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Audit concludes that penalties on ECB cases were not being adequately collected

The City Department of Finance (DOF) failed to collect over $634 million in penalties on Environmental Control Board (ECB) cases, according to an audit released today by New York City Comptroller William C. Thompson, Jr. The audit - which covered July 2000 through June 2001 - estimated conservatively that $26.2 million could have been collected on these cases through enhanced DOF collection efforts. These ECB cases were based on Notices of Violations issued by various City agencies and forwarded by ECB to DOF for final collection efforts.

"We must find ways to collect receivables that are due the City," Comptroller Thompson said. "The Department of Finance can do its part and act more aggressively to collect penalties on ECB cases. The payoff is substantial: hard cash in weak economic times."

The audit followed up on a report issued two years ago, which recommended that DOF refer or sell its older ECB cases to a private collection agency. But the new audit found that DOF did not follow through on this recommendation.

Specifically, the audit found that:

· DOF made no effort to collect on more than $80 million in current AVPS cases and $372 million in older AVPS cases. (AVPS stands for Automated Violations Processing System, one of the two major types of ECB cases.)

· DOF did not investigate more than $24 million of the $36 million in BARAMIS cases that DOF received from ECB during Fiscal Year 2001, and generally did not investigate more than $158 million BARAMIS cases. (BARAMIS, which stands for Bureau of Air Resources Automated Management Information System, is the second major type of ECB case.)

The audit conservatively estimated that 10 percent of current AVPS cases - $8 million - and three percent of older AVPS cases - $11.1 million - could have been collected in Fiscal Year 2001. In addition, the audit found that 10 percent of the current BARAMIS cases - $2.4 million - and three percent of older BARAMIS cases - $4.7 million - could have been collected, all adding up to $26.2 million.

The audit recommended that DOF request, obtain and review computer tapes from ECB containing AVPS cases and initiate a substantial effort to collect payments on AVPS cases. The audit also suggested that DOF significantly enhance its efforts to review and collect payments on BARAMIS cases. Additionally, the audit reiterated its previous recommendation that DOF award a contract that specifically involves the referral of older ECB cases for further collection efforts.

The City's new Finance Commissioner, Martha E. Stark, agreed with the audit's main conclusion and said, "The collection rate on ECB debt has been unacceptably low. Since becoming Commissioner four months ago, I've taken several steps to address this problem, and plan to take several more. These include working with ECB to make its fines more enforceable, contracting with an outside collection agency and sending more dunning letters from an outside firm."

"I am looking forward to working with the Bloomberg administration to increase sources of revenue through more aggressive collection efforts," Thompson responded.

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