Audit finds Pacific Park Management undercharged drivers and flags possible related-party contracting; MTA outlines fixes

The Government Audit and Oversight Committee heard on May 13, 2010, that a City Services Auditor compliance review found multiple financial and controls problems at four San Francisco garages managed under agreements with Pacific Park Management (PPM).

Tanya Lettigiu, director of audit in the controller'office'City Services Auditor division, told supervisors the review of Mission Bartlett, North Beach, Vallejo Street and San Francisco General Hospital garages (audit period 7/1/2006—6/30/2007; report dated 12/03/2009) found that parking system computers had been programmed to allow an unauthorized continuous or rolling grace period. The audit team calculated that PPM "undercharged transient parkers $92,264" during the audit period and recommended that SFMTA bill Pacific for the amount (the report'recommendation also referenced $94,264 as an amount to bill).

Lettigiu said auditors found 803 unaccounted-for issued versus returned tickets and recommended MTA bill Pacific $11,743 for unaccounted transit tickets and require daily reconciliation procedures. She also reported that Pacific did not consistently report invoices for San Francisco General Hospital; "there is no written agreement with Pacific and SFGH, which pays Pacific $300,000 per year or $25,000 per month," and inconsistent invoicing may have delayed city receipts.

The auditors flagged a potential appearance of a related-party conflict in Pacific's subcontracting: "Pacific's relationship with a security services firm presents the appearance of a conflict of interest," Lettigiu said, noting that the security firm's chief operating officer also served as Pacific's CEO/managing director and that the two entities shared an office address. The report recommended that MTA publish guidelines for operators on hiring and working with subcontractors and require notification of related-party relationships.

The audit also documented operational control weaknesses: missing records at Mission Bartlett after the garage computer was stolen; late deposit refunds to monthly parkers at SFGH (one to three months late in samples); inadequate time-card controls; and reimbursement requests lacking supporting documentation, which prevented verification of some expenses.

Amit Kothari, representing the San Francisco Municipal Transportation Agency, told the committee MTA has been implementing changes, including new parking facility operations and management regulations, secure backup storage requirements for operator data, and a daily ticket-audit procedure under development. On the grace-period issue, Kothari explained three categories used in the new guidance (turnaround, automated-payment exit and queue delays) and said the agency is "bringing it down to 2 minutes from 7 minutes." He said five garages operating under interim RFPs already meet the new standards and that the remaining contracts will be updated as renewals proceed.

Kothari said some previously identified amounts have been resolved with Pacific but have not yet been collected; he also said that, where there was no prior clear direction about free parking recipients, MTA would not pursue collections in some instances. The audit had estimated the annual value of free parking at about $29,000, while Pacific had reported about $8,000.

Supervisor Sophie Maxwell and others noted that similar missing-ticket problems appeared in an earlier audit (report dated 01/05/2007) showing Pacific had underpaid MTA $39,910 at North Beach and Vallejo Street; MTA staff said that issue has since been resolved.

After the presentation and public comment period (no public speakers offered remarks), Supervisor Carmen Chu moved to file the hearing; the motion was seconded and adopted "without objection," and the committee filed the item and adjourned.

The audit recommended specific follow-up steps for SFMTA, including billing Pacific for identified shortfalls, creating a written agreement with SFGH that specifies monthly billing and 30-day payment terms, requiring daily reconciliation of tickets, publishing subcontracting guidelines to address related-party concerns, and directing operators and vendors to eliminate unauthorized continuous grace-period programming. SFMTA staff described those recommendations as largely addressed through new regulations and contract terms to be applied as RFPs and renewals move forward.