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City Criticized On Agency Lease

Auditor: Oversight Led To Money Loss

By DANIEL E. GOREN, Courant Staff Writer

September 19, 2007

The management of a city-held lease at Constitution Plaza has come under fire from Hartford's internal auditor.

The Department of Public Works lacked the expertise to manage the lease, and as a result the city failed to collect nearly $500,000 in rent from its pension commission and lost thousands of dollars on parking spaces at the facility, according to Chief Auditor H. Patrick Campbell.

Campbell recommended that the city's lease at 250 and 260 Constitution Plaza be taken from public works and put under the authority of the city's Finance Department.

Sarah Barr, director of communications for Mayor Eddie A. Perez, said Lee Erdmann, the city's chief operating officer, will review the audit's findings with the departments involved and "make the appropriate changes, as necessary."

The city pays more than $2 million to Connecticut Constitution Associates LLC, headed by developer Richard D. Cohen, to lease space at Constitution Plaza for several departments: the treasurer's office, licenses and inspections, development services, Metro Hartford Information Services and Hartford probate court.

The city must cover the entire cost of rent for those departments, except the pension commission, which is under the treasurer's office. By law, the pension commission is allowed to reimburse the city for its rent by using money from its investments.

City Treasurer Kathleen Palm, who is responsible for overseeing the pension commission's budget, said she told the auditor she repeatedly asked the public works department to bill her for the space. But in order to know what amount she must pay, public works would have needed to calculate the square footage used by the commission's employees, Palm said. That calculation was never done, she said.

According to the audit report, public works has failed to collect rent from the city's retirement fund since 2001 - an estimated accrued shortfall of nearly $500,000. Had it been collected, the money would have become part of the city's operating budget.

As part of its lease, the city also rents 144 parking spaces for $115 per space per month. Most of the spaces are not used for city employees, who park for free at a lot across the street.

At the request of the mayor's office, the Hartford Parking Authority was asked to help public works sublet 139 of those spaces, according to the audit. The five remaining spaces were set aside, though the auditor said it was unclear why and who ultimately used them.

When public works asked the parking authority for help in subletting the spaces, it did not give the authority a copy of the lease or say how much the city currently paid for the spaces, according to parking authority officials. Instead, the parking authority was asked to "sell as many of the 139 spaces for as much as you can get," the audit said.

The parking authority sublet approximately 107 of the spaces at a rate of $113.98 per space per month - a loss of $1.02 per parking space. About 20 of the remaining spaces were rented for a higher value, according to the auditor, but the net result was that the city was unable to recoup all the money it paid for the spaces by subletting them.