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Internal audit flags outdated PBA contracts, parking and space-allocation gaps and $25.9M maintenance backlog
Summary
Knox County internal audit presented a City-County Building (PBA) audit identifying: decades-old contracts (1975/1977/1993), inconsistent space-allocation records, parking-access control gaps, and a 2018 facility master plan estimate of about $25.9 million in deferred modernization costs.
Zach Fullerton, presenting for internal audit, told the Knox County Audit Committee on March 10 that the Public Building Authority (PBA) contract documents governing the City-County Building have not been substantively updated since 1993 and that operational changes make a new operating agreement advisable.
Fullerton said the original lease and operating agreements (1975, supplemental 1977 and restatement 1993) remain in effect on an annual renewal basis but noted all underlying bonds were paid in full in 2001, giving the city and county the option to terminate the lease and take title. Fullerton said the countyand the city drafted new documents in 2022 (a lease termination draft and an updated operating agreement) but the city did not act and the efforts stalled; he recommended the parties resume talks to formalize updated responsibilities and pricing for services.
On space allocation, Fullerton reported that PBAmaintains the City-County building space map used by finance to allocate costs. Audit testing identified 32 county departments on the map; 18 were correct and 14 were incorrect. Fullerton recommended a dedicated annual update procedure and better communication from county departments to PBA when space changes hands.
The audit also tested parking-deck access and permits. Fullertonsaid auditors found five employees with building access who were no longer affiliated with the county and a variety of missing or inconsistent parking-authorization forms; auditors recommended a written policy, routine accuracy checks and better onboarding/offboarding procedures tied to payroll/personnel actions so access can be rescinded promptly.
Fullerton raised a separate operational concern as a significant risk area rather than a single finding: the City-County Building facility master plan (2018) estimated about $25,890,000 in modernization needs (HVAC, windows, ceiling systems, restrooms) and much of that work remains unfunded. He said PBA has completed some work where possible but that materials and labor costs have increased since the estimate and the county and city have deferred funding for larger renovations.
Fullerton said PBA and county staff agreed on the audit recommendations and that PBA had started to implement several improvements; he recommended county commissioners push the contract update process so the parties have a clear, lasting operating agreement.
The committee discussed whether the current contract split (roughly 70/30 based on square footage) remained appropriate and whether common-area costs are allocated; Fullerton said allocations are based on square footage and the existing split accounts for county share. County members said they would pursue talks with city staff to resume contract negotiations. Fullerton also announced that the internal audit team won a national award for the Knox County fleet audit and that the team will be recognized at an upcoming conference.
Next steps: internal audit will continue work on the scheduled audits in the FY26 risk assessment, push for a renewed operating agreement with the city and request routine accuracy checks and formal parking/access policies to reduce operational risk.
