new york comptroller thomas dinapoli on mount vernon's revenue collection

8/9/2019 New York Comptroller Thomas DiNapoli on Mount Vernon's revenue collection

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DIVISIONOF LOCAL GOVERNMENT

& SCHOOL ACCOUNTABILITY

O F F I C E O F T H E N E W YO R K ST A T E C O M P T R O L L E R

Report of Examination

Period Covered:

January 1, 2008 February 20, 2009

2009M-195

City ofMount Vernon

Revenue EnhancementOpportunities

Thomas P. DiNapoli


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11DIVISIONOF LOCAL GOVERNMENTAND SCHOOLACCOUNTABILITY

Page

AUTHORITY LETTER 2

EXECUTIVE SUMMARY 3

INTRODUCTION 5

Background 5

Objective 5

Scope and Methodology 6 Comments of Local Officials and Corrective Action 6

RENTAL PROPERTIES 7

Commercial Rents 8

Individual Rents 9

Accounting Records 9

Recommendations 10

PAYMENTS IN LIEU OF TAXES 11

Recommendations 13

PARKING TICKET ENFORCEMENT 15

Enforcement Actions 16

Additional Enforcement Opportunities 18

Recommendations 20

APPENDIX A Response From Local Offi

cials 21APPENDIX B OSC Comment on the Local Officials Response 29

APPENDIX C Audit Methodology and Standards 30

APPENDIX D How to Obtain Additional Copies of the Report 32

APPENDIX E Local Regional Office Listing 33

Table of Contents


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2 OFFICEOFTHE NEW YORK STATE COMPTROLLER2

State of New York

Office of the State Comptroller

Division of Local Government

and School Accountability

April 2010

Dear City Officials:

A top priority of the Office of the State Comptroller is to help local government officials manage

government resources efficiently and effectively and, by so doing, provide accountability for tax

dollars spent to support government operations. The Comptroller oversees the fiscal affairs of

local governments statewide, as well as compliance with relevant statutes and observance of good

business practices. This fiscal oversight is accomplished, in part, through our audits, which identify

opportunities for improving operations and City Council governance. Audits also can identify

strategies to reduce costs and to strengthen controls intended to safeguard local government assets.

Following is a report of our audit of the City of Mount Vernon, entitled Revenue Enhancement

Opportunities. This audit was conducted pursuant to Article V, Section 1 of the State Constitution and

the State Comptrollers Authority as set forth in Article 3 of the General Municipal Law.

This audits results and recommendations are resources for local government officials to use in

effectively managing operations and in meeting the expectations of their constituents. If you have

questions about this report, please feel free to contact the local regional office for your county, as listed

at the end of this report.

Respectfully submitted,

Office of the State ComptrollerDivision of Local Government

and School Accountability


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Office of the State ComptrollerState of New York

EXECUTIVE SUMMARY

The City of Mount Vernon (City) is located in Westchester County and serves approximately 67,000

residents within a four square mile area. The Mayor and City Common Council (Council), which

consists offive Council members, have overall responsibility for the Citys operations. The Citys

elected Comptroller is the chieffiscal officer. The Citys 2008 fiscal year budget of $83 million was

funded primarily by real property taxes and State and Federal aid. In addition, the City receives

revenues from payments in lieu of taxes (PILOTs), sales and mortgage taxes, parking fines, and City-

owned rental properties.

Scope and Objective

The objective of our audit was to review the Citys revenue streams for the period January 1, 2008

through February 20, 2009 and determine if there are revenue enhancement opportunities. Our audit

addressed the following related questions:

Are rents from City-owned rental properties fully collected and properly accounted for?

Have City officials maintained a schedule of all PILOTs, including any late or unpaid amounts,

and are the PILOT amounts reconciled periodically?

Are City officials properly accounting for all parking tickets and pursuing collection of all

parking tickets issued?

Audit Results

City officials need to improve their monitoring and enforcement of revenue collections. During our

audit period, the City was owed as much as $468,079 in unpaid rental, utility and PILOT payments,

and could have collected $87,800 more in parking fines if officials improved their collection practices.

City officials do not have written policies or procedures to ensure that lease agreements are monitoredand to outline the process the City will take for non-compliance with the terms of the lease. In addition,

City officials did not have formal leases with all tenants and did not monitor and enforce payment

of rents. As a result, the City was owed as much as $214,950 in unpaid rents and $58,427 in unpaid

electric and gas usage as of December 31, 2008.

Due to a lack of coordination and communication between the City and Mount Vernon Industrial

Development Agency, the City failed to receive at least $81,016 in tax revenue because an expired

PILOT property did not revert to the tax roll in a timely manner, and the City did not receive $60,000


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for relocating sewer lines for a project owner. We also found that, as a result of the Citys lack of

billing, reconciliation, and communication, the City did not receive $53,686 in PILOTs due as of

December 31, 2008.

City officials have not established written policies and procedures to govern parking ticket operations

or monitored unpaid parking tickets. As a result, City officials were unaware of the inconsistencies we

found in the generation of collection letters and application of penalties, as well as the current process

to only scofflaw1 those vehicles with registrations that fall within a specific time frame. Our audit

found that the City collected 82 percent of the revenue from parking violation tickets issued from April

1, 2008 to June 30, 2008. If the City had achieved the industry-established benchmark of 85 percent,

the City would have collected $87,800 more in revenue.

Comments of Local Officials

The results of our audit and recommendations have been discussed with City officials and their

comments, which appear in Appendix A, have been considered in preparing this report. Except as

specified in Appendix A, City officials generally agreed with our recommendations and indicated that

they planned to take corrective action. Appendix B includes our comment on an issue raised in theCitys response letter.

1 The City uses the DMV Parking Scofflaw and Suspension Program, which targets vehicles that were issued at least three

tickets within an 18-month period. DMV suspends the registration until the registrant pays the City for the outstanding

tickets.


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Background

Introduction

Objective

The City of Mount Vernon (City) is located in Westchester County

and serves approximately 67,000 residents within a four square mile

area. The Mayor and City Common Council (Council), which consists

offive elected Council members, have overall responsibility for theCitys operations. The Citys 2008 fiscal year budget of $83 million

was funded primarily by real property taxes and payments in lieu of

taxes (PILOT), sales and mortgage taxes, and State and Federal aid.

The City owns 26 properties that contain a total of 43 rental units. 2

The City has three classifications of tenants: other governments,

private corporations, and individual tenants acquired by foreclosure.

The Citys reported rental income for 2008 was approximately

$635,000.

The City, the Mount Vernon City School District (District) and

Westchester County (County) each receive a portion of the PILOTs

as an affected taxing jurisdiction (ATJ) from the Mount Vernon

Industrial Development Agency (MVIDA). For the 2008 fiscal year,

the City's share of the MVIDA PILOTs was approximately $152,500.

In addition, the City had three PILOT agreements with non-IDA

project owners which provided approximately $95,500 for the 2008

fiscal year.

The City has established a Traffic Violations Bureau (TVB) to collect

the fines associated with parking tickets. The City issued over 96,000tickets and reported parking violations fine revenue of approximately

$2.9 million for the fiscal year ended December 31, 2008.

The objective of our audit was to review the Citys revenue streams

and determine if there are revenue enhancement opportunities. Our

audit addressed the following related questions:

Are rents from City-owned rental properties fully collected

and properly accounted for?

Have City officials maintained a schedule of all PILOTs,

including any late or unpaid amounts, and are the PILOT

amounts reconciled periodically?

Are City officials properly accounting for all parking tickets

and pursuing collection of all parking tickets issued?

2 This includes a license rental agreement for tennis court facilities.


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We examined the Citys rental collections and PILOT program for the

period January 1, 2008 to February 20, 2009. We examined the Citys

collection process for parking violations for the period January 1,

2008 to December 31, 2008. For parking enforcement, we expanded

our review to examine the tickets issued from April 1, 2008 to June

30, 2008 and collected through April 30, 2009.

We conducted our audit in accordance with generally accepted

government auditing standards (GAGAS). More information on such

standards and the methodology used in performing this audit are

included in Appendix C of this report.

The results of our audit and recommendations have been discussed

with City officials and their comments, which appear in Appendix

A, have been considered in preparing this report. Except as

specified in Appendix A, City officials generally agreed with our

recommendations and indicated that they planned to take corrective

action. Appendix B includes our comment on an issue raised in theCitys response letter.

The Council has the responsibility to initiate corrective action. A

written corrective action plan (CAP) that addresses the findings and

recommendations in this report should be prepared and forwarded

to our office within 90 days, pursuant to Section 35 of the General

Municipal Law. For more information on preparing and filing your

CAP, please refer to our brochure, Responding to an OSC Audit

Report, which you received with the draft audit report. We encourage

the Council to make this plan available for public review in the City

Clerks office.

Scope and

Methodology

Comments of

Local Officials and

Corrective Action


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Rental Properties

Local officials are responsible for ensuring the collection of all

government monies due on a timely basis. Good management practices

require that effective controls over billings be established, monitored,

and enforced. Complete and accurate accounting records provideCity officials with essential information they need to effectively

manage and properly monitor the Citys finances. The City has a Real

Estate Committee (Committee) that is comprised of the Assessor,

Comptroller, President of the City Council and Corporation Council.

The Committee is responsible for the disposition and management of

City-owned properties.

A lease is a legally-enforceable contract that defines the relationship

between a property owner (the lessor) and a renter or tenant (the

lessee). A typical lease spells out all of the terms involved in a propertyrental agreement, including the length of time a lessee may use the

property and what condition it must be in upon return to the lessor.

The amount and timing of payments and any financial penalties for

late payments should also be included in the lease. A legally-binding

contract obligates the lessee to make regular payments throughout the

life of the lease, and the lessee has full rights to the property without

fear of sudden seizure or eviction. A lease also guarantees that the

original rental terms will not change until the lease has expired. City

officials are responsible for ensuring compliance with the terms and

conditions of leases, including full and timely payment of rent.

During our audit period, the City owned 26 properties (including

foreclosed properties) that had 42 rental units and a license rental

agreement for tennis court facilities. The City had three classifications

of tenants: other governments (three units), commercial (11 units and

the tennis court), and residential rentals acquired through foreclosure

(28 units). The City obtained these rental properties through purchase,

donation, or foreclosure. The annual total rental income to be

collected for the 2008 fiscal year was $690,944. The City reported

a total rental income collected of approximately $635,000 for 2008.

City officials did not have written policies or procedures detailing

who was responsible for monitoring the lease agreements and did not

have procedures for handling non-compliance with lease terms. As

a result, we found that the City has not received all of its rents on a

timely basis. As of December 31, 2008, tenants owed the City a total

of $214,950 in unpaid rents, as well as $58,427 for electric and gas

usage.


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The City has 12 commercial tenants. Eleven tenants currently have

formal leases or rental agreements in place, some of which require

the tenant to pay for the rental units electric and gas usage, as billed

by the City. The tenant who did not have a formal lease agreement

in place negotiated and signed a lease in 1996 to cover a two-year

period (1996 through 1998) with a monthly rent of $1,200, or

$14,400 annually. Thereafter, the City and the tenant did not enter

into a lease rental agreement. The tenant paid the City rent until April

2002. Thereafter, from April 2002 to December 2008 (81 months),

the tenant did not make any rent payments and owes the City $97,200

as of December 31, 2008.

Although the City sent a number of collection letters to the tenant,

we found no evidence that City officials have attempted to collect the

outstanding rents through legal action. The City Comptroller has tried

to contact the business a number of times since 2003 through the use

of arrears letters. However, due to the lack of cooperation between

City departments, the efforts were unsuccessful. For example, inMay 2008, the City Comptroller requested the City Law Department

to process a demand letter. The City Law Department responded by

requesting the City Comptroller sign the demand letter, dated July 25,

2008. The City Comptroller returned the letter unsigned with a memo

stating that she believed the letter should be sent by the City Law

Department. The City did not take further action.

In January 2009, the owner of the business passed away, owing the

City the $97,200 in unpaid rents. According to the Citys Corporation

Counsel, it is highly unlikely that the City can recover the unpaid

rents because the City did not have a written agreement with thebusiness owner.

Also, four commercial tenants with whom the City has current

agreements owed a total of $78,726 for unpaid rents as of December

31, 2008, bringing the total commercial rents in arrears to $175,926.

In addition, for those rental units that the City bills for electric and

gas usage, tenants owed $58,427 as of December 31, 2008. As of

February 20, 2009, City officials still had not billed tenants for

electric and gas charges owed as of December 2008.

Because of the Citys inaction, it has failed to collect $234,353 in

commercial rent and utility fees. The likelihood of collecting all past

due amounts is diminished because the City failed to enter into rental

agreements and allowed a significant amount of time to pass since

rents first went into arrears.

Commercial Rents


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The City owned 14 residential properties with 28 units (or individual

tenants) acquired through foreclosure. In October 2008, to address

issues with ownership of these properties, City officials contracted

with a property management company to be responsible for

executing leases and making sure the properties are safe and livable.

Ordinarily, a lease is negotiated by a landlord and the prospective

tenant before the property is occupied. City officials have chosen to

honor existing leases.

The City has procedures in place to notify the tenants about the

change of ownership and where the rental payments are to be sent.

We reviewed records for all 28 rental units and found that leases for

20 units3 could not be located or did not exist. During our audit, City

officials executed six leases and provided copies of two existing

leases from previous owners. City officials informed us that they

are currently in the process of obtaining copies of the remaining old

leases and/or executing new leases forfive rental units. City officials

also indicated that two of the properties (with three rental units) arebeing redeemed by the previous owner and one property (with four

rental units) is being sold.

As of March 12, 2009, City officials have not collected

approximately $39,000 in rents for these 28 units. According to City

officials, they were making progress in collecting $33,950 of this

amount: officials report that outstanding rents totaling $21,200 were

in the process of being collected, and the City is waiting for the

County to process the paperwork required to remit $12,750 owed to

the City for the government-subsidized rents for Section 8 housing.

Tenants had paid the remaining $5,050 to the previous ownersbecause City officials informed us that they did not follow up with

these tenants once the change of ownership letters were sent with

collection letters.

Complete and accurate accounting records help City officials to

monitor and enforce timely rent payments. City officials do not

maintain complete and accurate records of rental revenues and

reimbursements of utility charges. For example, officials do not bill

utility charges correctly and in a timely manner, do not reconcile

amounts due with amounts paid, and do not calculate interest for latepayments correctly.

We reviewed the Citys commercial tenant files and found that City

officials kept most of the related accounting records manually.

Officials maintained folders for each rental property since inception

of the original lease. However, the manual ledgers were not accurate

Individual Rents

Accounting Records

3 Two of the 20 rental units were vacant during our audit period.


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(there were mathematical errors, overbillings, under-billings,

incorrect assessment offinance charges) and there were duplicate

billing letters in multiple folders signed by different individuals,

indicating overlapping or uncoordinated efforts by the City. The

manual folders did not contain a schedule to track rental billings,

lease agreements, amount collected, and the finance charges levied.

As a result, City officials were unaware of the total amount due for

these properties on a month-to-month basis. Without complete and

accurate records, City officials do not have the information they need

to make informed decisions, to monitor collection activity, and to

enforce timely rent payments.

1. City officials should adopt a policy and implement procedures

to address City-owned rental properties. It should outline who is

responsible for monitoring the lease agreements and the actions

the City will take upon non-compliance with leases.

2. The Comptroller should provide appropriate oversight over theaccounting of the City-owned property rental payments to ensure

the complete, accurate and timely accounting of the payments.

The Comptroller should also ensure that a reconciliation of the

amounts due to the amounts paid is done on a monthly basis.

3. The Comptroller should implement written procedures to outline

the process to address late or non-payment of the rents and the

reimbursement process for gas and electric charges.

4. City officials should pursue collection of all amounts owed from

lessees.

Recommendations


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Payments in Lieu of Taxes

In general, Industrial Development Agencies (IDAs) offerfinancial

incentives to attract, retain, and expand businesses to improve

economic conditions in their respective localities. The assistance

granted to these businesses includes, among other things, grantingexemptions from real property taxes. A portion of the local real

property tax exemption is often recaptured in the form of payments in

lieu of taxes (PILOTs) made by the assisted businesses to the affected

taxing jurisdictions (ATJs). These payments are generally equal

to, or are a portion of the amount the ATJs would have received

had the property remained on the tax rolls. Accordingly, the City,

the Mount Vernon City School District (District), and the County of

Westchester (County) each receive a portion of the PILOTs as an ATJ

from the City of Mount Vernon IDA (MVIDA).

General Municipal Law (GML) requires that IDAs establish

guidelines and procedures that govern PILOT agreements. The

PILOT agreements entered into by the MVIDA require the assisted

business to request that the City Assessor calculate the PILOT

amounts payable each year and specify the payment due dates. The

City Assessor is then supposed to notify the business, MVIDA, and

the ATJs of the amounts and due dates. Due to a lack of coordination

and communication between the City and MVIDA, the City failed

to receive at least $81,016 in tax revenue because an expired PILOT

property did not revert to the tax roll in a timely manner, and the City

was due $60,000 in payments for relocating sewer lines for a projectowner. We also found that three additional project owners owed the

City $53,686 in PILOT payments as of December 31, 2008.

Coordination and Communication As multiple parties are involved

in the PILOT process, it is essential that they all coordinate and

communicate their efforts to ensure that all PILOTS are properly

accounted for. It is important for parties to work together to return

properties to the tax roll immediately upon a PILOTs expiration

because the owner starts paying taxes on the parcel only when it has

been returned to taxable status. City officials said it was the MVIDAs

responsibility to revert a property back to the tax roll.

We found that one propertys PILOT agreement expired in 2006,

but it was not returned to the tax roll. Therefore, the City has not

been receiving the taxes due for the past two years, totaling at least

$81,016. Because City officials did not adequately communicate

with MVIDA officials, the City Comptroller did not receive all of

the PILOT agreements. Without the PILOT agreement, the City


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Comptroller was not aware of the PILOTs expiration date, which

contributed to the property not being returned to the tax roll.

Further, the City receives payments from a project owner of two

separate projects for reimbursing the City for the costs of relocating

County sewer lines. The owner was supposed to repay the City during

the life of the PILOT. However, the City Comptroller was not

aware of this arrangement. Instead, the extra PILOT monies were

distributed to the District and the County, instead of being allocated

just to the City. As a result, forfiscal years 2007 and 2008, the City

did not receive over $60,000.

Billing To ensure that all PILOT payments are collected in a timely

manner and accurately allocated to the payees, internal controls over

billing must be in place. We reviewed 11 PILOT agreements entered

into by the MVIDA. Of the 11 executed PILOT agreements in effect

for 2008, nine required payments to the MVIDA; the remaining two

were still in the construction phase and therefore paid real propertytaxes directly to the City for the City/County taxes and to the District

for school taxes. For the 2008 fiscal year, the nine businesses that

were required to make PILOTs should have paid a total of $576,525,

of which the City's share was approximately $152,500.

Although the City is one of the ATJs, City officials have not assigned

someone to be responsible for ensuring that bills were being prepared

for the PILOT agreements. In addition, the Citys Chief Accountant

responsible for posting the MVIDA PILOT payments to the general

ledger did not have a schedule to reconcile amounts due to amounts

received. To compound the problem, the standard language within theagreements puts the responsibility on the project owners (lessee) to

request that the City Assessor calculate the PILOT amounts payable

each year and specify the payment due dates.

Two of the nine PILOTs did not pay a total of $29,620 (City portion),

as stated in the agreements. Project owners did not pay according to

the terms of the PILOT agreements because no one prepared bills

for the project owners. One project owner incorrectly calculated the

percentage increase from the prior year, and the other misunderstood

when the PILOT was to begin. When we brought this to the CityComptrollers attention, she corrected both situations and received

the payments by December 31, 2008.

In addition, the City and the County both have three other PILOT

agreements with project owners under which the City collects

PILOTs. These agreements are not associated with MVIDA, and the

Citys Chief Accountant is responsible for billing the project owners.

We calculated the total amount of these PILOT payments for the


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2008 fiscal year to be $146,975.4 The Citys share was $95,525.

The City had collected $41,839 of this amount. City officials stated

that all three project owners are unable to pay the outstanding

PILOT amounts totaling $53,686. City officials could not provide

documentation to support their claim regarding the owners financial

difficulty and, as of April 2009, have not taken legal action to receive

these monies and protect the taxpayers interests.

Because the City had poor controls over billing and did not designate

an individual to be responsible for the billing process, the City could

not be assured that all amounts due were actually collected.

Reconciliations Reconciliations are control activities designed

to identify errors or irregularities and alert management to their

occurrence. Accurate and complete reconciliations of the PILOT

agreements to a schedule of future payments must include the

timely identification and documentation of any differences. This

reconciliation provides the opportunity for an internal verificationof the PILOT payments due and to ensure that PILOT payments

received are accurate. However, we found no procedures in place

for such a reconciliation process. The City Comptroller provides a

memo to the Citys finance department listing the payments received

by the MVIDA, the Citys portion of the payment, and a check for

that amount. The Chief Accountant will then post the receipt to the

general ledger. However, we found that the Chief Accountant posted

additional amounts totaling $13,371 above the PILOT payments to

the general ledger. The $13,371 was additional money that the City

negotiated and received for moving sewer lines, and therefore should

have been posted to other revenue and not to the PILOT payment.This error was not detected because the Chief Accountant was not

reconciling amounts received to the amounts due. If PILOT accounts

are not reconciled, City officials cannot have a reasonable level of

assurance that the PILOT receipts are accurate and complete.

5. City officials should improve communications with MVIDA

to ensure that expired PILOTs return to the tax roll in a timely

manner.

6. City offi

cials should communicate all information and pertinentdocuments to the City Comptroller to ensure accurate allocation

of monies received.

Recommendations

4 One of the PILOTs is based on the audited financial information provided by

project owner; however, after numerous requests, as of April 30, 2009 the City still

had not received this information; therefore, we based the calculation on the prior

years PILOT.


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7. City officials should determine who is responsible for preparing

and mailing PILOT statements to the project owners.

8. The City Comptroller should prepare and provide a schedule of

amounts due to the accounting staff responsible for posting the

receipts.

9. The City Comptroller should ensure that reconciliations are

performed to make certain that all receipts are received.


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Parking Ticket Enforcement

Municipalities issue tickets for parking violations pursuant to the

New York State Vehicle and Traffic Law. Any individual who receives

a parking ticket may settle the ticket by paying the discounted

amount (if paid within the next business day), or the designated finewithin 30 days of the date of the ticket. After 30 days, the amount of the

fine doubles. After 60 days, the original fine is tripled to a maximum

of $100. Individuals may choose to protest the ticket. Failure to

respond to the ticket results in initiation of enforcement procedures,

which include sending out collection letters, assessing penalties,

towing or booting the vehicle and participating in the Department of

Motor Vehicles (DMV) Parking Scofflaw5 and Suspension Program.

Unpaid parking violation tickets result in a delay and/or potential

loss of revenue for municipalities. Collection becomes less-likely

the longer a ticket remains outstanding; older tickets may becomeuncollectible due to individuals who have moved or changed plates.

The City has established a Traffic Violations Bureau (TVB) to collect

the fines associated with parking tickets. For the fiscal year ended

December 31, 2008, the City issued over 96,000 tickets and reported

parking violations fine revenue of approximately $2.9 million. City

officials have not established written policies and procedures to

govern parking ticket operations and did not monitor unpaid parking

tickets. As a result, City officials were unaware of the inconsistencies

we found in the generation of collection letters and application of

penalties. In addition, City enforcement actions were not alwayseffective. Our testing showed that the City often failed to issue

delinquent notices and incorrectly calculated penalties. Also, the City

often failed to notify DMV for tickets that met the scofflaw criteria.

By developing and implementing parking ticket collection policies

and procedures, effectively tracking and monitoring collection

activity, and pursuing additional enforcement actions, the City could

improve its collection rate and increase ticket revenues. If the City

improved its current6 collection rate of 82 percent to the benchmark

rate of 85 percent, it could earn an additional $87,800 from parking

fine revenue.

5 A scofflaw is a person who fails to pay debts or answer summonses.6 We calculated the Citys collection results for the 13-month period April 2008

to April 2009. MPSA Partners established an 85 percent collection rate as a

benchmark for collecting parking tickets.


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Written policies and procedures governing parking ticket operations

provide employees with clear guidelines on how to enforce

and collect outstanding parking tickets. City officials have not

established written policies and procedures to govern parking ticket

operations. As a result, we found weaknesses in the Citys collection

and enforcement actions, which have resulted in lost revenue.

Delinquent Notice The City sends a delinquent notice to violators

who have failed to respond to a parking ticket. In order to manage the

volume of tickets requiring delinquent notices, the parking system

software randomly selects 1,200 tickets every other week to issue a

first delinquent notice. The week in between, the system generates

second and third delinquent notices from those previously sent

initial letters. Based on a sample of 50 tickets (which all should have

received three delinquent notices), the delinquent notice system has

worked as intended for 16 parking tickets, or only 32 percent. The

system did not send any delinquent notices for 14 parking tickets

(28 percent), and the remaining 20 parking tickets (40 percent) hadvarying and/or multiple problems, including:

The system generated first delinquent notices for 16 of 20

parking tickets prior to 30 days from the date of ticket

issuance, generated second delinquent notices for five

parking tickets prior to 60 days from the date of ticket

issuance, and generated the third delinquent notice for one

ticket prior to 90 days from the date of ticket issuance. The

late penalties cannot be assessed prior to 30 or 60 days from

the date of ticket issuance. Therefore, the City mailed out

notices forfine amounts due without the authority to collectthe additional fees. The City does not assess additional

penalties at 90 days after the date of ticket issuance, but will

quadruple a ticket fine up to $100 when the ticket has been

processed through the DMV scofflaw program.

Six of 20 parking ticket summons received only one delinquent

notice.

Penalty Assessment As parking tickets become past due (30 days),

the City adds penalties in accordance with City ordinance. Asrequired by the ordinance, 30 days past the issuance of the parking

ticket, the City assesses the first penalty by doubling the fine amount.

The City assesses the second penalty after 60 days by tripling the

fine amount. However, the second penalty cannot exceed $100, with

the exception of a $30 mandatory fee for parking in a designated

handicap space.

Enforcement Actions


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We found that the City did not assess the correct penalty for 22 of

the 50 parking tickets reviewed. If the City had assessed the correct

penalties for the sample, the total fine would have increased by $425.

If we apply the same percentage to the 4,245 total unpaid parking

tickets totaling $313,075, we estimate that the total fine amount could

have increased by approximately $35,800. This does not account for

tickets that could be eligible for the DMV scofflaw program (if a

ticket is scofflaw, the total fine is quadrupled but cannot exceed $100,

as described above).

Scofflaws The City utilizes the DMV Parking Scofflaw and

Suspension Program, which targets vehicles that have at least three

unpaid tickets within an 18-month period. The cost of each scofflaw

to the City is $2. Under this program, DMV immediately suspends

a registration or prevents a registrant from re-registering a motor

vehicle until the registrant settles the unpaid tickets with the issuing

municipality. Currently, the City notifies DMV within three to five

months from the expiration date of the violators registration. Cityofficials believe that this gives them the greatest benefit because,

given the proximity of the expiration date, the violator will pay the

outstanding tickets in order to re-register the vehicle. We selected and

tested 71 license plate numbers that met scofflaw criteria; total fines

owed for these vehicles were $27,465. We found the following:

Forty-five vehicles (with tickets valued at $17,670) were not

referred to DMV; 10 were not even sent delinquent notices.

One of these vehicles had a total of 214 outstanding tickets.

When we brought this to City officials attention, they

immediately impounded the vehicle.

Twenty-six vehicles (with tickets valued at $9,795) were

scofflawed; the City had not collected the fines by the end of

ourfieldwork.

City officials stated that they were reluctant to scofflaw all vehicles

due to a system error that occurred a few years ago that had

duplicated some of the tickets in the system. This system error

could have made some of the registrants incorrectly appear to fit

the scoffl

aw criteria. The City has since corrected the problem andhas removed the duplicate tickets from the system. Although the

Citys system was not set up to determine how many fines were

collected through the scofflaw program, if the City had scofflawed

all registrants who fit the criteria, more revenues would likely have

been generated.

Vehicle Impoundment and/or Immobilization The Citys ordinance

permits the City to tow and impound a motor vehicle at the owners


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expense. In addition to vehicle impoundment, City officials informed

us that the City has vehicle immobilization devices (commonly

referred to as booting devices) to enforce unpaid parking violations

fines. Booting vehicles can only be done by the Police Department

or the City Marshal, who are connected to the DMVs database,

and therefore have the ability to determine if a vehicle has been

scofflawed. Forfiscal year 2008, the City booted 984 vehicles and

collected over $413,000. If the City had scofflawed all applicable

registrants, it would be expected the Police Department or City

Marshal would have a greater pool of vehicles in which to boot or

tow. Therefore, by booting and towing more vehicles, the City would

likely increase revenues.

We identified a number of procedures and opportunities for

improvement that City officials should consider as part of their

efforts to increase the collection of unpaid fines and related penalties.

License Plate Readers (LPRs)

The use of LPRs in municipalitiesis on the rise. LPRs are box-like cameras mounted on either side of

a police car and are linked to a laptop computer mounted inside the

car. The cameras quickly scan cars on either side of the police car

whether they are moving or parked and feed the images into the

computer. The computer checks the plate numbers against the DMV

database to determine whether the car has parking violations. The

Citys Police Department has a number of LPRs that are currently

being used to alert police officers of stolen cars and cars that were

involved in crimes. LPR units could also be used to identify vehicles

with significant parking violations (scofflaw vehicles), which could

help improve the Citys enforcement and collection efforts. Cityofficials informed us that the LPR technology is relatively new so

they had not considered its use beyond the Police Department.

Civil Action Other municipalities have given the TVB the authority

to undertake civil action (i.e., place a default judgment against the

violator) to enforce unpaid parking tickets. City officials should

assess their specific circumstances and determine if initiating civil

action might effectively increase the collection of unpaid fines and

related penalties. Consideration of the cost to pursue civil action

should be weighed against its potential benefi

t.

Amnesty Programs Implementation of an amnesty period in which

unpaid fines could be paid without penalty, or some derivative

such as one-half of the late fees being waived, is another option

for the City to increase its collection of parking fines. Prior to

implementing an amnesty program, City officials should consider

whether anticipated collections would justify the forfeiture of any

penalties or other fees. City officials stated that, in the past, they have

Additional Enforcement

Opportunities


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implemented an amnesty period with limited success. According to

officials, the City gives violators the opportunity to present their case

to the City Justices each day, and the Justices have the authority to

reduce or dismiss tickets.

Collection Services Municipalities can contract for collection

services including full-service ticket processing and enforcement,

enforcement of unpaid tickets, or enforcement of unpaid out-of-state

tickets. If City officials pursue this, they should ensure that contracts

for collection services contain performance clauses so they can

monitor and evaluate contractor performance. City officials stated

that they had not previously looked into collection services because

they prefer to keep the services in-house.

Penalty Amounts The City last increased parking ticketfine amounts

and penalties for late payments in September 2000. In January 2009,

the Director of the TVB sent a preliminary request to the Mayor

to increase fines. City officials should periodically examine theestablished fine amounts and amend them as necessary. Penalties

should be set at high enough amounts that violators find it more cost-

effective to pay on time.

Violator InformationA number of parking tickets are unenforceable

because officials could not find a name and address for a given

license plate number due to incorrect recording of license plate

numbers, data entry errors, or miscoding the plate type. However,

this mostly occurs because the plates belong to out-of-state vehicles.

We determined that 30 percent 1,287 of the 4,245 outstanding

tickets

were issued to non-New York plates. To obtain out-of-stateregistrant information, City officials should work with the local

law enforcement agencies that may have access to the New York

Statewide Police Information Network. Alternatively, City officials

might consider contracting with a vendor to conduct database

searches for out-of-state violator name and address information.

Benchmark According to parking management consultants, an

effective parking system should collect, on average, 85 percent of

parking tickets issued, excluding tickets that are dismissed and

voided. Because the City will not collect afi

ne for every parkingticket issued, a benchmark rate of collection can be used to

periodically assess how effectively the Citys parking management

system is operating. Since revenue derived from parking violations

is significant, a periodic assessment of how well outstanding tickets

are being collected would help City officials determine whether

the Citys collection practices are working effectively. If ticket

collections are not meeting the established benchmark rate, City


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officials can take actions to explore and remedy the cause(s) for the

shortfall.

The City has not established a benchmark rate of collections to

determine whether its parking enforcement actions are effective. To

determine if the City met the 85 percent benchmark established by

parking management consultants, we calculated the Citys collection

results for a 13-month period from April 2008 to April 2009. Our

audit found that the City collected 82 percent of the parking violation

tickets issued from April 1, 2008 to June 30, 2008. If the City had

achieved the 85 percent benchmark, it would have collected $87,800

more in parking fines.

10. City officials should monitor their current enforcement system

to improve its efficiency and/or accuracy regarding delinquent

notices, penalty assessment, and scofflaw action.

11. City officials should examine the effectiveness of their collectionstrategies, and consider enhanced and/or alternative measures

that may increase the collection offines and related penalties.

These measures could include, but are not limited to, using

license plate readers, instituting civil action or amnesty programs,

using collection services, increasing penalty amounts, and

enhancing efforts to identify out of state registrations.

12. City officials should establish a standard benchmark collection

rate with which to periodically assess the performance of the

Citys parking ticket collection system.

Recommendations


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APPENDIX A

RESPONSE FROM LOCAL OFFICIALS

The local officials response to this audit can be found on the following pages.


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See

Note 1

Page 29


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Note 1

The report is entitled City of Mount Vernon Revenue Enhancement Opportunities.

APPENDIX B

OSC COMMENTS ON THE LOCAL OFFICALS RESPONSE


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APPENDIX C

AUDIT METHODOLOGY AND STANDARDS

Our overall goal was to review revenue streams to provide recommendations for revenue

enhancement opportunities or cost savings for the period January 1, 2008 through February 20, 2009.

To accomplish the objective of this audit and obtain valid audit evidence, our procedures included the

following steps:

We reviewed sections of the Citys charter that were relevant to our audit objectives.

To determine if City-owned rental properties had current leases, we reviewed all lease

agreements.

Since the City does not have written processes or procedures on rental properties, we

interviewed various City officials to determine the process used to determine rental amounts,

collection of rents, and evictions for non-payment of rents.

To determine if accounting records for the City-owned property rentals were accurate, we

reviewed the manual records maintained by the accounting department.

To determine the listing of all PILOT properties, we requested a listing through the assessors

office, the Comptrollers office, and the IDA. We then compared listings to ensure all properties

were reviewed.

In order to determine the amount of each PILOT due, we reviewed all PILOT agreements.

To determine whether all monies due to the City were received, we reviewed the schedules,memos and postings for PILOT payments.

We interviewed key personnel to determine the process by which the City determined the

effectiveness of its parking violations enforcement.

We analyzed the parking tickets issued from April 1, 2008 to June 30, 2008 and collected to

April 2009.

In order to determine the effectiveness of the parking collections, we used the benchmark,

according to parking management consultants, that about 85 percent of all parking ticketsissued should be collected.

To determine if the City is effectively enforcing collection of all issued parking tickets, we

calculated the Citys collection results for a 13 month period from April 2008 to April 2009.

We selected 50 tickets issued from April 1, 2008 to June 30, 2008 and unpaid as of February

10, 2009, and tested the application of the Citys enforcement measures.


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To determine the Citys use of the scofflaw, we selected 71 license plate numbers that were

issued at least three tickets within an 18 month period (scofflaw criteria).

To determine if the appropriate payment was made and if dismissals were properly authorized,

we selected and tested 30 tickets issued from April 1, 2008 to June 30, 2008 and adjudicated as

of February 10, 2009.

We conducted this performance audit in accordance with generally accepted government auditing

standards (GAGAS). Those standards require that we plan and perform the audit to obtain sufficient,

appropriate evidence to provide a reasonable basis for ourfindings and conclusions based on our audit

objectives. We believe that the evidence obtained provides a reasonable basis for our findings and

conclusions based on our audit objectives.


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APPENDIX D

HOW TO OBTAIN ADDITIONAL COPIES OF THE REPORT


Public Information Office

110 State Street, 15th Floor

Albany, New York 12236

(518) 474-4015

http://www.osc.state.ny.us/localgov/

To obtain copies of this report, write or visit our web page:


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APPENDIX E

OFFICE OF THE STATE COMPTROLLER

DIVISION OF LOCAL GOVERNMENT

AND SCHOOL ACCOUNTABILITY

Steven J. Hancox, Deputy Comptroller

John C. Traylor, Assistant Comptroller

LOCAL REGIONAL OFFICE LISTING

BUFFALO REGIONAL OFFICE

Robert Meller, Chief Examiner


295 Main Street, Suite 1032

Buffalo, New York 14203-2510

(716) 847-3647 Fax (716) 847-3643

Email: [email protected]

Serving: Allegany, Cattaraugus, Chautauqua, Erie,

Genesee, Niagara, Orleans, Wyoming counties

ROCHESTER REGIONAL OFFICE

Edward V. Grant, Jr., Chief Examiner


The Powers Building

16 West Main Street Suite 522

Rochester, New York 14614-1608

(585) 454-2460 Fax (585) 454-3545


Serving: Cayuga, Chemung, Livingston, Monroe,

Ontario, Schuyler, Seneca, Steuben, Wayne, Yates

counties

SYRACUSE REGIONAL OFFICE

Eugene A. Camp, Chief Examiner


State Office Building, Room 409

333 E. Washington Street

Syracuse, New York 13202-1428

(315) 428-4192 Fax (315) 426-2119


Serving: Herkimer, Jefferson, Lewis, Madison,

Oneida, Onondaga, Oswego, St. Lawrence counties

BINGHAMTON REGIONAL OFFICE

Patrick Carbone, Chief ExaminerOffice of the State Comptroller

State Office Building, Room 1702

44 Hawley Street

Binghamton, New York 13901-4417

(607) 721-8306 Fax (607) 721-8313


Serving: Broome, Chenango, Cortland, Delaware,

Otsego Schoharie Sullivan Tioga Tompkins

GLENS FALLS REGIONAL OFFICE

Karl Smoczynski, Chief Examiner


One Broad Street Plaza

Glens Falls, New York 12801-4396

(518) 793-0057 Fax (518) 793-5797


Serving: Clinton, Essex, Franklin, Fulton, Hamilton,

Montgomery, Rensselaer, Saratoga, Warren, Washington

counties

ALBANY REGIONAL OFFICE

Kenneth Madej, Chief Examiner


22 Computer Drive West

Albany, New York 12205-1695

(518) 438-0093 Fax (518) 438-0367


Serving: Albany, Columbia, Dutchess, Greene,

Schenectady, Ulster counties

HAUPPAUGE REGIONAL OFFICEIra McCracken, Chief Examiner


NYS Office Building, Room 3A10

Veterans Memorial Highway

Hauppauge, New York 11788-5533

(631) 952-6534 Fax (631) 952-6530


Serving: Nassau, Suffolk counties

NEWBURGH REGIONAL OFFICEChristopher Ellis, Chief Examiner


33 Airport Center Drive, Suite 103

New Windsor, New York 12553-4725

(845) 567-0858 Fax (845) 567-0080


Serving: Orange, Putnam, Rockland, Westchester

counties

new york comptroller thomas dinapoli on mount vernon's revenue collection

Documents