Court of Audit report

Real estate development under the microscope

The State Court of Audit audited so-called structural development cooperatives in the Vorarlberg municipalities of Doren, Sulzberg and Schruns - and found a number of things worthy of criticism.

The State Court of Audit has taken on a somewhat unwieldy topic, the so-called project and structural development cooperatives (PSG). What is behind this term? In a project and structural development cooperative, a municipality, a regional bank and a consultancy firm jointly establish a company. It carries out real estate transactions outside the public budget. The aim is to actively manage land in line with municipal development goals. Real estate purchases, developments and sales are carried out via the cooperatives.

Long-term dependency
The Court of Audit has now scrutinized three of the eleven existing PSGs in Vorarlberg - those in Sulzberg, Doren and Schruns - and identified a number of shortcomings. For example, the Court of Audit criticized the fact that the municipalities were entering into a "long-term dependency" through the partnerships, which was reinforced by the fact that the private partners (banks and consulting companies) were intertwined. The ACA also recommends that decisions cannot be made without the consent of the municipalities. The Court of Audit also sees potential for improvement in the area of compliance: "Because members of the Executive Board award contracts for the cooperative and work for contractors at the same time, this can lead to conflicts of interest."

The dual role as mayor and PSG chairman could also lead to conflicting interests, the audit report continues. There is also a need for an additional supervisory body, as the Executive Board has de facto controlled itself to date. And the individual signatory powers for all of the cooperative's bank accounts are also not ideal for the Court of Audit.

Furthermore, the municipal council should be better informed about the activities and plans of the cooperatives. In a joint statement, the municipalities partially contradicted the statements of the Court of Audit.