An independent investigation of payments from the South Billings Urban Renewal District board to its director found the the district overpaid its director by almost $80,000.
"It's unfortunate," said Chris Kukulski, Billings city manager. "I'm grateful we had an independent analysis."
Steve Zeier, director of the SBURD, is contracted to provide the urban renewal association with administration and project management services through his company Zeier Consulting. Between 2016 and 2017 SBURD board gave Zeier two extra payments of $38,422.50 for a total of $76,845.
Community activist Kevin Nelson discovered the discrepancy while going over past South Billings Urban Renewal Association financial records. Once the discrepancy was discovered the city hired Moulton Bellingham, PC, to investigate SBURD's financial records and its payments to Zeier.
"We thank Mr. Nelson for bringing it to our attention," Kukulski said.
The report, which was turned over to the city on April 19, was released by the city on Friday. The report found that the "evidence reviewed failed to establish that Zeier Consulting or Steve Zeier acted with intent to deceive or defraud."
The funds used by the SBURD are generated for the city through a tax increment financing district, a special zone within Billings where some property taxes are diverted into private urban renewal projects within the boundaries of the SBURD.
The city regularly audits the finances of all its departments, but contracts between the TIF boards and their directors do not fall under those regular audits. That has since changed. New memoranda of understanding between the city and its TIF boards will require that the boards follow city policy.
"They need to follow our purchasing policies," Kukulski said.
The discrepancy likely arose from the SBURD's payment schedule with Zeier. He was paid monthly through 2015. In 2016, the South Billings Urban Renewal Association board moved to quarterly payments, logged by the fiscal year rather than the calendar year. The city's fiscal year runs from July 1 to June 30.
The 2016 fiscal year, which began on July 1, 2105, shows a mix of monthly payments and quarterly payments, and appear to correctly add up by June 30, 2016. However, when payments are added up over the 2016 calendar year, the extra check becomes visible.
Moulton Bellingham's investigation into the financial records found the board had overpaid Zeier twice, for a total of $76,845. It also discovered that Zeier was reimbursed travel expenses of $1,509.87 without documentation of the trip.
Zeier has already begun repaying the city. One half of the $76,845 was subtracted from Zeier latest contract with the SBURA. The remaining $38,422.50 will be paid back by June 30. The $1,509.87 in reimbursed travel expenses will be removed from Zeier's May consulting fees.