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New York City Comptroller William C. Thompson, Jr. has issued an audit finding that Alley Pond Golf Center, Inc., generally adhered to its lease with the City to run a driving range and miniature golf course in Queens.

“My office found that the Alley Pond Golf Center properly calculated gross receipts and license fees due the City for 2006 but not for 2005, paid its minimum annual fees on time, and complied with other major requirements of its license agreement, such as paying utility charges, maintaining liability insurance and contributing a security deposit,” Thompson said.

In September 1994, the Department of Parks and Recreation and Orient Associates International signed a 12-year license agreement to operate, maintain, and manage the Alley Pond driving range and miniature golf course at 232-01 Northern Boulevard.

The agreement was subsequently assigned to the Family Golf Center, Inc., in 1996, and then to Spring Rock Golf Center, Inc., in 2001, which incorporated Alley Pond as a separate entity to manage and operate the concession.

The agreement requires Alley Pond to pay the City, the greater of either a $1 million minimum annual fee or 45 percent of its gross receipts up to $2 million and 50 percent of gross receipts exceeding $2 million. Gross receipts from pro-shop merchandise sales are to be calculated separately and reported at 11.25 percent of the total received.

Alley Pond is also required to pay the City a fixed fee of $59,560 for 2005 and $62,538 for 2006 for revenue derived from independent golf lesson instructors.  Also, Alley Pond must carry a $1 million general liability insurance policy that names the City as an additional insured, maintain a $250,000 security deposit with the City, and pay all required utility charges. 

For operating years 2005 and 2006, Alley Pond reported total gross receipts of $2,491,056 and $2,408,352 and paid the City $1,059,560 and $1,062,538, respectively, for license fees. Since April 1, 2007, Alley Pond no longer manages or operates the facility, as a result of Parks’ decision to select another concessionaire to manage and operate the facility.

Although Thompson’s audit found that Alley Pond was largely in compliance, auditors did detect several weaknesses. Alley Pond did properly calculate the amount of license fees due the City for 2006, but did not for 2005 and so owes the City $13,016 in fees and penalties.

The Parks Department is responsible for administering the Alley Pond agreement, but failed to register the agreement and subsequent assignments with the Comptroller’s Office, as required by City regulations.

“Since the assignments involved a change in ownership,” Thompson said, “Parks should have submitted the assignments to the Comptroller’s Office for registration when each assignment was promulgated to provide for an independent assessment of the golf centers change of management, thereby also providing accountability for the City’s responsibilities as they relate to concession agreements.”

Thompson’s office recommend that Alley Pond pay the City $13,016 in additional fees and penalties, and that the Parks Department ensure that Alley Pond pays the money and ensure that all future agreements and related assignments are submitted to the Comptroller’s Office for registration.

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