Dan Carden, Times of Northwest Indiana
dan.carden@nwi.com
INDIANAPOLIS | A portion of Gary's revenue problems can be traced to a failure to effectively manage buildings and property owned by the city, a state audit has found.
The State Board of Accounts reports that some leases on space at the Metro Center train/bus station in downtown Gary have been expired for at least 13 years.
The Gary Board of Public Works couldn't even provide auditors copies of leases or payments for some tenants.
"Records are not maintained in a manner to allow verification of rent payment activity for each tenant," auditors wrote in their 157-page report on the city's finances.
The audit also discovered the $1 parking fee at the Metro Center depends entirely on the honor system.
"There is no penalty if parking fees are not paid," according to the report.
In its official response to the audit findings, the city said it's not responsible.
"The City of Gary is not involved in the day-to-day operations of the Metro Center and therefore has not been aware of some of its accounting challenges," the city wrote.
The city of Gary owns the Metro Center, but the property is managed by the Gary Board of Public Works and Safety, according to the audit. The city's deputy mayor, controller and attorney serve on that board.
The audit report also found the Gary Redevelopment Commission does not charge late fees to tenants behind on the rent in buildings managed by the commission.
"Of the total lease payments made, 65 percent of them were paid past the due date, and no late charges were assessed," auditors discovered.
The Gary, East Chicago and Hammond Empowerment Zone didn't make any lease payments in 2008 but weren't even contacted about it until May 18, according to the report.
Auditors also questioned why the manager of the South Gleason Golf Course Pro Shop, who bought and sold all the supplies, paid the taxes and kept all the profits, was a city employee.
"There is no contract between the Gary Park and Recreation Department and the course manager regarding operation of the pro shop," according to the audit.
The city told auditors it has now switched to contractual operation of the pro shop following the retirement of the previous manager in February.
City needs to clean up its act
Ryan Kitchell, leader of the Indiana Distressed Unit Appeals Board, told The Times on Thursday he's closely monitoring the state's audit of the city of Gary.
"The DUAB was certainly aware, through previous audit reports, of severe internal-control weaknesses in the operations of the city. That was part of the reason the board required an independent fiscal monitor, which is now in place," Kitchell said.
"If Gary is planning to come back to the DUAB next year, they'll need to clean up their act big time, and the newly installed fiscal monitor can help," he said.
The board has allowed Gary to charge one-third higher property taxes than the rest of the state to try to prevent a city bankruptcy. Auditors suggested this month that might not be enough.