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The City’s Parks Department does a poor job of ensuring that concessionaires comply with the capital improvement provisions of their agreements, according to an audit issued today by New York City Comptroller William C. Thompson, Jr.

Auditors found that capital improvements totaling nearly $10 million were not completed at 37 of 58 concession s sites visited, that had improvements at five sites been completed, the City could have garnered nearly $300,000 in extra concessionaire fees, and that a lack of documentation between concessionaires and the Parks Department made it difficult to determine the status of work on projects.

“The Parks Department must do better in overseeing concessionaires,” Thompson said. “These facilities are spread out across the City and serve millions of New Yorkers every year. It is of significant concern that the Parks Department is not properly supervising them to ensure that the required improvements are made.”

The Parks Department monitors various City concessions, including ice rinks, marinas, golf courses and restaurants. Under their agreements, many concessionaires are required to make and pay for capital improvements to the facilities they operate. The Parks Department’s Revenue Division is responsible for overseeing concessionaires to ensure that required capital improvements are completed.

The scope of the Comptroller’s audit covered concession agreements in effect during Fiscal Year 2003 that required capital improvements.

Auditors also discovered poor conditions at certain concessions, potentially posing a risk to the public. These conditions included missing and cracked exterior facade panels at Terrace on the Park in Queens, an inaccessible restroom at the Prospect Park Tennis Center in Brooklyn, rotting piles and an unstable bulkhead at the Dyckman Street Marina in Manhattan, and missing fire protection at the Clove Lakes Cafe in Staten Island.

“Safety should be the Parks Department’s major concern,” Thompson said. “The Department must immediately, if it has not already done so, issue written notice requiring that the concessionaires correct the conditions noted in my audit.”

The audit concluded that the Department does not have an adequate project management system in place to ensure that concessionaires complete capital improvement projects. Auditors noted that Parks did not track the progress of capital improvements against start and completion dates prescribed in agreements, and it did not conduct routine inspections of capital improvement work performed. Auditors also noted that the Department did not review invoices, canceled checks, and other related documentation submitted by concessionaires and it did not update tracking documents to reflect changes in capital improvement requirements.

These deficiencies led to capital improvements not being completed. The 37 instances in which capital improvements were not completed were located in all five boroughs and included Wollman Rink in Central Park, Shea Stadium in Queens, Pelham Bay/Split Rock golf courses in the Bronx, and the South Shore Golf Course on Staten Island.

“The Parks Department needs to implement a project management system as quickly as possible,” Thompson said. “At a time when the City is still struggling with huge budget deficits, we cannot afford to forgo millions of dollars in required improvements.”

The audit also revealed that the Department did not assess liquidated damages against concessionaires who failed to make the required improvements by a specific date, as allowed for by the concession agreements. Department files did not indicate why six concessionaires were not assessed liquidated damages, which would have amounted to nearly $1.5 million.

The audit noted that a lack of documentation between concessionaires and Parks was a major problem. Ten of the 37 concessionaires who had not completed their capital improvements claimed that the Department had authorized them to modify or cancel the required capital improvements. However, neither side could provide the auditors with documents showing that changes were requested by the concessionaires and approved by the Department in any of the cases.

Auditors additionally found that the Department did not follow its procedures for certifying the completion of projects. While the auditors identified 18 concessionaires who completed their capital improvement requirements, the Department only certified one as complete.

The audit made nine recommendations to the Department, including:

• The Department should establish a project management system to monitor the progress of concessionaires in completing required capital improvements.
  
  
• The Department should issue notices-to-cure to concessionaires who have not completed the capital improvements required by their agreements.
  

• The City receives compensation equivalent to the value of the capital improvements it is forgoing before it approves any modifications.
  

• The Department should ensure that modifications to capital improvements are documented with formal agreements between the Department and the concessionaires.
  
  
• The Department should assess liquidated damages when concessionaires fail to complete capital improvements in accordance with their agreements.
  
  
• The Department should issue certificates-of-completion to those concessionaires who have completed their capital improvements.

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