the status of an audit into city leadership and the city’s risk management team. 

Initially the city was planning to audit the IT department but the finance committee decided in February to shift the audit to the risk management team instead. 

The city’s risk services division is responsible for minimizing potential risks or loss to the city, including third-party claims and the workers compensation program, and implementing efficient insurance, risk transfer and loss retention techniques among other responsibilities, according to the city’s website.

Last September the finance committee outlined its priorities for the auditing program which include identifying ways to save money in the general fund, cut costs, and be more efficient among other priorities. 

In October, the finance committee prioritized auditing city leadership and started with the city manager’s office during the tenure of former Salem City Manager Keith Stahley. 

That audit report described Stahley as using unclear criteria to decide city matters, sometimes without involving or communicating to city employees, and ineffectively leading the 12 people he directly managed. 

The report was cited publicly by Hoy as a reason for Stahley’s abrupt ouster in February after Hoy led Council President Linda Nishioka to believe the majority of council supported Stahley’s departure.  

Contact reporter Joe Siess: [email protected] or 503-335-7790.

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