08/18/2015
Mismanagement and questionable business practices by local officials have earned the Joplin municipal government a "poor" rating, State Auditor Nicole Galloway said Tuesday. Auditor Galloway provided details of financial mismanagement uncovered by her office's audit during a public presentation on the campus of Missouri Southern State University.
"I applaud the people of Joplin for requesting this audit and for their continued pursuit of the truth," Galloway said. "This audit focuses on the long-term mismanagement of public dollars in the months and years after the tornado and the need for increased accountability and transparency in the future."
After the 2011 tornado, city officials entered into master developer agreements with Wallace Bajjali Development Partners. These agreements named Wallace Bajjali as the lead developer for a series of redevelopment projects that would take place in the city. Key selection and agreement documents appeared to be written to benefit the company, and did not adequately protect the city. This, along with a failure to hold the developer accountable to the terms of the agreement, resulted in nearly $1.5 million spent by the city with no real estate redevelopment services provided.
In addition to a lack of performance, a series of property purchases related to redevelopment plans included questionable involvement by the former mayor, who acted as the broker on properties purchased by a local real estate development company. These properties, located in the redevelopment zone, were later flipped to the Joplin Redevelopment Corporation at a high markup.
In total, the Joplin Redevelopment Corporation, which is a component of the city government, spent $11 million to purchase 36 properties for redevelopment as part of the master developer agreements, but no redevelopment by the master developer ever occurred.
"The audit finds examples of the waste and mismanagement that occur when city leaders blur the lines between private business dealings and government service," Galloway said. "This leads to a distrust in the system, and a distrust in the people who are elected to represent our own best interests."
The audit also found violations of the Missouri Sunshine Law. The Joplin City Council held at least 10 closed meetings and 10 work sessions where notes were not properly taken or provided to the public, which is prohibited by Missouri law.
"The Missouri Sunshine Law exists to ensure public business is done in view of the people, so they have a say in the actions and decisions that directly impact them," Galloway said. "Because the law was not followed, the people of Joplin lost the opportunity to understand and be involved in the redevelopment process in their own city."
The audit was initiated through a petition of Joplin residents. Under Missouri law, citizens may request an audit of a municipality through a petition process that includes a number of valid signatures based on a percentage of the number of voters. In Joplin, 1,776 valid signatures were required to begin the audit. Petitioners submitted more than 5,000 signatures, and the Jasper County Clerk certified that the required number of signatures were valid.
The city's responses to the audit findings are included in the audit report. Local government officials indicate they are working to implement the audit findings.
"I am encouraged by the city council's responses to the audit and by their willingness to work to implement the recommendations included in the report," Galloway said. "It is my hope that the transparency provided by this audit will lead to significant improvements in the management of Joplin city government."
Because the audit includes a performance rating of "poor," Auditor Galloway's office will conduct a follow-up review. The follow-up report, which will be issued in 2016, will provide updates on key findings in the report.
The complete report is available online at auditor.mo.gov.
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Auditor Nicole R. Galloway, CPA, is the 38th auditor of the State of Missouri. She is a certified public accountant and certified fraud examiner. Prior to becoming State Auditor, Galloway served as Treasurer of Boone County, and has worked in the private sector as a corporate auditor, accountant and actuarial analyst. She has a Master of Business Administration from the University of Missouri and degrees in Applied Mathematics and Economics from Missouri University of Science and Technology.
