Audit Report on the Compliance of Parking System Plus, Inc., with Its Department of Transportation Contract To Operate the Delancey and Essex Street Municipal Parking Garage

AUDIT REPORT IN BRIEF

The objective of this audit was to determine whether Parking Systems Plus, Inc. (PSP) was in compliance with key provisions of its contract with the Department of Transportation (DOT) to operate the Delancey and Essex Street Municipal Parking Garage (Manhattan garage).

In June 2005, PSP began its three-year contract with DOT to manage and operate the Manhattan garage. The contract required that PSP be compensated monthly for all services rendered that are part of the Basic Management Fee. The monthly fee was $40,209, which represents the total contract amount of $1,447,537 divided by 36 months. PSP could also earn annual incentive fees if the Manhattan garage’s revenues exceeded the established revenue targets. The maximum incentive fee that could be paid to PSP for the three-year contract was an additional $345,000.

PSP operates the facility as a self-service parking garage that is open 24 hours a day, seven days a week. During Fiscal Year 2008, the Manhattan garage collected $1.5 million in parking fees for the City. DOT paid PSP a total of $602,235, which represents $457,349 in basic management fees (less retainage), $72,980 in incentive fees, and $71,906 for retainage that was withheld (the initial contract expired at the end of Fiscal Year 2008).

Audit Findings and Conclusions

Our review of the management and operations of the Manhattan garage found that PSP is in compliance with the key provisions of the contract. Controls over the parking fees collected are adequate, the facilities of the Manhattan garage are well maintained, and documentation provided to DOT by PSP generally supports the revenue collected and DOT payments for operating the Manhattan garage. In addition, DOT reviews the documentation and performs regular inspections of the facility. However, we found that DOT makes an allowance for a percentage of security guard patrols that are not performed. This allowance is not in the contract, and we believe that it should be.

Audit Recommendation

Based on our findings, we make one recommendation. DOT should incorporate all unwritten agreements with PSP into its contract, including the 15 percent allowance for patrols not performed, the requirement that at least 7 of the 13 sensors need to be activated, and the $5 fine for each patrol not performed.

DOT Response

DOT officials generally agreed with the audit’s findings and recommendation.