HomeMy WebLinkAbout04-18-19 Correspondence - Montana Department of Commerce to Andrus - Project Monitoring Results-BSTF Contract for Zinovo, LLC DIRECTOR M O N T A N A STEVE BULLOCK
GOVERNOR
DEPARTMENT OF COMMERCE
April 18, 2019
Mayor Cyndy Andrus ^`
City of Bozeman
P O Box 1230
Bozeman, MT 59771-1230
RE: Project Monitoring Results — Montana Department of Commerce, Big Sky Economic
Development Program Contract # MT-BSTF-1-1 8-16A, Zinovo, LLC
Dear Mayor Andrus:
On March 25, 2019, 1 visited your offices to review the progress of the City of Bozeman's BSTF
contract for job creation assistance to Zinovo, LLC. I want to thank Brian LaMeres, Carolyn Murry
and Amanda Brown for their time and effort during the visit. for their time and effort during the visit. I
appreciated and enjoyed the onsite visit to the Zinovo's office.
The purpose of the visit was to evaluate the City of Bozeman's compliance with state requirements of
the BSTF program and to assess progress towards completion of the grant. One of three levels of
determination (listed below) is assigned to a particular issue if the City of Bozeman or Zinovo, LLC's
performance is considered less than satisfactory.
Concern
An issue that does not involve a statutory or regulatory requirement but may involve recommending
management or program improvement is considered a concern. A modification of an administrative
procedure or policy would be suggested. No formal written response is required from the grantee.
Question of Performance
If the review raises a question regarding whether a violation of a statutory or regulatory requirement
has occurred, the BSTF liaison will first informally discuss the review results with the company to
determine if a violation has occurred. If a determination cannot be made before the end of the
monitoring visit, the BSTF liaison may conclude that there is a question of performance and request
additional information to be provided within 30 days. That period allows the Montana Department of
Commerce the time to determine if a violation has occurred. A final determination will be made within
30 days.
Finding
When a monitoring review reveals a specific, identifiable violation of a statutory requirement, the BSTF
liaison will make a "finding." A written response regarding the company's proposed actions to correct
the situation is required within 30 days of the date of the BSTF liaison's monitoring letter.
Corrective actions should:
1. Prevent a continuance of the violation;
COMMERCE.MT.GOV I MARKETMT.COM
301 S.PARK AVE. I OFFICE OF TOURISM AND BUSINESS DEVELOPMENT-PO BOX 2005331 HELENA,MT 59620-0533
P:406.841.2870 I F:406.841.2871 I TDD:406.841.2702
DIRECTOR M O N T A N A STEVE BULLOCK
GOVERNOR
DEPARTMENT OF COMMERCE
April 18, 2019
Mayor Cyndy Andrus ^`
City of Bozeman
P O Box 1230
Bozeman, MT 59771-1230
RE: Project Monitoring Results — Montana Department of Commerce, Big Sky Economic
Development Program Contract # MT-BSTF-1-1 8-16A, Zinovo, LLC
Dear Mayor Andrus:
On March 25, 2019, 1 visited your offices to review the progress of the City of Bozeman's BSTF
contract for job creation assistance to Zinovo, LLC. I want to thank Brian LaMeres, Carolyn Murry
and Amanda Brown for their time and effort during the visit. for their time and effort during the visit. I
appreciated and enjoyed the onsite visit to the Zinovo's office.
The purpose of the visit was to evaluate the City of Bozeman's compliance with state requirements of
the BSTF program and to assess progress towards completion of the grant. One of three levels of
determination (listed below) is assigned to a particular issue if the City of Bozeman or Zinovo, LLC's
performance is considered less than satisfactory.
Concern
An issue that does not involve a statutory or regulatory requirement but may involve recommending
management or program improvement is considered a concern. A modification of an administrative
procedure or policy would be suggested. No formal written response is required from the grantee.
Question of Performance
If the review raises a question regarding whether a violation of a statutory or regulatory requirement
has occurred, the BSTF liaison will first informally discuss the review results with the company to
determine if a violation has occurred. If a determination cannot be made before the end of the
monitoring visit, the BSTF liaison may conclude that there is a question of performance and request
additional information to be provided within 30 days. That period allows the Montana Department of
Commerce the time to determine if a violation has occurred. A final determination will be made within
30 days.
Finding
When a monitoring review reveals a specific, identifiable violation of a statutory requirement, the BSTF
liaison will make a "finding." A written response regarding the company's proposed actions to correct
the situation is required within 30 days of the date of the BSTF liaison's monitoring letter.
Corrective actions should:
1. Prevent a continuance of the violation;
COMMERCE.MT.GOV I MARKETMT.COM
301 S.PARK AVE. I OFFICE OF TOURISM AND BUSINESS DEVELOPMENT-PO BOX 2005331 HELENA,MT 59620-0533
P:406.841.2870 I F:406.841.2871 I TDD:406.841.2702
2. Mitigate any adverse effects or consequences of the violation to the extent possible under
the circumstances; and
3. Prevent a recurrence of the same or similar violation.
The following is a summary of the compliance areas monitored during our visit:
Prospera Business Network
CRDC FILE AND FINANCIAL MANAGEMENT
✓ CRDC oversight matches the management plan.
✓ Documentation of receipt of administrative expenses is adequate.
No concerns were noted.
City of Bozeman
LOCAL GOOVERNM[_�I`;T FILE MANAGEMENT
✓ All original documents associated with the contract were on file.
✓ Activities completed matched the contract agreement.
✓ No complaints relative to the project have been received.
✓ File is not easily accessible by the public. I was unable to verify all the documents as the
documents are electronically stored and were unavailable.
Files should be readily available for public review if requested. No additional concerns were noted.
City of Bozeman
LOCAL GOVERNMENT FINANCIAL MANAGEMENT
✓ Local Government adopted a budget resolution for expenditures.
✓ Budget resolution is on file.
✓ Grant project appears in the local government financial records.
✓ There is a separation of duties.
✓ There are no ineligible expenditures charged against the project.
✓ All expenditures had adequate documentation and authorization.
Based on the documentation provided by Zinovo, LLC, the City paid on the five jobs which were later
determined to be ineligible (see Finding below). No additional concerns were noted.
Zinovo, LLC
ASSISTED BUSINESS FILE AND FINANCIAL MANAGEMENT
✓ Hiring records were complete.
✓ The business is behind in their hiring and their records matched the most recent progress
report Reviewed payroll records and verified wages match the job creation report.
✓ Documentation of receipt of reimbursed expenses is adequate.
Concern: During the monitoring visit when verifying employees, it was discovered that 1 employee
on the baseline is a remote worker and does not live in Montana. If this contract is amended, the
baseline will be corrected at that time.
Finding: The BSTF Program had received a Job Creation Certification, signed by the Zinovo, LLC,
that they had created 10 net new jobs at the 1010 E.'Main Street, Bozeman. Based on this
information, the City and BSTF Program disbursed funds on those 10 net new jobs. During the
monitoring visit it was discovered that five of the jobs are located outside of the State of Montana,
making the jobs ineligible. At this time, Zinovo, LLC is upside down by 5 jobs.
As part of the City's written response on the Finding, we are requesting that Zinovo, LLC provide a
revised hiring plan documenting how they plan to remedy this issue.
This contract expires on December 1, 2019. If at that time, Zinovo, LLC has not created 10 net new
jobs, then the Department would entertain a request from the City to extend the contract to allow
Zinovo, LLC time to create the jobs.
Please note that all proiect records must be kept on file for three (3) years after you have received
the final BSTF project closeout letter from the Department. Additionally, to assist the Department
with program performance reporting, the BSTF award recipient may be required to provide annual
project updates for 3 years after the close of the contract.
If you need additional information or have questions, you can contact me at (406) 841-2792 or by
email at ddavidson2@mt.gov.
Sincerely,
Debi Davidson
Program Specialist
Big Sky Economic Development Trust Fund
Montana Department of Commerce
Cc: Brit Fontenot, City of Bozeman
Peg Rifleman, Zinovo, LLC
Paul Reichert, Prospera Business Network