City Auditor Laura Doud and her office have released their latest audit, this particular report focusing on building permits in Long Beach [full report below].
Doud notes most importantly that the system used to track and record information regarding building permits—which netted the City almost $7M in FY2013 alone through 9,700+ building permit applications—is limited and the previous fee study, from 2005, is outdated.
“The [Department of Development Services’ Building and Safety] Bureau uses the Hansen Building Permits module (Hansen) to track and record all information related to building permit applications, including fee transactions and history, description of projects, and key milestone dates… While we did note some exceptions, in comparison to the volume of applications processed, those exceptions were minimal,” Doud noted in her executive summary. “We do have concerns, however, about the potential for errors or fraud to occur. The use of Hansen is limited in assisting management with adequate supervisory review and controls over user access in Hansen are poor.”
Even more, Doud notes that given the outdated fee study, it is unclear whether the fees the City is charging for building permits actually covers the cost associated with supplying the services. Although it is “impossible to predict economic conditions,” Doud feels that the lack of maintaining current fee studies ultimately led to the Bureau having to borrow technology subcharge revenue to keep afloat for four years, from 2007 to 2011.
“While these technology funds have been paid back,” Doud wrote, “it is unclear how the Department would face similar situations going forward due to the lack of a formal reserve policy to provide guidance and direction on how to handle excess fund balances or possible actions to be taken if/when the Fund is in a deficit position.”
Ultimately, Doud and her office recommend that the Bureau increase its reporting from Hansen or use a different system altogether. Additionally, they suggested the Bureau update their fee study.