Springfield committee launches audit of pilot revenue agreements; auditor to review 15 contracts

The Springfield City Pilot Revenue Committee on April 14 asked the city auditor to begin a formal review of existing pilot revenue agreements and the administration of voluntary payments-in-lieu-of-taxes.

The audit, City Auditor John said during the meeting, will examine current administration and compliance for about 15 pilot agreements and related economic incentive arrangements administered by the Assessor’s Office. "The reason why we're doing this audit for the pilot program is because it was on our annual audit plan," John said. He told the committee the review will look for gaps in policy and practice and produce findings and recommendations to the department, senior management and the committee.

The audit was welcomed by committee members, who said it arrives at a time the committee is drafting a permanent pilot policy and preparing a statement of work from the Collins Center. Committee member Jay Latoury said the Collins Center will submit a proposal and statement of work this week that the committee and councilors can comment on before the city pursues grant funding. "This is their recommendations on how they could partner with us. It's subject to our deciding that it makes sense and the scope is something that we can influence," Latoury said.

Why it matters: Pilot agreements can shift sizable sums into the city's general fund or, if administered inconsistently, allow revenue to slip through the cracks. Lindsay, a member of administration and finance, said pilot payments currently go to the city's general fund. The auditor and committee members discussed that inconsistent contract language and long flat-fee agreements can reduce revenue over time if amounts are not adjusted.

Scope and timeline: The auditor told the committee he intends to complete fieldwork in a few weeks and estimated the audit would be substantially complete by late May or early June, with the report to the committee likely in late June or July. "I'll have findings and recommendations ... then I'll present it to senior management. I'll get everyone's responses. Then once I have the administration's responses, I'll sit down with the committee to present my report," the auditor said.

What the audit will examine: The auditor said the review will check whether a formal city policy exists (he said none was found) and whether the Assessor's Office is receiving required annual certification forms from tax-exempt entities. He also said he will review whether properties that change ownership are returned to the tax roll when appropriate. "One of the most glaring things ... is there's no policy at the city," he said.

Revenue scale and payors: Committee members and staff offered differing approximations of how much pilot revenue contributes to the budget. The auditor said, "I thought it was about, about 1,800,000, if memory serves." Lindsay said the non‑MGM portion was "probably talking about a million dollars." The committee asked that the audit identify who has paid consistently and who has not.

Legal enforcement and contract limits: The City Solicitor told the committee that the city's ability to compel payments depends on contract language and whether an organization voluntarily entered an enforceable agreement. "It depends on the language inside that arrangement ... but it's now a binding agreement between two parties so that if one side fails to produce as agreed upon, it gives the city the opportunity to potentially up all the way up to suing them for reimbursement," the Solicitor said.

Related work and next steps: Committee member Karen Lee said she has prepared a draft using Holyoke's pilot program draft as a template; the committee plans to combine that work with the Collins Center's statement of work to produce a formal recommendation in six to eight weeks. Latoury said the group hopes to apply for grant funding when an application opens, likely in August after the state completes its 2026 budget process.

Audit evidence and assistance: The auditor invited the committee to share prior notes and reports on the 15 pilot agreements; Karen Lee said the committee previously produced individual reports on those agreements and would circulate them. The auditor said he will incorporate any materials the committee provides and will review nonprofit financial statements as needed to check whether unrelated business income might be taxable.

Committee expectations: Several members said they expect the audit to identify payors and non‑payors and to recommend steps the city could take if payments are missing or if overpayments occurred. "If there's people there who are not paying, I do have an expectation that we are going to reach out to them and say, you made a promise. We need the money," the committee chair said.

No formal vote was taken. The auditor began the engagement and will return with a written report and recommendations to the committee after department and administration responses are obtained.