BREAKING NEWS: Audit Reveals More Problems With Quimby Fees – Downtown News
Posted: February 21st, 2008Download Controller Laura Chick’s Audit of Quimby Park Fees.
Recreation and Parks Department’s Program Plagued by Poor Accounting
by Anna Scott
Staff Writer
The city Department of Recreation and Parks has overcharged developers at least $5 million in park fees since 2004, due to an accounting error by city planners, according to a newly released report. Additionally, the department could be collecting up to $250,000 in further overcharges each month.
The blunder is one of several described in an audit released Thursday, Feb. 21, by City Controller Laura Chick. Launched in October, the audit examined the Recreation and Parks department’s collections and expenditures since 2002 of the assessments known as Quimby fees, charged to residential developers citywide and used to fund park projects.
The report also blasted the department for poor planning and clunky record keeping. It said the department should have taken action three years ago when Quimby collections began to increase.
As of January 2008, Recreation and Parks had accumulated approximately $130 million in Quimby fees, according to the audit, including an estimated $15 million Downtown (encompassing Council District Nine and parts of the First and 14th districts).
“We have millions of dollars that developers have readily agreed to pay that are sitting, collecting dust. It’s shocking; it’s dismaying; it’s depressing and it’s wrong,” said Chick.
Ninth District Councilwoman Jan Perry said she is not surprised by the findings.
“It’s been a cumbersome, lumbering process from beginning to end,” said Perry. “With all the new residents Downtown, the need for neighborhood parks and open space has grown in leaps and bounds in a shorter time frame than we’ve ever anticipated.”
Recreation and Parks General Manager Jon Kirk Mukri said that the audit’s findings were not surprising. He maintained that the report validates efforts the department has made toward improving the Quimby program.
“What this proves is everything that I’ve done to date… is the right thing to do,” said Mukri. “People are going to look at all this money and say it should be spent, but it’s not a lot of money when you look at the restrictions on Quimby. I’m holding it until we reach a critical mass of money where we can make a big expenditure.
“We need to do this smartly, not just to meet some arbitrary deadline.”
Crunching Numbers
Calculated annually by the city Planning Department and administered by Recreation and Parks, Quimby fees generally range from approximately $3,000 to $9,000 per new housing unit. According to city law, the money must be used for park projects within two miles of where it is collected.
Recreation and Parks came under fire for its handling of the funds in September, when some Downtown developers began complaining about how money collected had been spent. That and media coverage led to Chick’s audit. The resulting report details how Quimby money has been handled Downtown to illustrate larger problems with the program.
Of the $12 million that Recreation and Parks has earmarked for park projects in Council District Nine, which encompasses much of Downtown, only $1.3 million has been spent in the past five years, the report finds. All of that money has gone to improving existing recreation centers outside the Central City, and the department has done little to find space for new parks, auditors found.
“Recreation and Parks should be working hand-in-hand with the Planning Department, with developers, with the development community to look for those creative opportunities,” said Chick. “We’ve got to think creatively in order to come up with the right open spaces Downtown.”
Mukri has said that a dramatic increase in Quimby collections over the past five years, brought on by the housing boom, left the department understaffed and ill-equipped to manage the money.
The report says action should have been taken.
At the end of fiscal year 2004-2005, the Quimby balance was approximately $50 million, according to the report. “[Recreation and Parks] should have developed and implemented a plan several years ago to provide guidance on how funds collected would be used to meet the needs of the residents in the subdivisions that paid the fees,” it reads.
Auditors also found that Recreation and Parks uses four different systems to keep track of Quimby funds, but does not regularly reconcile the varying numbers. As a result, the department “cannot produce real time reports that give a true picture of how much in Quimby fees have been collected” or how much has been spent.
Some of the problems with Quimby, Chick said, stem from the outdated city ordinances that govern the program.
The report refers in particular to the two-mile limit on where funds can be spent; rules barring spending on parks-related administrative expenses; a ban on developers of projects smaller than 50 units from donating land instead of paying fees; and a policy of only spending the funds within the council district where they are collected.
Chick argued that Recreation and Parks could have been more active in getting those ordinances updated.
“It’s a city rule; it’s not a state thing that’s imposed on us,” said Chick. “If the two-mile radius is a problem, change it.”
Much of the report’s contents are not entirely new.
In October, Mukri admitted in a letter to Mayor Antonio Villaraigosa that his department lacks an effective system for managing and allocating Quimby fees. Recreation and Parks has launched a park needs study and is building a new computer database to address the situation.
Chick in 2006 released two audits of Recreation and Parks that criticized the department for poor financial oversight and being slow to change.
“I think they confirmed what I wrote in my letter,” said Mukri of the audit report. As for the charge that the department could have been more active in updating obsolete city laws, he said, “We have been in negotiations with the City Attorney and the Planning Department, and we have been on record over the last couple of years saying they need to be reviewed. This supports my position on Quimby.”
The new report recommends that Recreation and Parks work with planners and the City Attorney to reimburse developers who have been overcharged, develop new systems for tracking and reporting Quimby funds, and explore revising outdated city rules.
Contact Anna Scott at anna@downtownnews.com.
