Tuesday, December 6, 2011

Parks Dept. Lost Millions In Conssesion Revenue Due To Poor Management - Audit

Empty chairs at the shuttered Tavern on the Green in 2010.
Empty chairs at the shuttered Tavern on the Green in 2010. The City lost a potential $8.8M dollars - including $2.2 million in concession fees and the city and state had lost $3.7 million in sales tax revenue from the Tavern on the Green deal according to an audit released today By Comptroller John Liu. (Photo: Piotr Redlinski for The New York Times)


The New York City Parks and Recreation Department could have attracted an additional $8.8 million in revenue in the last three fiscal years through better management of its retail, recreational and dining concessions, according to an audit released Monday by John C. Liu, the city comptroller, according to an article in the New York Times.

The audit found that the parks department forfeited $6.9 million in revenue in the 2008, 2009 and 2010 fiscal years by failing to solicit bids and award licenses in a timely fashion, and $1.9 million for rejecting bids without maintaining the required documentation.

The audit singled out the handling of the Tavern on the Green concession in Central Park as a missed opportunity, saying that the city had foregone $2.2 million in concession fees and that the city and state had lost $3.7 million in sales tax revenue because of a gap in operations at the site, which had once been a famed restaurant.

The restaurant closed on Jan. 1, 2010, after its former operator went bankrupt. The city awarded a license to a new operator, but the deal fell apart after that operator failed to reach an agreement with the union representing Tavern employees. The site has since reopened, on a temporary basis, as a combination visitor center, food court and retail store.

The department, in its response to the audit, disagreed strongly with its conclusions, calling them “misleading and unfounded.”

The report shows “a serious lack of understanding of the required elements of the concession award process, particularly regarding the need for a determination that a prospective concessionaire will be a responsible business partner, with the integrity and financial wherewithal to serve the public, and meet its financial obligations,” Robert L. Garafola, the parks department’s deputy commissioner for management and budget, wrote in his response.

The parks department manages more than 400 concessions, which bring in more than half of the department’s revenue. In fiscal years 2008, 2009, and 2010, the department reported revenues from concessions of $52.6 million, $46.1 million and $39.8 million, respectively.

Read More:

The New York Observer - December 7, 2011 - By Kat Stoeffel

New York Times - December 5, 2011 - By Kate Taylor

Wall Street Journal METROPOLIS - December 5, 2011 - By Sumathi Reddy

Comptroller's Audit Finds City Parks Lost Millions Through Poorly Managed Concessions
NY1 News - December 5, 2011

Potential $8.8M Forfeited; Tavern on the Green Among
Underutilized Attractions

View in pdf

New York, NY – City Comptroller John C. Liu today announced that an audit of the Department of Parks and Recreation’s controls over recreational, dining, and retail concessions found that better management could have yielded $8.8 million more in badly needed revenue for the City.

Most notably, by allowing the Tavern on the Green restaurant to close without contracting for a new operator, the Parks Department has lost concession revenue of nearly $2.2 million, the audit states. In addition to the lost revenue calculations, the City and State have forfeited nearly $3.7 million in sales taxes with Tavern’s demise, and 500 jobs disappeared, the audit estimates. The storied Central Park restaurant closed nearly two years ago and has not reopened.

“Parks are not just about concessions, but concession contracts should be better managed so that revenue flows to the City without unnecessary interruption,” Comptroller Liu said.

The audit concluded that other concessions could also have been better managed – to the tune of $6.6 million. These include the pushcart licenses in Battery Park, the Central Park tennis courts, the ice skating rink at Flushing Meadows Corona Park, and the snack bar at Orchard Beach in Pelham Bay Park.
Specifically, the Parks Department should have started key contract solicitations earlier and ensured more competition, auditors said. Parks also failed to maintain key documentation supporting contract decisions and preventing conflicts of interest.

The Parks Department, as custodian of over 29,000 acres of City parkland, is responsible for soliciting and awarding concessions for various attractions. Typically, the concession operators pay a fee or a percentage of their total receipts – money that is used to support programs and services. In Fiscal Years 2008, 2009, and 2010, Parks reported concession revenues of $52.6 million, $46.1 million, and $39.8 million, respectively.

The Parks Department has disagreed with many of the audit’s findings, maintaining that delays in implementing license agreements resulted from discussions made in the best interests of the City. It added that it cannot pursue concession revenue above all other considerations, such as legal obligations and long-term capital investments. The audit stated that Parks could have nonetheless avoided many delays with better planning and without compromising other aims.

The audit made 22 recommendations. Among the findings, Parks should:

  • Track the solicitation and award process to ensure that it progresses in a timely matter;
  • Retain written explanations of rejected proposals that detail why an award is not in the City’s best interest;
  • Examine why it receives a small number of responses to solicitations and initiate corrective action.

The scope of the audit was July 1, 2008, through June 30, 2010.

Comptroller Liu credited Deputy Comptroller for Audit Tina Kim and the Audit Bureau for presenting the findings. The full report is available at: http://comptroller.nyc.gov/audits


No comments:

Post a Comment