More than a billion of state financial aid helped to regenerate 122 brownfields. Yet, the SAO found a number of shortcomings
PRESS RELEASE ON AUDIT NO 23/14 – 17 February 2025
Between 2019 and 2023, state financial aid of CZK 1.1 billion led to the regeneration of 122 brownfields out of a total of 979 which are exclusively publicly owned. Thanks to these subsidies, neglected and unused properties covering an area of 27.4 hectares have become, for example, a municipal office, a day care centre for the elderly, a fire station, a kindergarten, a community centre, a multifunctional facility, a park or an active and passive recreation zone. Nevertheless, the Supreme Audit Office (SAO) audit found a number of shortcomings both on the part of the providers of the subsidy, which were the Ministry for Regional Development (MoRD) and the State Fund for Investment Promotion (SFIP), and on the part of the beneficiaries. In seven out of nineteen audited projects, i.e. in more than one third of them, the auditors found shortcomings indicating a breach of budgetary discipline, up to CZK 32.5 million. These were mostly errors in public procurement and ineligible expenditure.
Yet, the SAO assessed the audited projects and their expenditures as effective, except for one. In this case, the beneficiary received a subsidy of almost CZK 23 million. However, the planned gymnasium with a climbing wall, fitness, sanitary facilities, cafeteria, etc. was not built.
In the case of the MoRD and the SFIP, the SAO found significant shortcomings especially in the audit activities. For example, the Ministry often did not examine the final evaluation or the financial settlement of the subsidies paid in the final phase of the project. SFIP did not carry out on-the-spot inspections at the beneficiary's premises to the extent required by law.
Since the MoRD did not clearly define the conditions under which expenditures incurred on land outside a registered brownfield site may be eligible, some beneficiaries misinterpreted the procedure. They claimed the expenditure for construction works on plots of land outside the brownfield area as eligible for reimbursement. In contrast, the SFIP has clearly established that costs which are an integral part of the revitalisation but were incurred outside the revitalised area are ineligible for reimbursement.
The SAO audit showed that the MoRD also granted a subsidy to a beneficiary who provided false information in the application that the building/area was not located in a floodplain of a 100-year flood, although it was located in such an area. The Ministry also paid for construction work that had not been carried out at the time of invoicing - the beneficiary had replaced the originally planned interlocking pavers with granite blocks during construction without informing the Ministry.
The SAO also considers it a shortcoming that the only parameter monitored by the MoRD and the SFIP is the number of concluded contracts and not, for example, the size of the revitalised area. The SAO also found that revitalised land and reconstructed buildings in public ownership of municipalities, towns and regions remain in the "National Database of Brownfields", even though they no longer meet the definition of a brownfield. The SAO therefore recommends that the MoRD ensure an inter-ministerial exchange of information which would lead to an update of the data in the "National Database of Brownfields".
An overview of the revitalised brownfields from the audit sample can be found here: https://www.nku.cz/scripts/detail.php?id=13965.
Communication Department
Supreme Audit Office