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New York City Comptroller William C. Thompson, Jr. today issued an audit finding that – for the fifth time this year - City agencies have failed to collect water and sewer charges from companies operating under contracts with the City.  

In his most recent audit, Thompson found that the operator of the Manhattan Cruise Terminal, P&O Ports North America, underpaid the fees required under its agreement with the New York City Economic Development Corporation by almost $75,000 and underpaid water and sewer charges by nearly $78,000.

“EDC must do a better job than it has been doing,” Thompson said. “In the last three audits we conducted of EDC managed properties, significant water and sewer charges were owed to the City. That is unacceptable.”

He continued, “Unfortunately, the Department of Environmental Protection also needs to do better than it has. Despite four previous audits this year that revealed overdue water and sewer charges, the DEP has not improved its collection efforts. In these tough economic times, all agencies must ensure that all revenue due to the City is paid.”

Thompson released his most recent audit finding unpaid water and sewer charges at the Manhattan Cruise Terminal. Thompson’s audit, which can be viewed at www.comptroller.nyc.gov, examined whether P&O was complying with the provisions of its agreement with EDC for calendar years 2004 through 2006.

Since 1997, P&O Ports North America, Inc. has been the exclusive operator of terminal management services for the Manhattan Cruise Terminal, which consists of Piers 88, 90, and 92 on the Hudson River between 46th and 54th Streets. P&O operates under an agreement with the New York City Economic Development Corporation (EDC). On January 1, 2007, a new 10-year agreement was signed, expiring December 31, 2011, with an option to renew for an additional five-year period ending on December 31, 2016.

Under the agreement, P&O is responsible for billing and collecting all fees from the cruise lines. P&O is required to remit to EDC revenue from a per-passenger fee charged for each passenger embarking or disembarking a cruise vessel. EDC is required to fund capital improvements at the piers. For calendar years 2004 through 2006, P&O paid EDC a total of $14,155,144 consisting of $4,173,462 for per-passenger fees as well as $8,311,554 in wharfage and $1,670,128 in dockage fees.

While P&O mostly remitted to EDC the fees owed and complied with the other major requirements of its agreement, the audit revealed two underpayments. P&O improperly calculated the per-passenger fee after a per-passenger count of 650,001 for calendar year 2005 and as a result underpaid a total of $74,826 in fees to EDC.

P&O also had not paid the City $77,795 in outstanding water and sewer charges for October 2006 through August 2008. According to P&O’s billing and payment records, there were 12 water and sewer accounts. However, auditors’ review of DEP records found a total of 15 registered P&O accounts. Of the additional three accounts reported in the DEP’s system, one had an outstanding balance of $77,795 dating back to October 1, 2006. Consequently, P&O owed the City $77,795 in water and sewer charges.         

“This calendar year alone my auditors have found that city agencies have allowed water and sewer to go unpaid for a total of more than $11 million dollars,” Thompson said.

In two other instances, EDC failed to ensure that companies pay water and sewer charges to the City. The Brooklyn Army Terminal owed almost $240,000, and New York Skyports, Inc. owed more than $37,000 in water and sewer charges. An audit of DEP’s billing and collecting of water and sewer charges revealed that private hospitals owed more than $10 million. Finally, auditors also found that DCAS allowed Water’s Edge to go without paying more than $77,000 in water and sewer charges.

“New Yorkers are being asked to dig deeper and deeper into their emptier pockets, yet a number of City agencies are not doing their part to ensure that much-needed revenue makes it into the City’s coffers,” Thompson said.

Thompson recommended that P&O:

• Pay EDC an additional per-passenger fee of $74,826, and
• Pay the outstanding balance in water and sewer charges of $77,795.

Additionally, Thompson recommended that EDC:

• Ensure that P&O pays the additional fee of $74,826
• Ensure that P&O pays $77,795 in outstanding water and sewer charges
• Monitor P&O compliance with all the agreement terms, and
• Ensure that revenue from incremental dockage and wharfage is allocated to related capital improvements.

P&O officials agreed with the report findings and provided copies of payments made to EDC and to the NYC Water Board as recommended by this audit. EDC officials responded that they received a payment from P&O, and confirmed that P&O paid all outstanding water and sewer charges.

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