Audit Report On The Operation And Management Of Piers 92 And 94 January 1, 2007-December 31, 2009

AUDIT REPORT IN BRIEF

The City of New York is the owner of Piers 92 and 94 on the Hudson River between 52nd and 56th Streets. The properties include the surface area of the decks, the head house, the outdoor parking lot, and related improvements.  Piers 92 and 94 operate as a facility for trade and consumer shows, customary convention center uses, supporting ancillary services, and public parking. Currently, the facility offers 208,000 square feet of exhibit or event space and approximately 280 parking spaces above Pier 92. The New York City Economic Development Corporation (EDC) is responsible for administering the agreements with the operators of the piers under its Maritime contract with the City. From calendar years 2007 through 2009, our audit scope period, the operations of Piers 92 and 94 have been under two separate companies. This report will address each company and their respective operating period separately.

Audit Findings and Conclusions

Our audit found that the operators were generally in compliance with the agreements, except for the following observations:

For the operating period January 1, 2007 through November 21, 2008, our review noted that The Un-Convention Center, Inc. (Un-Convention) understated its revenue by a total of $197,920 and its base charge by $300. Therefore, it owes the City $20,092 in additional fees and base charge. In addition, Un-Convention did not perform the required pier improvements resulting in the City having to reimburse $81,387 to the new operator for the costs.

For the operating period December 11, 2008, through December 31, 2009, we found that MMPI Piers LLC (MMPI) understated its events revenue by $45,257, underpaid its base charge by $968 and did not maintain an adequate security deposit. In addition, MMPI submitted $774,513 in excess of the reimbursable capital improvement allowed. EDC has not approved these for reimbursement.

Audit Recommendations

To address these issues, we recommend that:

• Un-Convention revise its revenue participation charge calculations and remit $20,092 in base charge and revenue participation charges to EDC.
• Un-Convention reimburse EDC $81,387 for unfinished required improvements at the pier.
• MMPI exclude parking operating expenses from its event revenue participation charge calculation.
• MMPI submit the additional $6,968 in base charge and security deposit to EDC.
• MMPI capital improvement costs submitted to EDC are within the scope of Exhibit C of the occupancy permit.

We recommend that EDC:

• Approve only capital improvements outlined in the occupancy permit with MMPI.
• Ensure that the operators pay the correct base charge and security deposit, and verify the accuracy of participation charge calculations.
• Ensure that the necessary improvements and maintenance work at the piers are performed in a timely manner.
• Recoup $81,387 from Un-Convention for unfinished capital improvements.