An audit of the two city departments responsible for attracting jobs and developing housing in Cincinnati recommends widespread management and organizational changes.

        The departments of Economic Development and Neighborhood Services need to examine and possibly refine everything from their basic missions to how they track developers.

        A weakness of both departments: record keeping and contract writing.

        City Manager John Shirey said he's satisfied the review shows the city adequately monitors funds.

        Yet the Jefferson Wells In ternational review also highlighted department practices that cost taxpayers by either duplicating or inefficiently distributing work.

        For example, Economic Development hired a private contractor, Chapman & Associates, to administer the street vendor and small-business loan programs — two jobs that could have been completed more cheaply by the city, the audit said.

        City Councilman Phil Heimlich, a frequent critic of both departments, said the review echoes what he's been preaching all along: The departments have done an inadequate job of reviving a declining city.

        “This report helps explain why Newport has an IMAX theater and aquarium on their riverfront and why we have a parking lot on ours,” Mr. Heimlich said.

        Mr. Shirey said the audit was made to show the de partments' weaknesses.

        “You can't ask a consultant to tell you what's wrong and not have them find something,” said Mr. Shirey.

        Mr. Shirey ordered the review in May 2000 after internal city audits exposed problems at Neighborhood Services. The consultant expanded the audit to include Economic Development at the request of former Councilman Charlie Winburn.

        Department managers and Mr. Shirey will review the findings and decide whether to make changes.

        Peg Moertl, named director of Neighborhood Services after the audit started, already has ordered several changes. The department hired a private contractor to organize records and improve computer systems.

        Perhaps the biggest chal lenge for Ms. Moertl is developing a comprehensive housing plan.

        The audit described Neighborhood Services' mission of improving the housing stock as a “broad generic vision” that makes it difficult to choose projects that benefit the city the most.

        Ms. Moertl's department plans to examine various housing programs and possibly weed out ineffective ones starting next year.

        “I would not say there will be wholesale changes tomorrow,” Ms. Moertl said. “There is a transition plan.”

        The review also said Neighborhood Services had inadequate checks on developers.

        Developers don't have to disclose how much profit their subcontractors reap from projects.

        The audit also said the city's inadequate conflict-of-interest laws allow “misuse of public funds, permit undeserved personal gain and provide an opportunity for public criticism.”

        The audit pointed to a Mount Auburn developer, Dorian Development, that received a $500,000 grant from the city to build five homes. Dorian's partners later purchased one of the publicly-subsidized homes.

        In addition, the audit found several administrative and management problems with Economic Development. The department's interim director, Toni Selvey-Maddox, didn't return a phone call Friday.

        The department's contracts and records were inconsistent and incomplete, the audit said..

        The poor documentation hampers the city from scrutinizing development projects, possibly causing the city to “focus its energies and resources in areas that provide minimal economic return, compared to other project options.”

        Even the department's mission is vague, the audit claims. It should consider adopting concrete goals such as job retention, job growth or increased tax base.

        The report recommended changing how department workers are assigned projects. It should be based on skill level instead of assigning an officer to a geographic region.

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