OFFICE OF THE NEW YORK STATE COMPTROLLER

D IVISION OF LOCAL GOVERNMENT

& SCHOOL ACCOUNTABILITY

City of
Mount Vernon
Revenue Enhancement
Opportunities
Report of Examination
Period Covered:
January 1, 2008 — February 20, 2009
2009M-195

Thomas P. DiNapoli
 Table of Contents

Page

AUTHORITY LETTER 2

EXECUTIVE SUMMARY 3

INTRODUCTION 5
Background 5
Objective 5
Scope and Methodology 6
Comments of Local Officials and Corrective Action 6

RENTAL PROPERTIES 7
Commercial Rents 8
Individual Rents 9
Accounting Records 9
Recommendations 10

PAYMENTS IN LIEU OF TAXES 11

Recommendations 13

PARKING TICKET ENFORCEMENT 15

Enforcement Actions 16
Additional Enforcement Opportunities 18
Recommendations 20

APPENDIX A Response From Local Officials 21

APPENDIX B OSC Comment on the Local Officials’ Response 29
APPENDIX C Audit Methodology and Standards 30
APPENDIX D How to Obtain Additional Copies of the Report 32
APPENDIX E Local Regional Office Listing 33

DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY 11

 State of New York
Office of the State Comptroller

Division of Local Government

and School Accountability

April 2010

Dear City Officials:

A top priority of the Office of the State Comptroller is to help local government officials manage
government resources efficiently and effectively and, by so doing, provide accountability for tax
dollars spent to support government operations. The Comptroller oversees the fiscal affairs of
local governments statewide, as well as compliance with relevant statutes and observance of good
business practices. This fiscal oversight is accomplished, in part, through our audits, which identify
opportunities for improving operations and City Council governance. Audits also can identify
strategies to reduce costs and to strengthen controls intended to safeguard local government assets.

Following is a report of our audit of the City of Mount Vernon, entitled Revenue Enhancement
Opportunities. This audit was conducted pursuant to Article V, Section 1 of the State Constitution and
the State Comptroller’s Authority as set forth in Article 3 of the General Municipal Law.

This audit’s results and recommendations are resources for local government officials to use in
effectively managing operations and in meeting the expectations of their constituents. If you have
questions about this report, please feel free to contact the local regional office for your county, as listed
at the end of this report.

Respectfully submitted,

Office of the State Comptroller

Division of Local Government
and School Accountability

2 OFFICE OF THE NEW YORK STATE COMPTROLLER

 State of New York
Office of the State Comptroller
EXECUTIVE SUMMARY

The City of Mount Vernon (City) is located in Westchester County and serves approximately 67,000
residents within a four square mile area. The Mayor and City Common Council (Council), which
consists of five Council members, have overall responsibility for the City’s operations. The City’s
elected Comptroller is the chief fiscal officer. The City’s 2008 fiscal year budget of $83 million was
funded primarily by real property taxes and State and Federal aid. In addition, the City receives
revenues from payments in lieu of taxes (PILOTs), sales and mortgage taxes, parking fines, and City-
owned rental properties.

Scope and Objective

The objective of our audit was to review the City’s revenue streams for the period January 1, 2008
through February 20, 2009 and determine if there are revenue enhancement opportunities. Our audit
addressed the following related questions:

• Are rents from City-owned rental properties fully collected and properly accounted for?

• Have City officials maintained a schedule of all PILOTs, including any late or unpaid amounts,
and are the PILOT amounts reconciled periodically?

• Are City officials properly accounting for all parking tickets and pursuing collection of all
parking tickets issued?

Audit Results

City officials need to improve their monitoring and enforcement of revenue collections. During our
audit period, the City was owed as much as $468,079 in unpaid rental, utility and PILOT payments,
and could have collected $87,800 more in parking fines if officials improved their collection practices.
City officials do not have written policies or procedures to ensure that lease agreements are monitored
and to outline the process the City will take for non-compliance with the terms of the lease. In addition,
City officials did not have formal leases with all tenants and did not monitor and enforce payment
of rents. As a result, the City was owed as much as $214,950 in unpaid rents and $58,427 in unpaid
electric and gas usage as of December 31, 2008.

Due to a lack of coordination and communication between the City and Mount Vernon Industrial
Development Agency, the City failed to receive at least $81,016 in tax revenue because an expired
PILOT property did not revert to the tax roll in a timely manner, and the City did not receive $60,000

DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY 33

for relocating sewer lines for a project owner. We also found that, as a result of the City’s lack of
billing, reconciliation, and communication, the City did not receive $53,686 in PILOTs due as of
December 31, 2008.

City officials have not established written policies and procedures to govern parking ticket operations
or monitored unpaid parking tickets. As a result, City officials were unaware of the inconsistencies we
found in the generation of collection letters and application of penalties, as well as the current process
to only scofflaw1 those vehicles with registrations that fall within a specific time frame. Our audit
found that the City collected 82 percent of the revenue from parking violation tickets issued from April
1, 2008 to June 30, 2008. If the City had achieved the industry-established benchmark of 85 percent,
the City would have collected $87,800 more in revenue.

Comments of Local Officials

The results of our audit and recommendations have been discussed with City officials and their
comments, which appear in Appendix A, have been considered in preparing this report. Except as
specified in Appendix A, City officials generally agreed with our recommendations and indicated that
they planned to take corrective action. Appendix B includes our comment on an issue raised in the
City’s response letter.

1
The City uses the DMV Parking Scofflaw and Suspension Program, which targets vehicles that were issued at least three
tickets within an 18-month period. DMV suspends the registration until the registrant pays the City for the outstanding
tickets.

4 OFFICE OF THE NEW YORK STATE COMPTROLLER

 Introduction

Background The City of Mount Vernon (City) is located in Westchester County

and serves approximately 67,000 residents within a four square mile
area. The Mayor and City Common Council (Council), which consists
of five elected Council members, have overall responsibility for the
City’s operations. The City’s 2008 fiscal year budget of $83 million
was funded primarily by real property taxes and payments in lieu of
taxes (PILOT), sales and mortgage taxes, and State and Federal aid.

The City owns 26 properties that contain a total of 43 rental units.2

The City has three classifications of tenants: other governments,
private corporations, and individual tenants acquired by foreclosure.
The City’s reported rental income for 2008 was approximately
$635,000.

The City, the Mount Vernon City School District (District) and
Westchester County (County) each receive a portion of the PILOTs
as an affected taxing jurisdiction (ATJ) from the Mount Vernon
Industrial Development Agency (MVIDA). For the 2008 fiscal year,
the City's share of the MVIDA PILOTs was approximately $152,500.
In addition, the City had three PILOT agreements with non-IDA
project owners which provided approximately $95,500 for the 2008
fiscal year.

The City has established a Traffic Violations Bureau (TVB) to collect

the fines associated with parking tickets. The City issued over 96,000
tickets and reported parking violations fine revenue of approximately
$2.9 million for the fiscal year ended December 31, 2008.

Objective The objective of our audit was to review the City’s revenue streams
and determine if there are revenue enhancement opportunities. Our
audit addressed the following related questions:

• Are rents from City-owned rental properties fully collected

and properly accounted for?

• Have City officials maintained a schedule of all PILOTs,

including any late or unpaid amounts, and are the PILOT
amounts reconciled periodically?

• Are City officials properly accounting for all parking tickets

and pursuing collection of all parking tickets issued?

2
This includes a license rental agreement for tennis court facilities.

DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY 55

Scope and We examined the City’s rental collections and PILOT program for the
Methodology period January 1, 2008 to February 20, 2009. We examined the City’s
collection process for parking violations for the period January 1,
2008 to December 31, 2008. For parking enforcement, we expanded
our review to examine the tickets issued from April 1, 2008 to June
30, 2008 and collected through April 30, 2009.

We conducted our audit in accordance with generally accepted

government auditing standards (GAGAS). More information on such
standards and the methodology used in performing this audit are
included in Appendix C of this report.

Comments of The results of our audit and recommendations have been discussed
Local Officials and with City officials and their comments, which appear in Appendix
Corrective Action A, have been considered in preparing this report. Except as
specified in Appendix A, City officials generally agreed with our
recommendations and indicated that they planned to take corrective
action. Appendix B includes our comment on an issue raised in the
City’s response letter.

The Council has the responsibility to initiate corrective action. A

written corrective action plan (CAP) that addresses the findings and
recommendations in this report should be prepared and forwarded
to our office within 90 days, pursuant to Section 35 of the General
Municipal Law. For more information on preparing and filing your
CAP, please refer to our brochure, Responding to an OSC Audit
Report, which you received with the draft audit report. We encourage
the Council to make this plan available for public review in the City
Clerk’s office.

6 OFFICE OF THE NEW YORK STATE COMPTROLLER

 Rental Properties

Local officials are responsible for ensuring the collection of all

government monies due on a timely basis. Good management practices
require that effective controls over billings be established, monitored,
and enforced. Complete and accurate accounting records provide
City officials with essential information they need to effectively
manage and properly monitor the City’s finances. The City has a Real
Estate Committee (Committee) that is comprised of the Assessor,
Comptroller, President of the City Council and Corporation Council.
The Committee is responsible for the disposition and management of
City-owned properties.

A lease is a legally-enforceable contract that defines the relationship

between a property owner (the lessor) and a renter or tenant (the
lessee). A typical lease spells out all of the terms involved in a property
rental agreement, including the length of time a lessee may use the
property and what condition it must be in upon return to the lessor.
The amount and timing of payments and any financial penalties for
late payments should also be included in the lease. A legally-binding
contract obligates the lessee to make regular payments throughout the
life of the lease, and the lessee has full rights to the property without
fear of sudden seizure or eviction. A lease also guarantees that the
original rental terms will not change until the lease has expired. City
officials are responsible for ensuring compliance with the terms and
conditions of leases, including full and timely payment of rent.

During our audit period, the City owned 26 properties (including

foreclosed properties) that had 42 rental units and a license rental
agreement for tennis court facilities. The City had three classifications
of tenants: other governments (three units), commercial (11 units and
the tennis court), and residential rentals acquired through foreclosure
(28 units). The City obtained these rental properties through purchase,
donation, or foreclosure. The annual total rental income to be
collected for the 2008 fiscal year was $690,944. The City reported
a total rental income collected of approximately $635,000 for 2008.

City officials did not have written policies or procedures detailing

who was responsible for monitoring the lease agreements and did not
have procedures for handling non-compliance with lease terms. As
a result, we found that the City has not received all of its rents on a
timely basis. As of December 31, 2008, tenants owed the City a total
of $214,950 in unpaid rents, as well as $58,427 for electric and gas
usage.

DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY 77

Commercial Rents The City has 12 commercial tenants. Eleven tenants currently have
formal leases or rental agreements in place, some of which require
the tenant to pay for the rental unit’s electric and gas usage, as billed
by the City. The tenant who did not have a formal lease agreement
in place negotiated and signed a lease in 1996 to cover a two-year
period (1996 through 1998) with a monthly rent of $1,200, or
$14,400 annually. Thereafter, the City and the tenant did not enter
into a lease rental agreement. The tenant paid the City rent until April
2002. Thereafter, from April 2002 to December 2008 (81 months),
the tenant did not make any rent payments and owes the City $97,200
as of December 31, 2008.

Although the City sent a number of collection letters to the tenant,

we found no evidence that City officials have attempted to collect the
outstanding rents through legal action. The City Comptroller has tried
to contact the business a number of times since 2003 through the use
of arrears letters. However, due to the lack of cooperation between
City departments, the efforts were unsuccessful. For example, in
May 2008, the City Comptroller requested the City Law Department
to process a demand letter. The City Law Department responded by
requesting the City Comptroller sign the demand letter, dated July 25,
2008. The City Comptroller returned the letter unsigned with a memo
stating that she believed the letter should be sent by the City Law
Department. The City did not take further action.

In January 2009, the owner of the business passed away, owing the
City the $97,200 in unpaid rents. According to the City’s Corporation
Counsel, it is highly unlikely that the City can recover the unpaid
rents because the City did not have a written agreement with the
business owner.

Also, four commercial tenants with whom the City has current
agreements owed a total of $78,726 for unpaid rents as of December
31, 2008, bringing the total commercial rents in arrears to $175,926.
In addition, for those rental units that the City bills for electric and
gas usage, tenants owed $58,427 as of December 31, 2008. As of
February 20, 2009, City officials still had not billed tenants for
electric and gas charges owed as of December 2008.

Because of the City’s inaction, it has failed to collect $234,353 in

commercial rent and utility fees. The likelihood of collecting all past
due amounts is diminished because the City failed to enter into rental
agreements and allowed a significant amount of time to pass since
rents first went into arrears.

8 OFFICE OF THE NEW YORK STATE COMPTROLLER

Individual Rents The City owned 14 residential properties with 28 units (or individual
tenants) acquired through foreclosure. In October 2008, to address
issues with ownership of these properties, City officials contracted
with a property management company to be responsible for
executing leases and making sure the properties are safe and livable.
Ordinarily, a lease is negotiated by a landlord and the prospective
tenant before the property is occupied. City officials have chosen to
honor existing leases.

The City has procedures in place to notify the tenants about the
change of ownership and where the rental payments are to be sent.
We reviewed records for all 28 rental units and found that leases for
20 units3 could not be located or did not exist. During our audit, City
officials executed six leases and provided copies of two existing
leases from previous owners. City officials informed us that they
are currently in the process of obtaining copies of the remaining old
leases and/or executing new leases for five rental units. City officials
also indicated that two of the properties (with three rental units) are
being redeemed by the previous owner and one property (with four
rental units) is being sold.

As of March 12, 2009, City officials have not collected

approximately $39,000 in rents for these 28 units. According to City
officials, they were making progress in collecting $33,950 of this
amount: officials report that outstanding rents totaling $21,200 were
in the process of being collected, and the City is waiting for the
County to process the paperwork required to remit $12,750 owed to
the City for the government-subsidized rents for Section 8 housing.
Tenants had paid the remaining $5,050 to the previous owners
because City officials informed us that they did not follow up with
these tenants once the change of ownership letters were sent with
collection letters.

Accounting Records Complete and accurate accounting records help City officials to
monitor and enforce timely rent payments. City officials do not
maintain complete and accurate records of rental revenues and
reimbursements of utility charges. For example, officials do not bill
utility charges correctly and in a timely manner, do not reconcile
amounts due with amounts paid, and do not calculate interest for late
payments correctly.

We reviewed the City’s commercial tenant files and found that City
officials kept most of the related accounting records manually.
Officials maintained folders for each rental property since inception
of the original lease. However, the manual ledgers were not accurate

3
Two of the 20 rental units were vacant during our audit period.

DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY 99

 (there were mathematical errors, overbillings, under-billings,
incorrect assessment of finance charges) and there were duplicate
billing letters in multiple folders signed by different individuals,
indicating overlapping or uncoordinated efforts by the City. The
manual folders did not contain a schedule to track rental billings,
lease agreements, amount collected, and the finance charges levied.
As a result, City officials were unaware of the total amount due for
these properties on a month-to-month basis. Without complete and
accurate records, City officials do not have the information they need
to make informed decisions, to monitor collection activity, and to
enforce timely rent payments.

Recommendations 1. City officials should adopt a policy and implement procedures

to address City-owned rental properties. It should outline who is
responsible for monitoring the lease agreements and the actions
the City will take upon non-compliance with leases.

2. The Comptroller should provide appropriate oversight over the

accounting of the City-owned property rental payments to ensure
the complete, accurate and timely accounting of the payments.
The Comptroller should also ensure that a reconciliation of the
amounts due to the amounts paid is done on a monthly basis.

3. The Comptroller should implement written procedures to outline

the process to address late or non-payment of the rents and the
reimbursement process for gas and electric charges.

4. City officials should pursue collection of all amounts owed from

lessees.

10 OFFICE OF THE NEW YORK STATE COMPTROLLER

 Payments in Lieu of Taxes

In general, Industrial Development Agencies (IDAs) offer financial

incentives to attract, retain, and expand businesses to improve
economic conditions in their respective localities. The assistance
granted to these businesses includes, among other things, granting
exemptions from real property taxes. A portion of the local real
property tax exemption is often recaptured in the form of payments in
lieu of taxes (PILOTs) made by the assisted businesses to the affected
taxing jurisdictions (ATJs). These payments are generally equal
to, or are a portion of the amount the ATJs would have received
had the property remained on the tax rolls. Accordingly, the City,
the Mount Vernon City School District (District), and the County of
Westchester (County) each receive a portion of the PILOTs as an ATJ
from the City of Mount Vernon IDA (MVIDA).

General Municipal Law (GML) requires that IDAs establish

guidelines and procedures that govern PILOT agreements. The
PILOT agreements entered into by the MVIDA require the assisted
business to request that the City Assessor calculate the PILOT
amounts payable each year and specify the payment due dates. The
City Assessor is then supposed to notify the business, MVIDA, and
the ATJs of the amounts and due dates. Due to a lack of coordination
and communication between the City and MVIDA, the City failed
to receive at least $81,016 in tax revenue because an expired PILOT
property did not revert to the tax roll in a timely manner, and the City
was due $60,000 in payments for relocating sewer lines for a project
owner. We also found that three additional project owners owed the
City $53,686 in PILOT payments as of December 31, 2008.

Coordination and Communication − As multiple parties are involved

in the PILOT process, it is essential that they all coordinate and
communicate their efforts to ensure that all PILOTS are properly
accounted for. It is important for parties to work together to return
properties to the tax roll immediately upon a PILOT’s expiration
because the owner starts paying taxes on the parcel only when it has
been returned to taxable status. City officials said it was the MVIDA’s
responsibility to revert a property back to the tax roll.

We found that one property’s PILOT agreement expired in 2006,

but it was not returned to the tax roll. Therefore, the City has not
been receiving the taxes due for the past two years, totaling at least
$81,016. Because City officials did not adequately communicate
with MVIDA officials, the City Comptroller did not receive all of
the PILOT agreements. Without the PILOT agreement, the City

DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY 11

11
 Comptroller was not aware of the PILOT’s expiration date, which
contributed to the property not being returned to the tax roll.

Further, the City receives payments from a project owner of two

separate projects for reimbursing the City for the costs of relocating
County sewer lines. The owner was supposed to repay the City during
the life of the PILOT. However, the City Comptroller was not
aware of this arrangement. Instead, the “extra” PILOT monies were
distributed to the District and the County, instead of being allocated
just to the City. As a result, for fiscal years 2007 and 2008, the City
did not receive over $60,000.

Billing − To ensure that all PILOT payments are collected in a timely

manner and accurately allocated to the payees, internal controls over
billing must be in place. We reviewed 11 PILOT agreements entered
into by the MVIDA. Of the 11 executed PILOT agreements in effect
for 2008, nine required payments to the MVIDA; the remaining two
were still in the construction phase and therefore paid real property
taxes directly to the City for the City/County taxes and to the District
for school taxes. For the 2008 fiscal year, the nine businesses that
were required to make PILOTs should have paid a total of $576,525,
of which the City's share was approximately $152,500.

Although the City is one of the ATJs, City officials have not assigned
someone to be responsible for ensuring that bills were being prepared
for the PILOT agreements. In addition, the City’s Chief Accountant
responsible for posting the MVIDA PILOT payments to the general
ledger did not have a schedule to reconcile amounts due to amounts
received. To compound the problem, the standard language within the
agreements puts the responsibility on the project owners (lessee) to
request that the City Assessor calculate the PILOT amounts payable
each year and specify the payment due dates.

Two of the nine PILOTs did not pay a total of $29,620 (City portion),
as stated in the agreements. Project owners did not pay according to
the terms of the PILOT agreements because no one prepared bills
for the project owners. One project owner incorrectly calculated the
percentage increase from the prior year, and the other misunderstood
when the PILOT was to begin. When we brought this to the City
Comptroller’s attention, she corrected both situations and received
the payments by December 31, 2008.

In addition, the City and the County both have three other PILOT
agreements with project owners under which the City collects
PILOTs. These agreements are not associated with MVIDA, and the
City’s Chief Accountant is responsible for billing the project owners.
We calculated the total amount of these PILOT payments for the

12 OFFICE OF THE NEW YORK STATE COMPTROLLER

 2008 fiscal year to be $146,975.4 The City’s share was $95,525.
The City had collected $41,839 of this amount. City officials stated
that all three project owners are unable to pay the outstanding
PILOT amounts totaling $53,686. City officials could not provide
documentation to support their claim regarding the owners’ financial
difficulty and, as of April 2009, have not taken legal action to receive
these monies and protect the taxpayers’ interests.

Because the City had poor controls over billing and did not designate
an individual to be responsible for the billing process, the City could
not be assured that all amounts due were actually collected.

Reconciliations − Reconciliations are control activities designed

to identify errors or irregularities and alert management to their
occurrence. Accurate and complete reconciliations of the PILOT
agreements to a schedule of future payments must include the
timely identification and documentation of any differences. This
reconciliation provides the opportunity for an internal verification
of the PILOT payments due and to ensure that PILOT payments
received are accurate. However, we found no procedures in place
for such a reconciliation process. The City Comptroller provides a
memo to the City’s finance department listing the payments received
by the MVIDA, the City’s portion of the payment, and a check for
that amount. The Chief Accountant will then post the receipt to the
general ledger. However, we found that the Chief Accountant posted
additional amounts totaling $13,371 above the PILOT payments to
the general ledger. The $13,371 was additional money that the City
negotiated and received for moving sewer lines, and therefore should
have been posted to other revenue and not to the PILOT payment.
This error was not detected because the Chief Accountant was not
reconciling amounts received to the amounts due. If PILOT accounts
are not reconciled, City officials cannot have a reasonable level of
assurance that the PILOT receipts are accurate and complete.

Recommendations 5. City officials should improve communications with MVIDA

to ensure that expired PILOTs return to the tax roll in a timely
manner.

6. City officials should communicate all information and pertinent

documents to the City Comptroller to ensure accurate allocation
of monies received.

4
One of the PILOTs is based on the audited financial information provided by
project owner; however, after numerous requests, as of April 30, 2009 the City still
had not received this information; therefore, we based the calculation on the prior
year’s PILOT.

DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY 13

13
 7. City officials should determine who is responsible for preparing
and mailing PILOT statements to the project owners.

8. The City Comptroller should prepare and provide a schedule of

amounts due to the accounting staff responsible for posting the
receipts.

9. The City Comptroller should ensure that reconciliations are

performed to make certain that all receipts are received.

14 OFFICE OF THE NEW YORK STATE COMPTROLLER

 Parking Ticket Enforcement

Municipalities issue tickets for parking violations pursuant to the

New York State Vehicle and Traffic Law. Any individual who receives
a parking ticket may settle the ticket by paying the discounted
amount (if paid within the next business day), or the designated fine
within 30 days of the date of the ticket. After 30 days, the amount of the
fine doubles. After 60 days, the original fine is tripled to a maximum
of $100. Individuals may choose to protest the ticket. Failure to
respond to the ticket results in initiation of enforcement procedures,
which include sending out collection letters, assessing penalties,
towing or booting the vehicle and participating in the Department of
Motor Vehicles (DMV) Parking Scofflaw5 and Suspension Program.
Unpaid parking violation tickets result in a delay and/or potential
loss of revenue for municipalities. Collection becomes less-likely
the longer a ticket remains outstanding; older tickets may become
uncollectible due to individuals who have moved or changed plates.

The City has established a Traffic Violations Bureau (TVB) to collect

the fines associated with parking tickets. For the fiscal year ended
December 31, 2008, the City issued over 96,000 tickets and reported
parking violations fine revenue of approximately $2.9 million. City
officials have not established written policies and procedures to
govern parking ticket operations and did not monitor unpaid parking
tickets. As a result, City officials were unaware of the inconsistencies
we found in the generation of collection letters and application of
penalties. In addition, City enforcement actions were not always
effective. Our testing showed that the City often failed to issue
delinquent notices and incorrectly calculated penalties. Also, the City
often failed to notify DMV for tickets that met the scofflaw criteria.
By developing and implementing parking ticket collection policies
and procedures, effectively tracking and monitoring collection
activity, and pursuing additional enforcement actions, the City could
improve its collection rate and increase ticket revenues. If the City
improved its current6 collection rate of 82 percent to the benchmark
rate of 85 percent, it could earn an additional $87,800 from parking
fine revenue.

5
A scofflaw is a person who fails to pay debts or answer summonses.
6
We calculated the City’s collection results for the 13-month period April 2008
to April 2009. MPSA Partners established an 85 percent collection rate as a
benchmark for collecting parking tickets.

DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY 15

15
Enforcement Actions Written policies and procedures governing parking ticket operations
provide employees with clear guidelines on how to enforce
and collect outstanding parking tickets. City officials have not
established written policies and procedures to govern parking ticket
operations. As a result, we found weaknesses in the City’s collection
and enforcement actions, which have resulted in lost revenue.

Delinquent Notice − The City sends a delinquent notice to violators

who have failed to respond to a parking ticket. In order to manage the
volume of tickets requiring delinquent notices, the parking system
software randomly selects 1,200 tickets every other week to issue a
first delinquent notice. The week in between, the system generates
second and third delinquent notices from those previously sent
initial letters. Based on a sample of 50 tickets (which all should have
received three delinquent notices), the delinquent notice system has
worked as intended for 16 parking tickets, or only 32 percent. The
system did not send any delinquent notices for 14 parking tickets
(28 percent), and the remaining 20 parking tickets (40 percent) had
varying and/or multiple problems, including:

• The system generated first delinquent notices for 16 of 20

parking tickets prior to 30 days from the date of ticket
issuance, generated second delinquent notices for five
parking tickets prior to 60 days from the date of ticket
issuance, and generated the third delinquent notice for one
ticket prior to 90 days from the date of ticket issuance. The
late penalties cannot be assessed prior to 30 or 60 days from
the date of ticket issuance. Therefore, the City mailed out
notices for fine amounts due without the authority to collect
the additional fees. The City does not assess additional
penalties at 90 days after the date of ticket issuance, but will
quadruple a ticket fine up to $100 when the ticket has been
processed through the DMV scofflaw program.

• Six of 20 parking ticket summons received only one delinquent

notice.

Penalty Assessment − As parking tickets become past due (30 days),

the City adds penalties in accordance with City ordinance. As
required by the ordinance, 30 days past the issuance of the parking
ticket, the City assesses the first penalty by doubling the fine amount.
The City assesses the second penalty after 60 days by tripling the
fine amount. However, the second penalty cannot exceed $100, with
the exception of a $30 mandatory fee for parking in a designated
handicap space.

16 OFFICE OF THE NEW YORK STATE COMPTROLLER

 We found that the City did not assess the correct penalty for 22 of
the 50 parking tickets reviewed. If the City had assessed the correct
penalties for the sample, the total fine would have increased by $425.
If we apply the same percentage to the 4,245 total unpaid parking
tickets totaling $313,075, we estimate that the total fine amount could
have increased by approximately $35,800. This does not account for
tickets that could be eligible for the DMV scofflaw program (if a
ticket is scofflaw, the total fine is quadrupled but cannot exceed $100,
as described above).

Scofflaws − The City utilizes the DMV Parking Scofflaw and

Suspension Program, which targets vehicles that have at least three
unpaid tickets within an 18-month period. The cost of each scofflaw
to the City is $2. Under this program, DMV immediately suspends
a registration or prevents a registrant from re-registering a motor
vehicle until the registrant settles the unpaid tickets with the issuing
municipality. Currently, the City notifies DMV within three to five
months from the expiration date of the violator’s registration. City
officials believe that this gives them the greatest benefit because,
given the proximity of the expiration date, the violator will pay the
outstanding tickets in order to re-register the vehicle. We selected and
tested 71 license plate numbers that met scofflaw criteria; total fines
owed for these vehicles were $27,465. We found the following:

• Forty-five vehicles (with tickets valued at $17,670) were not

referred to DMV; 10 were not even sent delinquent notices.
One of these vehicles had a total of 214 outstanding tickets.
When we brought this to City officials’ attention, they
immediately impounded the vehicle.

• Twenty-six vehicles (with tickets valued at $9,795) were

scofflawed; the City had not collected the fines by the end of
our fieldwork.

City officials stated that they were reluctant to scofflaw all vehicles
due to a system error that occurred a few years ago that had
duplicated some of the tickets in the system. This system error
could have made some of the registrants incorrectly appear to fit
the scofflaw criteria. The City has since corrected the problem and
has removed the duplicate tickets from the system. Although the
City’s system was not set up to determine how many fines were
collected through the scofflaw program, if the City had scofflawed
all registrants who fit the criteria, more revenues would likely have
been generated.

Vehicle Impoundment and/or Immobilization – The City’s ordinance

permits the City to tow and impound a motor vehicle at the owner’s

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 expense. In addition to vehicle impoundment, City officials informed
us that the City has vehicle immobilization devices (commonly
referred to as booting devices) to enforce unpaid parking violations
fines. Booting vehicles can only be done by the Police Department
or the City Marshal, who are connected to the DMV’s database,
and therefore have the ability to determine if a vehicle has been
scofflawed. For fiscal year 2008, the City booted 984 vehicles and
collected over $413,000. If the City had scofflawed all applicable
registrants, it would be expected the Police Department or City
Marshal would have a greater pool of vehicles in which to boot or
tow. Therefore, by booting and towing more vehicles, the City would
likely increase revenues.

Additional Enforcement We identified a number of procedures and opportunities for

Opportunities improvement that City officials should consider as part of their
efforts to increase the collection of unpaid fines and related penalties.

License Plate Readers (LPRs) − The use of LPRs in municipalities

is on the rise. LPRs are box-like cameras mounted on either side of
a police car and are linked to a laptop computer mounted inside the
car. The cameras quickly scan cars on either side of the police car −
whether they are moving or parked – and feed the images into the
computer. The computer checks the plate numbers against the DMV
database to determine whether the car has parking violations. The
City’s Police Department has a number of LPRs that are currently
being used to alert police officers of stolen cars and cars that were
involved in crimes. LPR units could also be used to identify vehicles
with significant parking violations (scofflaw vehicles), which could
help improve the City’s enforcement and collection efforts. City
officials informed us that the LPR technology is relatively new so
they had not considered its use beyond the Police Department.

Civil Action – Other municipalities have given the TVB the authority
to undertake civil action (i.e., place a default judgment against the
violator) to enforce unpaid parking tickets. City officials should
assess their specific circumstances and determine if initiating civil
action might effectively increase the collection of unpaid fines and
related penalties. Consideration of the cost to pursue civil action
should be weighed against its potential benefit.

Amnesty Programs – Implementation of an amnesty period in which

unpaid fines could be paid without penalty, or some derivative
such as one-half of the late fees being waived, is another option
for the City to increase its collection of parking fines. Prior to
implementing an amnesty program, City officials should consider
whether anticipated collections would justify the forfeiture of any
penalties or other fees. City officials stated that, in the past, they have

18 OFFICE OF THE NEW YORK STATE COMPTROLLER

 implemented an amnesty period with limited success. According to
officials, the City gives violators the opportunity to present their case
to the City Justices each day, and the Justices have the authority to
reduce or dismiss tickets.

Collection Services – Municipalities can contract for collection

services including full-service ticket processing and enforcement,
enforcement of unpaid tickets, or enforcement of unpaid out-of-state
tickets. If City officials pursue this, they should ensure that contracts
for collection services contain performance clauses so they can
monitor and evaluate contractor performance. City officials stated
that they had not previously looked into collection services because
they prefer to keep the services in-house.

Penalty Amounts – The City last increased parking ticket fine amounts
and penalties for late payments in September 2000. In January 2009,
the Director of the TVB sent a preliminary request to the Mayor
to increase fines. City officials should periodically examine the
established fine amounts and amend them as necessary. Penalties
should be set at high enough amounts that violators find it more cost-
effective to pay on time.

Violator Information − A number of parking tickets are unenforceable

because officials could not find a name and address for a given
license plate number due to incorrect recording of license plate
numbers, data entry errors, or miscoding the plate type. However,
this mostly occurs because the plates belong to out-of-state vehicles.
We determined that 30 percent − 1,287 of the 4,245 outstanding
tickets − were issued to non-New York plates. To obtain out-of-state
registrant information, City officials should work with the local
law enforcement agencies that may have access to the New York
Statewide Police Information Network. Alternatively, City officials
might consider contracting with a vendor to conduct database
searches for out-of-state violator name and address information.

Benchmark − According to parking management consultants, an

effective parking system should collect, on average, 85 percent of
parking tickets issued, excluding tickets that are dismissed and
voided. Because the City will not collect a fine for every parking
ticket issued, a benchmark rate of collection can be used to
periodically assess how effectively the City’s parking management
system is operating. Since revenue derived from parking violations
is significant, a periodic assessment of how well outstanding tickets
are being collected would help City officials determine whether
the City’s collection practices are working effectively. If ticket
collections are not meeting the established benchmark rate, City

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 officials can take actions to explore and remedy the cause(s) for the
shortfall.

The City has not established a benchmark rate of collections to

determine whether its parking enforcement actions are effective. To
determine if the City met the 85 percent benchmark established by
parking management consultants, we calculated the City’s collection
results for a 13-month period from April 2008 to April 2009. Our
audit found that the City collected 82 percent of the parking violation
tickets issued from April 1, 2008 to June 30, 2008. If the City had
achieved the 85 percent benchmark, it would have collected $87,800
more in parking fines.

Recommendations 10. City officials should monitor their current enforcement system
to improve its efficiency and/or accuracy regarding delinquent
notices, penalty assessment, and scofflaw action.

11. City officials should examine the effectiveness of their collection

strategies, and consider enhanced and/or alternative measures
that may increase the collection of fines and related penalties.
These measures could include, but are not limited to, using
license plate readers, instituting civil action or amnesty programs,
using collection services, increasing penalty amounts, and
enhancing efforts to identify out of state registrations.

12. City officials should establish a standard benchmark collection

rate with which to periodically assess the performance of the
City’s parking ticket collection system.

20 OFFICE OF THE NEW YORK STATE COMPTROLLER

 APPENDIX A

RESPONSE FROM LOCAL OFFICIALS

The local officials’ response to this audit can be found on the following pages.

DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY 21

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 See
Note 1
Page 29

22 OFFICE OF THE NEW YORK STATE COMPTROLLER

DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY 23
23
24 OFFICE OF THE NEW YORK STATE COMPTROLLER
DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY 25
25
26 OFFICE OF THE NEW YORK STATE COMPTROLLER
DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY 27
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28 OFFICE OF THE NEW YORK STATE COMPTROLLER
 APPENDIX B

OSC COMMENTS ON THE LOCAL OFFICALS’ RESPONSE

Note 1

The report is entitled “City of Mount Vernon − Revenue Enhancement Opportunities.”

DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY 29

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 APPENDIX C

AUDIT METHODOLOGY AND STANDARDS

Our overall goal was to review revenue streams to provide recommendations for revenue
enhancement opportunities or cost savings for the period January 1, 2008 through February 20, 2009.
To accomplish the objective of this audit and obtain valid audit evidence, our procedures included the
following steps:

• We reviewed sections of the City’s charter that were relevant to our audit objectives.

• To determine if City-owned rental properties had current leases, we reviewed all lease
agreements.

• Since the City does not have written processes or procedures on rental properties, we
interviewed various City officials to determine the process used to determine rental amounts,
collection of rents, and evictions for non-payment of rents.

• To determine if accounting records for the City-owned property rentals were accurate, we
reviewed the manual records maintained by the accounting department.

• To determine the listing of all PILOT properties, we requested a listing through the assessor’s
office, the Comptroller’s office, and the IDA. We then compared listings to ensure all properties
were reviewed.

• In order to determine the amount of each PILOT due, we reviewed all PILOT agreements.

• To determine whether all monies due to the City were received, we reviewed the schedules,
memos and postings for PILOT payments.

• We interviewed key personnel to determine the process by which the City determined the
effectiveness of its parking violations enforcement.

• We analyzed the parking tickets issued from April 1, 2008 to June 30, 2008 and collected to
April 2009.

• In order to determine the effectiveness of the parking collections, we used the benchmark,
according to parking management consultants, that about 85 percent of all parking tickets
issued should be collected.

• To determine if the City is effectively enforcing collection of all issued parking tickets, we
calculated the City’s collection results for a 13 month period from April 2008 to April 2009.

• We selected 50 tickets issued from April 1, 2008 to June 30, 2008 and unpaid as of February
10, 2009, and tested the application of the City’s enforcement measures.

30 OFFICE OF THE NEW YORK STATE COMPTROLLER

 • To determine the City’s use of the scofflaw, we selected 71 license plate numbers that were
issued at least three tickets within an 18 month period (scofflaw criteria).

• To determine if the appropriate payment was made and if dismissals were properly authorized,
we selected and tested 30 tickets issued from April 1, 2008 to June 30, 2008 and adjudicated as
of February 10, 2009.

We conducted this performance audit in accordance with generally accepted government auditing
standards (GAGAS). Those standards require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit
objectives. We believe that the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.

DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY 31

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 APPENDIX D

HOW TO OBTAIN ADDITIONAL COPIES OF THE REPORT

To obtain copies of this report, write or visit our web page:

Office of the State Comptroller

Public Information Office
110 State Street, 15th Floor
Albany, New York 12236
(518) 474-4015
http://www.osc.state.ny.us/localgov/

32 OFFICE OF THE NEW YORK STATE COMPTROLLER

 APPENDIX E
OFFICE OF THE STATE COMPTROLLER
DIVISION OF LOCAL GOVERNMENT
AND SCHOOL ACCOUNTABILITY
Steven J. Hancox, Deputy Comptroller
John C. Traylor, Assistant Comptroller
LOCAL REGIONAL OFFICE LISTING
BUFFALO REGIONAL OFFICE
Robert Meller, Chief Examiner
Office of the State Comptroller
295 Main Street, Suite 1032
Buffalo, New York 14203-2510
(716) 847-3647 Fax (716) 847-3643
Email: Muni-Buffalo@osc.state.ny.us
Serving: Allegany, Cattaraugus, Chautauqua, Erie,
Genesee, Niagara, Orleans, Wyoming counties
ROCHESTER REGIONAL OFFICE
Edward V. Grant, Jr., Chief Examiner
Office of the State Comptroller
The Powers Building
16 West Main Street – Suite 522
Rochester, New York 14614-1608
(585) 454-2460 Fax (585) 454-3545
Email: Muni-Rochester@osc.state.ny.us
Serving: Cayuga, Chemung, Livingston, Monroe,
Ontario, Schuyler, Seneca, Steuben, Wayne, Yates
counties
SYRACUSE REGIONAL OFFICE
Eugene A. Camp, Chief Examiner
Office of the State Comptroller
State Office Building, Room 409
333 E. Washington Street
Syracuse, New York 13202-1428
(315) 428-4192 Fax (315) 426-2119
Email: Muni-Syracuse@osc.state.ny.us
Serving: Herkimer, Jefferson, Lewis, Madison,
Oneida, Onondaga, Oswego, St. Lawrence counties
BINGHAMTON REGIONAL OFFICE
Patrick Carbone, Chief Examiner
Office of the State Comptroller
State Office Building, Room 1702
44 Hawley Street
Binghamton, New York 13901-4417
(607) 721-8306 Fax (607) 721-8313
Email: Muni-Binghamton@osc.state.ny.us
Serving: Broome, Chenango, Cortland, Delaware,
Otsego, Schoharie, Sullivan, Tioga, Tompkins
counties
DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY
GLENS FALLS REGIONAL OFFICE
Karl Smoczynski, Chief Examiner
Office of the State Comptroller
One Broad Street Plaza
Glens Falls, New York 12801-4396
(518) 793-0057 Fax (518) 793-5797
Email: Muni-GlensFalls@osc.state.ny.us
Serving: Clinton, Essex, Franklin, Fulton, Hamilton,
Montgomery, Rensselaer, Saratoga, Warren, Washington
counties
ALBANY REGIONAL OFFICE
Kenneth Madej, Chief Examiner
Office of the State Comptroller
22 Computer Drive West
Albany, New York 12205-1695
(518) 438-0093 Fax (518) 438-0367
Email: Muni-Albany@osc.state.ny.us
Serving: Albany, Columbia, Dutchess, Greene,
Schenectady, Ulster counties
HAUPPAUGE REGIONAL OFFICE
Ira McCracken, Chief Examiner
Office of the State Comptroller
NYS Office Building, Room 3A10
Veterans Memorial Highway
Hauppauge, New York 11788-5533
(631) 952-6534 Fax (631) 952-6530
Email: Muni-Hauppauge@osc.state.ny.us
Serving: Nassau, Suffolk counties
NEWBURGH REGIONAL OFFICE
Christopher Ellis, Chief Examiner
Office of the State Comptroller
33 Airport Center Drive, Suite 103
New Windsor, New York 12553-4725
(845) 567-0858 Fax (845) 567-0080
Email: Muni-Newburgh@osc.state.ny.us
Serving: Orange, Putnam, Rockland, Westchester
counties
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