State auditors released their findings Thursday, Nov. 14 of the audit they completed on the Choctaw Town Square project that includes a new Walmart Super Center on NE 23rd Street.

Last June, the City of Choctaw asked the Oklahoma State Auditor and Inspector’s office to look into the project, saying they were concerned some "inappropriate items" had been billed to the city.

Auditors discovered that 32 percent of expenditures they looked at for the project had no documentation to support it. They pointed out, however, that this does not necessarily mean the documentation does not exist.

Despite their request, the state office reported no participation from the development company in charge of the project. Choctaw Town Square, LLC, a company managed by principals Eldon Blackaby and son, Kurt Blackaby, was hired by the city as the project’s developer.

"Unfortunately, due to insufficient evidence support

ing the developer’s reported project expenditures, we were unable to conclude as to the overall allowability of development expenses," the audit executive summary states. "Only 32 percent of developer expenses submitted to the City of Choctaw were supported by detailed documentation.

The summary goes on to state that of the "limited documentation provided" by the city, they noted several questionable developer practices, including providing inconsistent expenditure support, altering of an original invoice, and charging of unexpectedly high closing costs that may not have been in accordance with the parties’ written agreement."

Auditors called the contract with the city CTS as "broad based" with no spending limits, giving the developer a wide berth of control over the project.

"As the Choctaw City Council approved the written agreement and the corresponding individual payments, the Council was ultimately responsible for committing public funds to any questionable expenditure," the audit stated.

Audit details

Throughout the 15 page audit, interviews revealed that councilmembers, staff and the city’s attorney expressed concerns about the project. A majority of the council, though, accepted statements by the owner of CTS that he would "do the City right."

Auditors also pointed out that because many CTS-related discussions took place in executive session, which is closed to the public, no notes or minutes were available to provide a "clear record" or the "instructions or courses of action approved by the council."

Auditors reported possible explanations for the council’s actions, including that councilmembers were inexperienced in dealing with a project of such large scope, and that they were "too trusting or fearful of the developer."

"As a result, they ceded control of the Town Square project to CTS," auditors wrote. "The overwhelming sentiment in our meetings with both Council members and City staff was one of resignation: despite the complications and financial burdens suffered during this development project, if Choctaw sees a Walmart built, everything has been worth it."

City’s response

Choctaw released a statement following the audit calling CTS’s lack of participation as a "stonewall" move and disappointing.

"The Council and Trustees will continue to pursue the development of the Markets at Choctaw and we will continue to pursue all legal remedies available to defend the City and CUA against the baseless claims made by CTS, LLC in their lawsuit against the City and CUA."

To read the complete audit, go to www.sai.state.ok.us.