An audit of the BRA found an agency still tracking billions of dollars worth of project on paper, unable to say if developers are building or paying for the affordable housing they committed to and losing out in millions of dollars in revenue on back rent on property it owns and on fees developers are supposed to pay when they refinance BRA-approved projects.
Mayor Walsh hired the accounting firm KPMG to take a look at the operations at the BRA and its Economic Development Industrial Corporation, which oversees the Boston Marine Industrial Park in South Boston.
KPMG found companies renting BRA property owe $4.3 million in back rent - with $2.3 million of that being in arrears for more than 90 days. One exception: Bunker Hill Community College, which pays no rent at all on the two BRA parcels it uses for parking lots.
In its report, KPMG said its first problem was just getting the documentation it needed from the BRA to analyze its operations. KPMG found that most critical documents are still maintained on paper rather than electronically, and that, oops, they often go lost, which is no news to anybody who remembers how the owners of the Hancock were able to shut their public observation deck permanently even though everybody knew they'd signed an agreement with the BRA in the 1960s to keep it open.
Poor record keeping in turn led to an inability by the BRA to figure out whether developers fulfill the various promises they make to the authority to win approval, for example, to either build "affordable" housing units as part of a luxury housing project or to pay into a fund to build those units elsewhere in the city:
While a 'Compliance Department' and a 'Compliance Database' do exist within the organization, their effectiveness has been inadequate. The Department has existed since about 2004 and developing and maintaining the database, which is concerned principally with tracking compliance with Article 80 developer commitments, is manually intensive. Finally, the responsibility for compliance with other requirements (leases, affordable housing, etc.) does not fall under the Compliance Department either directly or indirectly. The Compliance Database, similar to the development 'pipeline' is maintained in a Microsoft Access database but the database and pipeline are not fully integrated and, due to the manual updating process, do not always contain consistent data. ...
Over the years, the BRA/EDIC during the normal course of business has entered into and continues to enter into various complex agreements with developers, lessees and other third parties. These agreements outline the responsibilities of both the BRA/EDIC and the counterparty. Accordingly, the enforcement of critical provisions of these agreements is and should be a major focus of the BRA/EDIC. However, there is no effective system in place to ensure that all documents are captured or that all key elements of the agreements are identified and managed to ensure that the counterparty commitments made to the BRA/EDIC are delivered in full and on a timely basis. ...
The BRA/EDIC has historically been responsible for executing [affordable housing] agreements with developers and for ensuring adherence to the agreement by either collecting IDP payments for spending on affordable housing projects around the City or by verifying that affordable housing units were constructed by the developer. Additionally, we were unable to obtain a written policy over how or where IDP funds were to be spent, and the tracking of actual spending was not well documented as BRA/EDIC could not articulate where each IDP receipt was spent in support of affordable housing initiatives. ...
KPMG cites a specific example: The Fenway Triangle Project/Van Ness project:
[The project] was signed off by BRA/EDIC management in June 2013, but it was not captured by the Compliance Department in its database for approximately 10 months. During this 10 month period, construction had started but no evidence of a building permit being provided by ISD to BRA/EDIC could be provided. Under the terms of the DIP Agreement, a payment of almost $300,000 should have been made by the developer to the City Treasurer when the building permit was issued and another $300,000 payment should have been made one year after the building permit was issued. As of June 1, no developer payments have been made, although negotiations are being held with the developer to satisfy all obligations due under the developer agreements. These obligations include the affordable housing contribution and payments supporting jobs and affordable housing. Although we requested a copy of the building permit for this development, one was not provided. The lack of a monitoring system to identify, track and follow up on these types of developer commitments may result in developer funds not being remitted completely or on time to the BRA/EDIC or the City Treasurer. Additionally, the lack of coordination between ISD, the department responsible for issuing key documents (such as, building permits, certificates of occupancy, etc.) and the BRA/EDIC, the entity responsible for monitoring compliance with the developer commitments may result in developer obligations not being enforced.
That project also highlighted another BRA issue, KPMG said: It doesn't have a consistent naming policy for projects:
For example, 1325 Boylston is also known as the Fenway Triangle. Another property is known as either 115 Federal Street or 115 Winthrop Square, while another property is known as P-7a or 240 Tremont St. The lack of a project naming convention can create confusion and make researching information more difficult.