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PUC says it has implemented most recommendations; airport details Fox Rent A Car recoveries and contested penalties
Summary
City auditors flagged high risk in PUC-related audits; PUC and Airport officials said departments have implemented most recommendations, recovered some amounts, and dispute whether to collect certain penalties in the Fox Rent A Car audit.
City Services Auditor staff told the Government Audit and Oversight Committee that several PUC audits remain open or contested, and PUC and Airport representatives described steps taken to address the issues.
Tanya Ledes said an active PUC lease audit (Hansen/Henson Aggregates) included 49 recommendations, with the overall risk rated high. “PUC has recovered $4,292 in subtenant rent identified in the audit report. However, it had not yet collected $120,852 of other funds due identified by the audit team,” she said. Ledes also said monitoring some lease provisions for rock‑quarry operations requires specialized expertise, and that PUC is seeking vendors and working with CSA to obtain that expertise.
Nancy Hamm, director of assurance and internal controls at PUC, said the utility had retrained staff, fixed late‑payment functionality in legacy lease software and hired a lease administration consultant to create a comprehensive operations manual. Hamm said the PUC plans to replace its legacy system (Colonial) with the commercial Yardi lease system by the end of the calendar year to better monitor complex provisions such as percentage rents and royalties.
Turning to the Airport’s Fox Rent A Car audit (issued July 2011), Ledes said the audit included 23 recommendations: 16 open, 1 contested and 6 closed, and that the airport had invoiced but not yet collected $366,747 in fees, fines and penalties and had chosen not to collect $219,000 in penalties. Wallace Tang, Airport Controller, told the committee the airport has implemented 15 of 16 open items and summarized recoveries: "out of the $532,000 as of today ... we have already collected $262,000," he said.
Airport staff described the contested issue: Fox closed between 1 a.m. and 4 a.m. contrary to the lease/permit and the department considers it a violation subject to penalties. Airport staff said Fox now operates 24 hours and that managers sometimes exercise discretion not to pass the full recommended penalties to a small new entrant when doing so could imperil the business; airport staff said they applied approximately $261,000 in fines as a corrective signal and are monitoring compliance.
CSA emphasized that even if the airport exercises discretion, contract violations remain subject to penalties. The auditors said they will continue to follow up and that related materials and the quarter’s memo will be posted to CSA’s website.
The committee did not take a formal vote on any specific recovery or enforcement action during the hearing; the item was continued to the May 22 Board agenda for additional follow‑up.
