The City of New York Office of the Comptroller Bureau of Management Audit
Audit Report on the Efforts of the Roosevelt Island Operating Corporation To Maintain and Rehabilitate the Landmarks on Roosevelt Island
MJ03-108A
June 25, 2003
AUDIT REPORT IN BRIEF
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the complete audit (Size: 254KB)
This audit determined: whether the Roosevelt Island
Operating Corporation (RIOC) maintained, or caused to be maintained,
the landmarks in the open space areas on Roosevelt Island (Island);
and whether RIOC attempted to obtain financing for landmarks rehabilitation
as well as the extent to which such rehabilitation took place. RIOC
is a public benefit corporation created in 1984 to be responsible
for the operation, security, and maintenance of the Island.
Audit Findings and Conclusions
Regarding the lease requirement that RIOC stabilize
and rehabilitate the five existing landmarks on the open space areas,
RIOC has taken some steps to maintain or stabilize four of the five
landmarks. In addition, RIOC has obtained, or attempted to obtain,
financing to rehabilitate all five landmarks.
However, during the audit period and contrary to
the lease agreement, RIOC had not taken adequate steps to stabilize
the Smallpox Hospital landmark, although the landmark was cited
by engineers as needing emergency stabilization, and State grant
funding was available for that purpose. A 1995 engineering survey
commissioned by RIOC found that the Smallpox Hospital was unstable
and that there was potential for catastrophic wall collapse. RIOC
applied for and was awarded a State grant in 1997 to perform emergency
stabilization of the Hospital. However, RIOC refused the grant,
anticipating that it would instead rehabilitate the landmark and
develop the surrounding open space area. However, RIOC rejected
a proposed rehabilitation project for the Hospital in 1999 and had
taken no steps to stabilize the landmark. Subsequent to the audit
scope period, in May 2003, RIOC commissioned an engineering study
to determine the emergency stabilization that is needed for the
north wall of the Hospital (Phase I) as well as the overall stabilization
that is needed to make the entire structure stable (Phase II). Phase
I is expected to be completed in June 2003.
In addition, the financing method by which RIOC
sought to rehabilitate the Smallpox Hospital landmark (as well as
the Octagon Tower landmark) may have disregarded the letter or intent
of the lease. RIOC has sought to rehabilitate these two landmarks
by soliciting proposals for commercial or residential development
on the open space areas in which they are located. The General Development
Plan (GDP) of the lease states that open space areas are to be developed
as parkland. Moreover, RIOC’s efforts to undertake stabilization
or rehabilitation of these landmarks through development may have
delayed important stabilization or rehabilitation work at the Smallpox
Hospital landmark that could have been funded by other means, such
as governmental grants or tax-free bonds. Subsequent 2002 State
legislation explicitly states that the Island’s open space
areas are not to be developed for other than park purposes. At the
exit conference, the RIOC acting president strongly asserted that
RIOC’s current policy is to be in full compliance with that
legislation regarding the Southpoint Park site, in which the Smallpox
Hospital is located.
Audit Recommendations
We make three recommendations, all of which are
listed below. RIOC should:
- Abide by its contractual obligations and continue the process
after the engineering study to ensure that it stabilizes the Smallpox
Hospital.
- Continue its recent policy to ensure that any project to rehabilitate
Island landmarks and to develop the open space areas fully complies
with the legislation and with provisions of the City lease.
- If RIOC desires to seek development in areas not currently allowed
by the City lease, RIOC should obtain approval from the City to
amend the GDP before entering into any binding contracts with
developers.
Agency Response
RIOC agreed with the audit’s recommendations.
