|
Blowing It at the Bight
by Mark Howell
A consultant has found that mismanagement
at the Key West Bight could be costing the city up to $100,000 a year in
uncollected rents and rebates to tenants.
The consultant's report will be presented
to the Bight Board next Wednesday, May 19 by Robert Antrim of Maximus,
Inc., a company hired by the city 15 months ago at the behest of
disgruntled tenants at the Bight.
The Maximus report, which calls for
improvements in the day-to-day administration of the Bight, counsels the
city to hire a property manager to ensure those improvements. Currently
responsible for the Bight is the Port Authority director, Raymond
Archer.
Quarrels between the 30 or so tenants and
their landlord, the city, came to a head last year when some of the
tenants refused to pay fees they claimed had jumped by 10 percent or
more. Two of the tenants, Buco Pantelis of Waterfront Market and Jeffrey
Gunther of the Conch Republic Seafood Company, met in February 2003 with
the city's budget analyst, Dennis Grote, to thrash out the problem.
At issue were the common area maintenance
fees, called CAM, that each tenant pays to the city. The CAM fee is the
tenant's annual share of the Bight's communal expenditure for property
taxes, insurance umbrella and maintenance/ operation costs. CAM is
applied by measuring the square footage of a tenant's property and
charging $4.29 per square foot.
Grote was sympathetic to the tenants'
observations that the city has miscalculated the square footage of many
of the properties. The actual area utilized by an enterprise has often
been taken to be more, or less, than the "footprint" shown in the
tenant's original lease, or vice versa.
So the Bight Board solicited a consultant
to report on operations at the Bight and specifically address the CAM
problem. A company called Maximus, Inc. agreed to do the job for
$50,000.
Maximus is the hot-growth governmental
consultancy that Business Week calls a "wildly profitable privatizer"
for its welfare-to-work and child-care programs designed for dozens of
local governments. The company's cost services division has just
completed its report on CAM at the Bight, authored by Antrim and Richard
McLaughlin.
In a summary seen by Solares Hill this
week, the report's authors find fault with the city for "straining good
relations between landlord and tenants" by its lack of any "consistent
and clear understanding" of CAM. "It is apparent," notes the report,
that relations with tenants because of this have become "unnecessarily
contentious over time."
The assessment and collections process
"has been neglected," the report continues. "Collections are not always
assessed at the calculated amounts." From discussions with Bight staff,
"we determined that the billed CAM amounts are not always updated
annually. Billings may be based on some 'historical amount.'"
Inconsistencies in calculating CAM must now be resolved by coordinating
all the city's Bight leases and updating each of them with accurate
square-footage.
The "correct" calculations provided by the
Maximus report mean that some tenants will pay less CAM, some pay more.
"We knew that going in," said Buco Pantelis. "And it's okay. It is what
it is. Life is so easy when it's fair."
Waterfront Market stands to pay a higher
CAM because of the addition of a juice bar and other operations not
included in its original lease with the city. The Maximus report puts
the market's real-life footprint today as 10,740 square feet. The city
continues to calculate the market's CAM on 8,000 square feet.
What this error has done to the Bight's
bottom line is illustrated in a Maximus spreadsheet itemizing CAM
overcharges and undercharges in 2002.
Annual revenues at the Bight have made it
a four-and-a-half million dollar operation, with almost three million
dollars in expenses and an operating income edging toward two million
dollars. (The Bight is still paying off a bond issue for its purchase.)
Maximus calculates that an amount equal to almost 10 percent of the
operating income was lost in 2002 through incorrect square-footage
assessments plus rebates due to tenants for overcharges.
The precise calculation shows the city
shortchanging itself by $50,237 in uncollected rents, unpaid space and
from incorrect records. At the same time, the city now owes $45,660 to
tenants who paid too much because of incorrect records. Which totals
$95,897 in lost income.
The sharpest language in the report is
saved for the city's "need for improvement" in administering leases and
dealing with the CAM assessment process overall. The report recommends
that the city create the position of property manager at the Bight.
That role is currently shared by Ports
director Archer and the Bight manager, Mark Tait, with engineer John
Olinzock most often left to deal with the actual business of Bight
tenants. Items of unfinished business on the Bight Board's agenda
meanwhile continue to pile up, among them issues of illegal chartering
and waiting lists for slips.
Solares Hill asked Raymond Archer this
week how he felt about the recommendation that his position at the Bight
be replaced by a new one.
"I have been asking for quite some time,"
Archer said, "to be authorized to fill the property manager's job. But
the Bight Board felt it was unnecessary. Julio [Avael] thinks it's a
good idea."
Is he happy with his tenure at the Bight?
"None of us have the answers to questions
posed by the city," Archer said. "Only the previous managers understood
what happened. No-one here knows about the origin of Buco's lease. The
tenants have more historical knowledge than city staff does.
"That's why we fully supported the funding
for the report. We haven't been able to say here's why this is that. My
goal is to at least answer the questions.
"The report allows us to be comfortable,
even if we don't agree with it fully. I myself am very happy. I think
it's a relief."
Now Sheila Rowan of Friends and Neighbors
of the Key West Bight has a special request of the city: "Please hire
somebody from the property management world who knows what they're
doing." |
