City of West Palm Beach Internal Auditor s Office

Transcription

1 POST AUDIT REVIEW OF THE CITY S REAL ESTATE MANAGEMENT PRACTICES AUDIT Report No. PAR June 14, 2018 City of West Palm Beach Internal Auditor s Office Beverly Mahaso, Interim City Internal Auditor, Esq., CIA, CFE Elena Georgiev, Senior Internal Auditor, CPA, CGMA, CIA Ellen Misita, Senior Internal Auditor, CGAP

2 June 14, 2018 City Commission Audit Committee City of West Palm Beach 401 Clematis Street West Palm Beach, Florida RE: POST AUDIT REVIEW OF THE CITY S REAL ESTATE MANAGEMENT PROCESS AUDIT, AUD Dear City Commissioners and Audit Committee Members: In FY 2017, the Internal Auditor s Office released an audit of the City s Real Estate Management Process. We performed certain procedures, as enumerated below, with respect to activities of the Real Estate Management function, in order to render a conclusion on the status of the recommendations made as a result of that audit. This Post Audit Review consisted primarily of inquiries of City personnel in Housing and Community Development, and examinations of various supporting documentation. It was substantially less in scope than an audit in accordance with generally accepted government auditing standards. The evidence obtained provided a reasonable basis for our conclusions; however, had an audit been performed, other matters might have come to our attention that would have been reported to you and our conclusions may have been modified. The audit contained seven (7) recommendations that addressed the audit s findings. Based on the review performed, we concluded that recommendations 1, 2, 3, 4 and 5 were implemented and recommendations 6 and 7 were partially implemented. We have enclosed a table listing all the recommendations with the current statuses. We found that management made significant efforts to take corrective action. Further, we note that the Departments are actively continuing to make improvements. As such, additional steps may have been taken to implement the recommendations after the conclusion of this Post Audit Review. We will conduct another Post Audit Review in approximately 6 to 12 months, at which time we will review all additional changes made after the conclusion of this Post Audit Review. 1

3 Recommendation Status with Priority 5 5 Low High High Implemented Partially Implemented Not Implemented We thank the personnel at the Housing and Community Development Department for their assistance in conducting this review. Respectfully submitted, /s/ Beverly Mahaso Interim City Internal Auditor cc: Jeri Muoio, Mayor Jeffrey Green, City Administrator Dorritt Miller, Deputy City Administrator Scott Kelly, Assistant City Administrator Armando Fana, Director of Housing and Community Development Encl. 2

4 AUDIT RECOMMENDATIONS 1 Business Process for Purchase and Sale of Real Property HCD should build upon the efforts made to date by the Land Management Committee by finalizing the Property Acquisition Checklist as well as the Property Inspection Worksheet. The Land Management Committee should also develop a Property Disposal checklist to ensure that all relevant Departments are notified when a property is sold or otherwise disposed of. We concur. We are continuing our efforts through the Land Management committee to establish business processes for the acquisition and disposition of properties. Standard operating procedures have been established for intake and disposition of properties, inspections and code lien removal. HCD has completed the procedures for removal of allowable utility lien amounts on city owned properties. All relevant departments, including Finance and Risk are notified of property dispositions. 2 Maintenance of City-Owned Property Future projects should include representatives from Engineering, Utilities, and Planning before financial commitments to future streetscape projects are made. HCD should continue to coordinate efforts to determine which department will have on-going maintenance responsibility for Cityowned lots. We concur. As noted in the report, we have contracted with a vendor for maintenance of HCD properties. We will also work with other Departments to ensure that adequate planning is done on future land infrastructure projects. HCD has not conducted any streetscape projects since the review but would include relevant departments for future projects. HCD has expanded the number of city owned parcels on the maintenance list and has a company under contract to maintain city owned parcels that are not used for official business. The rest are 3

5 being maintained through Parks and Rec and Engineering. 3 Valuation of Assets HCD should work with Finance and related City Departments to develop a process that ensures land and buildings are valued accurately and that transactions are recorded timely in the City's financial records. 4 Tenant Arrears The CRA should make every effort to collect the rental arrears and to ensure that appropriate insurance is in place for this lease and all other leases. The CRA should more closely monitor property requirements to ensure that all contractual agreements are met in a timely manner. We concur and will draft an SOP to address a process for acquisitions and dispositions of properties. We concur. HCD has a process in place to notify Finance when there is a disposition or acquisition of property and we meet with Finance semiannually to reconcile. MANAGEMENT UPDATE 02/2018: On 2/23/18, CRA advised the following in an that the lease with the tenant at the Sunset Lounge was terminated as of 7/1/17, and a Concession Agreement was signed allowing the tenant the use of the building until the commencement of demolition. At the same time, tenant executed a Promissory Note for $36,000 which forgave the rental arrears at a rate of $3,000 per month while he operated the Sunset under the Concession Agreement. Tenant replaced his insurance coverage on 4

6 8/15/17. Note that the CRA had full liability and damage coverage on the premises during the entire period. Tenant was notified on 11/21/17 that he would be required to vacate the premises on 1/15/18, when selective demolition would commence. He vacated on that date. Auditor s Note: In light of the Concession Agreement and Promissory Note entered into by the CRA, no further action is warranted. 5 Sidewalk Cafes The City should review its Ordinance and for FY 2018 consider adding an appropriate square foot fee to the Comprehensive Fee Schedule. We agree to consider assessing the per square foot fee provided for by the City Ordinance. Economic conditions will be weighed as part of this decision. ADMINISTRATION UPDATE 05/2018: Administration has considered the per square foot fee and has made the determination that it is not economically feasible at the present time. 5

7 6 Single Source for Real Estate Portfolio Information HCD should ensure that there is one master resource of the City's real estate portfolio available to all stakeholders, preferably through GIS, that will enable users to look up a property either by street address or PAPA property control number to determine its status and then take appropriate action. In addition, managers should encourage employees to attend presentations and Open Houses sponsored by the Information Technology Department so that they can be introduced to and utilize, available technology to perform their jobs efficiently and effectively. HCD, along with the Land Management Committee, will review the required data sets for a centralized real estate database, which may include the City's GIS. It is anticipated that this will mirror the existing HCD Land Management Database. PARTIALLY Still a work in progress. HCD expanded the database for its affordable housing portfolio, however it is still working with GIS on the details of expanding that effort. Meeting was held with IT on 2/23/18. GIS database to include all city owned properties should be completed by summer

8 7 Status of Old Loan Agreements All listings maintained by both Finance and HCD should be maintained and updated in a common database, available to management of the Departments, and clearly indicate the terms of the agreement, including current status. The listing should be reviewed and updated on at least a quarterly basis to reflect changes in the loan portfolio. There are currently two common databases where loan portfolio information can be shared. One is the contract database, which has an HCD loan database that contains loan agreements and other relevant documents. The other is Oracle, which contains the information on accounts receivable for loans. Older loans may not have been entered into either of these two databases. Management is exploring the potential of bringing on temporary services to help analyze loan portfolios. PARTIALLY HCD has an open RFQ to procure the underwriting and servicing of the multi-family development loan portfolio. The existing loan portfolio of single family mortgages will be contracted out as well through a piggy back procurement from Palm Beach County, who currently is procuring for single family mortgage loan servicing. Both should be completed by summer