Wednesday, December 7, 2011

Liu says Parks Dept. needs to do a better job with concessions

City Comptroller John Liu says better management of parks concessions would net millions for the city.

He highlights Tavern on the Green, which closed nearly two years ago and still has yet to be replaced with a new tenant, costing the city over $2 million (and made my school change the location of our Senior Formal! Still bitter about that, if you couldn't tell).

Liu says all the concession mismanagement by the Department of Parks and Recreation has cost the city $8.8 million. 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. 

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

He mentions the ice skating rink in Queens, but the audit has left out (for good reason) the non-existent ice skating rink in Van Cortlandt Park. 

Over the summer, we've been writing about the parks department's failure to close negotiations with Ice Rink Events to bring a skating rink to Van Cortlandt Park. There was limited interest--only three companies showed up to the site tour, and two of them didn't bother bidding on the contract--which seems to have given Ice Rink Events the upper hand in the negotiations, allowing them to force the better deal.

Because of that, parks is probably going to not gain as much money as they could have out of these negotiations. Mayor Michael Bloomberg wanted to rink up and running this year. They're already behind schedule.

They recently announced a compromise for this year only, though if the entire summer has shown us anything, it's that the entire concession process needs to be looked over and reexamined for a more transparent process. 

Liu says that specifically, the Parks Department should have started key contract solicitations earlier and ensured more competition. 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.  

Jump below for the rest of the audit summary.

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.

 The full report can be downloaded here.

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