Jacksonville, FL — The City of Jacksonville has missed out on some revenue it should have been bringing in, and the City Council Auditor says that’s in part because of a lack of good record keeping.
The Council Auditor’s Office looked in to communication towers- the City leases some property on which towers are installed and operated. The Real Estate Division deals with the leasing, while the Parks, Recreation, and Community Services Department handles the fees. The revenue is put in to a special fund and then allotted to the Council Districts where the tower is located, to be used for recreational purposes at City-owned parks. Between January 1, 2010 and December 31, 2016, the City brought in $981,337 in communication tower revenue, according to the report.
Several of the findings tie back to record keeping, with one of the most significant being that revenue from some subleases was not being collected at all.
While the City says they have a process for tracking all known cell towers on City property, they acknowledge that relies on the parties involved lawfully complying and making all of the required notifications. Upon the Auditor’s recommendation, the City is now committing to physically inspecting each tower once a year, to ensure there is no new, unauthorized equipment. They will also require lessees to annually certify that their current lease is accurate and there are no changes, and twice a year, lessees will have to affirm any subtenants.
The Auditor’s Report says not annually checking on the physical sites could cost the City revenue, because they would not see unauthorized subtenants using the site. In fact, the Auditor found a few subtenants the City was not receiving any money from, at Ray Greene Park. The Auditor found that the main tenant should have paid $51,176 to the City in collection fees for two subtenants, but that had not happened. The Report says $38,342 of that sum has now been paid.
Some of the fees that have been collected have been put in the wrong place. 32% of audited lease payments were not recorded properly in the accounting system, totaling $73,153 that was not put in to the Communication Tower Special Revenue Fund. Additionally, $117,478 from one of the sites was put in a fund that co-mingled with other revenue sources. The City says these have all been corrected, and they’re improving the accounting process moving forward.
There have also been changes to ensure lease payments are collected in a more timely manner. The Report found 27% of audited lease payments were not collected or deposited in a timely manner, with an average delay of 61 to 108 days. Generally, this was because the tenant was not remitting the check, according to the Auditor. The City says they’re improving invoicing procedures, but did not specifically comment on the Auditor’s recommendation to asses a late fee if tenants miss their due dates.
Despite some of the inconsistencies in the record keeping, the Auditor found the money was being spent on allowable expenditures.
An area where revenue used to come in that has since dried up is through “Cell on Wheels” temporary set-ups. Companies are allowed to rent space temporarily at these tower sites, in order to boost cell service for special events. The Report says this program brought in around $74,000 through permits over a few years, but requests for the permits have stopped coming in, because the Office of General Counsel advised that the permits all need the approval of City Council. That route could take a couple of months, whereas most seeking this permit have a window of a couple of weeks.
The City agrees that they will try to augment the Municipal Code, to let the Real Estate Officer enter in to these leases, which could make it a more viable option for vendors.
The Auditor found the City could also look at potentially getting more money, by reexamining the Municipal Code around the beginning of a lease. Right now, leases can be no less than $25,000 per year, and increase annually under various formulas. There has been no change in that minimum payment, though, to reflect the passage of time- meaning someone starting a lease now would pay much less than a long-time contract holder. The City wants to look in to whether this is a proper interpretation of the Code.
There were other areas where the City says they’ve already made changes, including better separating duties among those who handle payments, to ensure there are strong internal controls and checks. They’re also improving how they log checks, in order to comply with the City’s Cash Policy, and requiring insurance documentation be provided in accordance with the leases- after the Real Estate Division and Risk Management Division were unable to locate any such documentation of coverage for the main tenants.
