| FOR IMMEDIATE RELEASE
January 12, 2012 Greuel: City Contracts Cost Los Angeles Millions in Unrealized Revenue
LOS ANGELES –Today, Los Angeles City Controller Wendy Greuel revealed that untimely approval of permits by the City’s Bureau of Street Services for advertising on street furniture led to $23.1 million in lost financial opportunity for the City.
In her audit of the City’s street furniture contract with CBS Decaux, LLC, Greuel warned that an additional $57 million could be lost if City officials do not pursue a contract amendment to resolve outstanding issues.
“This issue needs to be taken up immediately,” said Greuel. “During these difficult economic times, it is unconscionable to leave $57 million on the table when that funding could otherwise be used for funding essential services.”
The CBS Decaux contract, which was originally executed as a 20-year agreement in Jan. 2002 by the Board of Public Works, was intended to expand the City’s street furniture program by providing modern amenities for transit patrons, while also generating approximately $150 million in revenue for the City. The audit revealsthat through the first ten years of the contract, the City could have received at least $53 million in revenue; however, from inception of the contract through January 2011, the City only realized $29.9 million due to the methodology used to calculate annual fees paid to the City and delays in approving site permits, costing the City $23.1 million. In addition, $57 million more could be lost if a contract amendment is not pursued to resolve outstanding issues.
Greuel called on City leaders to streamline the program’s site approval and permit application process and torestructure how street furniture funds are distributed. Since 2002, each Council district has received more than $1 million in funds for community improvements. Given the state of Los Angeles’ struggling economy, Greuel said that money should be redirected entirely into the General Fund. “Given the high stakes that are at risk, I urge the Bureau of Street Services and the City Attorney to revisit the terms of this contract to generate as much revenue as possible for the City going forward. Creating a more effective and efficient City requires the assistance of all City entities and we cannot afford any further delays to take action,” Greuel added. Controller Greuel’s audit is attached. Controller Greuel has conducted nearly 50 audits and uncovered nearly $100 million that the City has lost to waste, fraud, and abuse over the last two years.
For more information, please visit the Controller’s website at controller.lacity.org
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