Audit Report on Real Estate Tax Charges on Space Leased at 180 Water Street by the Human Resources Administration

AUDIT REPORT IN BRIEF

This audit determined whether the landlord’s real estate charges allocated to the Human Resources Administration (HRA) for space leased at 180 Water Street were accurate and properly adjusted to account for any reassessments. The 180 Water Street Associates L.P. (landlord) provided the City the use of office space at 180 Water Street pursuant to a written lease agreement (lease), dated June 25, 1997, negotiated by the New York City Department of Citywide Administrative Services (DCAS). HRA occupies approximately 430,000 square feet of rental space at the property.

We determined that the landlord’s real estate tax charges allocated to HRA were accurate and properly adjusted to account for all of the reassessments that the landlord received during the audit period. We further determined that HRA has adequate controls in place to ensure that the landlord’s real estate tax charges allocated to HRA for space leased at 180 Water Street were accurate and properly adjusted to account for real estate tax credits that are listed in the DOF Fairtax database.

However, HRA does not have adequate controls in place to identify real estate tax refunds that the landlord receives as a result of Tax Commission decisions. In January 2004, HRA received a credit from the landlord totaling $1,034,879, representing a tax refund received by the landlord for the period Tax Years 2000 through 2002. However, HRA was not aware that it was entitled to this credit until the landlord informed the agency.

We made two recommendations to HRA. HRA should:

• Establish a control procedure to identify instances in which leased properties are reassessed due to Tax Commission action. For example, HRA could contact the Tax Commission periodically to determine whether the Commission has reassessed any of the properties that the agency is leasing.
• Follow up with the landlords of leased properties for which real estate tax credits or refunds are granted to ensure that the agency receives its proportionate share of such credits or refunds.