City Controller Rebecca Rhynhart’s office is auditing the Germantown Special Services District, which was created to clean up the neighborhood’s business corridors but has imploded over the last year amid accusations of mismanagement and questionable spending.

In a Sept. 13 letter obtained by The Inquirer, First Deputy City Controller Kellan White informed the district that it was being audited for failing to file required financial reports with the state since 2004. Rhynhart on Tuesday confirmed that her office was auditing the district.

“We got some calls of concern into our office about how the money has been spent from the improvement district, so we reached out to the state to get their financials and were told that they haven’t filed in many years,” Rhynhart said in an interview. “The tips involved questioning the spending and where the money went.”

The audit follows a series of setbacks for the district, which for years, starting in 1995, collected a special property tax from neighborhood businesses to clean up the shopping district at Germantown and Chelten Avenues. City Councilwoman Cindy Bass, whose 8th District includes Germantown, appoints the district’s board and effectively controls the organization, which had a $230,000 budget in 2018.

In June, more than 100 of the businesses subject to the levy, which is about 12% of the owners’ property tax bills, opposed the reauthorization of the district’s taxing authority, saying it had stopped cleaning the streets and questioning what district officials had done with the money it collected.

The district still exists and can collect delinquent taxes. But it no longer can take in new tax revenue, and its future is uncertain.

Bass said she welcomed the audit as an opportunity to clear the district’s name as it makes plans for a new chapter that she said will be unveiled soon.

“We want people to feel comfortable, and if there was something that was done inappropriately, we certainly want to know what it was,” Bass said.

Bass blames the business owners’ revolt on a small group of people who want the organization to be restructured as a business improvement district, which would allow taxed property owners to have a say on district business, instead of a special services district, which is controlled by the local Council member’s appointees.

Bass said the current structure is better for the neighborhood because she takes into account the entire community when making appointments, not just the business’ interests.

“With a BID, it’s really like a little apartheid because it’s only these wealthy owners who have a say,” she said. “I just don’t think that that speaks to Germantown. I don’t think it speaks to the people in the community.”