Audit Report on the Administration of the Department of City Planning Penn Center Subdistrict Fiduciary Account

AUDIT REPORT IN BRIEF

The audit determined whether the Department of City Planning (Department) accurately accounted for the revenues and expenses of the Penn Center Subdistrict fiduciary account and ensured that all funds were used in accordance with the fiduciary agreement.

Fiduciary accounts are used to record financial resources held and administered in trust by the City of New York . The principal and income of these accounts is intended to benefit individuals, private organizations, or other non-City government entities. Under the New York City Zoning Resolution §81-52 (Resolution), the Department is responsible for administering a fiduciary account established to receive contributions from applicants seeking approval to erect signs above a height of 40 feet within the Penn Center Subdistrict (Subdistrict). The fiduciary agreement and account was established in December 2001.

In accordance with the Resolution, the Department is the custodian of the account and is required to consult with the Commissioner of the Department of Transportation (DOT) in regards to the disbursement of funds to implement improvements within the Subdistrict. As of December 31, 2004 , $1,320,620 was on deposit in the Penn Center Subdistrict account.

Audit Findings and Conclusions

The Department accurately accounted for and deposited all funds it received into the fiduciary account. However, the Department did not ensure that all funds due from an applicant who erected signs in the Subdistrict were collected. As a result, the account was underfunded by a total of $190,500.

In addition, since the inception of the account, the Department has not disbursed funds from the fiduciary account to make any Subdistrict improvements. Further, the Department has not consulted with DOT on making improvements in the Subdistrict, contrary to the Resolution and fiduciary agreement. According to research by a non-profit organization that monitored pedestrian accidents in the area, there is a clear need for improvements within the Subdistrict that will safeguard pedestrians and enhance traffic circulation in the area.

Audit Recommendations

To address these issues, we recommend that the Department:

• Ensure that applicants for constructing signage above a height of 40 feet remit required payments prior to approving applications.

• Utilize fiduciary account funds to develop and implement required improvement projects.

Consult with DOT officials regarding improvement plans within the Subdistrict, as required by the fiduciary agreement.