A Plante Moran audit published by the Traverse City Downtown Development Authority in December 2025 found that during the 2022-2024 tenure of former CEO Jean Derenzy, the DDA made multiple financial policy missteps in its management of the Downtown Traverse City Association. Cash withdrawals. Expense reimbursements without itemized receipts. Reliance on credit card statements rather than invoices. The auditors stopped short of alleging financial improprieties. They wrote that they could neither confirm nor deny whether the DTCA incurred losses, because documentation was insufficient to determine either way.

Derenzy stepped down in early 2024. Interim CEO Burkholder, named permanent CEO in June 2024, is leading the response. The audit is a useful case for city attorneys and DDA counsel because it shows what an inconclusive finding looks like when documentation is the failure point. The audit cannot exonerate. It cannot accuse. The remediation work falls to the new leadership regardless. The procurement and reimbursement policy gaps the audit identifies are common across mid-sized DDAs that grew faster than their internal controls.

What the audit actually says

The Plante Moran report is structured around a series of findings, each tied to specific transactions or policy areas examined during the 2022-2024 period. The findings cluster around three categories. First, expense reimbursements that lacked itemized receipts and that were processed against credit card statements rather than against invoices or original receipts. Second, cash withdrawals from the DTCA accounts that were not consistently documented with contemporaneous purpose statements or supporting receipts. Third, vendor and contractor payments that did not consistently align with documented procurement procedures.

The auditors' careful language matters. The report does not say that funds were misappropriated. It says that the documentation available to the auditors was insufficient to determine whether funds were misappropriated. The distinction is legally consequential. An audit finding that funds were misappropriated has specific consequences in a Michigan public-authority context: referral to the state attorney general, potential criminal investigation, civil recovery actions, board removal procedures. An audit finding that documentation was insufficient produces none of those consequences automatically. It produces remediation obligations and a public-record gap that may or may not be revisited.

For the Traverse City DDA, the practical effect is that the December 2025 audit closes one chapter without resolving the underlying question. The DDA can move forward under new leadership. The DDA cannot definitively put the Derenzy-era questions to rest, because the documentation that would be required to do so does not exist. The questions remain available to be raised by future auditors, by future board members, by community members, or by the press, on whatever timeline they choose.

Why the inconclusive finding category matters

Inconclusive audit findings are an underappreciated category of district accountability outcome. The category sits between exoneration (the auditor reviewed and found no problems) and adverse finding (the auditor reviewed and identified specific problems with specific consequences). The inconclusive category is structurally different from both. It does not produce the closure that exoneration produces. It does not produce the consequences that an adverse finding produces. It produces a documented record that the question was asked, the documentation was insufficient to answer it, and the answer remains unavailable.

For city attorneys advising districts, the inconclusive category has three implications worth flagging in counsel relationships. First, the inconclusive finding does not insulate the district from future inquiry. A future auditor, regulator, prosecutor, or journalist can revisit the underlying transactions on a different timeline. The documentation gaps that produced the inconclusive finding may have widened or narrowed by then, but they do not close the question. Second, the inconclusive finding does create a public record that puts the burden of proof on anyone who later wants to make a definitive claim. A subsequent finding that funds were misappropriated would have to address why the December 2025 auditors could not reach that conclusion. Third, the inconclusive finding does not, on its own, satisfy any fiduciary obligation the board has to the public. The board's subsequent actions on the audit recommendations are what determine whether the inconclusive finding becomes a documented remediation success or a documented warning that was not acted on.

Audit Outcome Categories: Traverse City vs 47th Street BID
Source: Plante Moran audit report Traverse City DDA Dec 2025 · NYC Comptroller 47th Street BID audit 2024

The 47th Street comparison

The case that most closely parallels Traverse City in 2026 accountability terms is the 47th Street BID, which Plat Street covered in Issue 2. The NYC Comptroller's 2024 audit of the 47th Street BID identified an escrow-related governance gap and recommended specific remedial action. As of April 2026, the recommendation stood unimplemented one full year after issuance. The 47th Street case is not an inconclusive finding. It is an adverse finding with a specific recommendation that has not been acted on.

The structural parallel is the documentation pattern. In both cases, the audit identified a category of operational practice that was not adequately documented and that, in the absence of documentation, could not be definitively cleared or definitively pursued. In 47th Street, the practice was the handling of certain escrow funds. In Traverse City, the practice was the handling of expense reimbursements and cash withdrawals from an affiliated entity. In both cases, the documentation gap is the failure point. In both cases, the remediation falls to leadership that did not create the gap and that has limited ability to resolve the historical question, only the prospective one.

For other BIDs and DDAs, the lesson generalizes. The documentation practices a district maintains today determine the kind of audit outcomes the district can produce in five years. A district whose expense reimbursement policy requires itemized receipts, whose cash transactions are documented in real time with contemporaneous purpose statements, and whose vendor payments are processed against original invoices on a defined procurement workflow will produce audit findings that are either exoneration or specific adverse findings with specific remediation paths. A district whose practices fall short of those standards will produce inconclusive findings that resolve nothing.

The Burkholder response

CEO Burkholder, named permanent CEO in June 2024, has led the public response to the audit. The DDA's December 2025 statement on the report acknowledged the findings and committed to a documented remediation plan. The plan covers the three finding categories: expense reimbursement policy revisions to require itemized receipts and original documentation; cash management policy revisions to eliminate undocumented cash withdrawals and substitute electronic payment processes where cash is not strictly required; and procurement policy revisions to align vendor and contractor payments with documented procurement workflows.

The remediation work is not visible to the public on a continuous basis. The DDA has committed to including remediation status updates in its quarterly board reports through 2026. The first quarterly update was published in March 2026 and identified specific policy revisions adopted, training conducted with affected staff, and outstanding remediation items. The reporting discipline matters. A DDA that publishes remediation progress on a defined schedule produces a record of action. A DDA that announces a remediation plan and then does not publicly track progress produces a record of announcement.

What city counsel should be reading from this

For city attorneys representing the city in city-DDA matters, three operational implications follow from the Traverse City case.

First, request copies of the DDA's expense reimbursement, cash management, and procurement policies on a regular cycle, not only at moments of crisis. Reading those policies once a year, with reference to the categories the Plante Moran auditors flagged, is sufficient to identify whether the city's DDA is operating with documentation discipline that would produce defensible audit outcomes. Most city attorneys do not currently do this. Beginning to do it does not require new authority. It requires routine document review under existing oversight responsibilities.

Second, encourage the DDA to commission an independent operational audit on a defined cycle, three years or five years, regardless of whether any precipitating event suggests one is needed. The cost of a routine operational audit is meaningful but not prohibitive. The benefit is that the documentation practices that produce defensible audit outcomes are tested in advance, with time to remediate, rather than tested in response to an external precipitating event.

Third, ensure that the city-DDA contractual relationship includes specific documentation and reporting requirements that the city can hold the DDA to. Many city-DDA relationships operate primarily under the state DDA enabling statute, with limited city-specific requirements layered on top. The city has the contractual ability to specify additional documentation and reporting requirements beyond the statutory minimum. Doing so produces a record that, in the event of a future audit, anchors the discussion in city-defined obligations rather than in state-statute defaults.

What other DDAs should be doing now

For DDA executive directors and boards, the Traverse City case produces three immediate questions worth asking inside the next 60 days. Does the DDA's current expense reimbursement policy require itemized receipts and original documentation, or does it allow credit card statements as the supporting documentation? Does the DDA's current cash management policy permit cash withdrawals, and if so, are the withdrawals documented with contemporaneous purpose statements and supporting receipts? Does the DDA's current procurement policy align with the actual workflow used for vendor and contractor payments, or has the workflow drifted from the documented policy?

A DDA that can answer all three questions affirmatively is in a position to produce defensible audit outcomes if the inquiry comes. A DDA that cannot answer one or more of those questions affirmatively is in the position the Traverse City DDA was in before December 2025. The remediation work is not difficult. It is procedurally straightforward and operationally modest. The barrier is not technical. It is the discipline of doing the work before the audit makes it urgent.

Key Takeaways

Sources

Editor's note. Direct thematic continuation of "The Accountability Question" and "47th Street BID: Escrow Recommendation Stands One Year Later." New angle: the inconclusive-finding category as a structurally distinct accountability outcome.