The Dallas city auditor released a stinging report Monday on the management of a trust fund designed to encourage business growth in South Dallas through loans and grants.
The South Dallas/Fair Park Trust Fund has been beset by management troubles since its inception in 1989. And according to this audit, problems remain.
The fund “continues to experience difficulties in managing grant and loan programs according to trust fund policies and guidelines,” the report by City Auditor Craig Kinton said.
While agreeing with the audit’s specifics, a city official involved in overseeing the fund said it is healthy and being managed soundly. He said the audit raised mostly procedural issues that have been resolved by recently updated guidelines.
“I feel that the trust fund is on solid ground and that the transactions that have been approved since the new guidelines have been put in place have been well thought out,” said Karl Zavitkovsky, director of the city’s Office of Economic Development. “The track record of those transactions bears that out.”
The trust fund, which gets its revenues from the city’s general fund and from Fair Park events, provides loans and grants to fledgling businesses and charities in the depressed neighborhood that surrounds the park. It has distributed millions of dollars since its creation.
The audit focused on the period between Oct. 1, 2009, and July 31, 2010, during which the fund authorized 18 grants totaling $267,926 and three loans totaling $169,484.
In a formal response to the audit, city staffers countered each of several points of criticism offered by the auditor.
The audit said the fund made exceptions to its own underwriting guidelines for each of the three loans by allowing applicants to claim higher property values than the Dallas County Appraisal District values.
City staffers responded that it was the guidelines, not the underwriting procedure itself, that needed updating. They said that the guidelines have been revised and that all the loans made during the audit period have been paying as agreed.
In a second criticism, the auditor said the fund was not accurately monitoring loan payments. City staffers, while acknowledging a lost payment, said the problem was taken care of and the loan in question is up to date.
In a third criticism, the auditor said that grant applications were being approved without required documents, such as financial statements, tax certificates and organizational charts. City staffers countered that the documents were being collected before grants were paid out and that the guidelines have been updated to reflect that method.
City Council member Carolyn Davis, whose district encompasses Fair Park, said Monday that she had not seen the audit and could not comment.
