FOR IMMEDIATE RELEASE: Oct. 29, 2015
Today, the City Auditor’s Office released an audit on the tri-party agreement created to outline the roles and responsibilities for KC Streetcar. The agreement establishes a public-private partnership for the operation of the streetcar. The purpose of the audit was to determine whether the agreement protects the City’s interests in KC Streetcar.
The audit concluded that the Federal Transit Authority’s view that Kansas City Streetcar Authority (KCSA) is a no-bid, third-party contractor could impact the City’s future eligibility for funding for FTA operational grants for the starter line. The City used FTA grants for the construction of the streetcar and does not currently plan to use grants for the operation of the streetcar, however, should the City ever decide to apply for any, it would have to change how KCSA is procured or receive a written exception for FTA’s required open and competitive bidding process. Regarding the current agreement, the City is at risk of conflicting with FTA’s regulations regarding revenue contracts and the expenditure of revenues generated by those contracts because contractors performing those duties are to be obtained by a competitive and open bid process but KCSA was not.
The audit also concluded that the tri-party agreement includes many recommended practices, but additional practices should be incorporated to better protect the City’s interest in KC Streetcar. The City has no systematic and ongoing process to assess whether the public-private partnership for KC Streetcar continues to be the optimal governance structure. The annual budget for the streetcar is not presented as a separate entity in the City’s budget; the operating budget is in the Finance Department’s budget while the annual debt service is in the Public Works Department’s budget. Although no revenues have been generated by the streetcar yet, the agreement calls for revenues to be deposited into KCSA’s account, which complicates the City’s ability to account for its revenues. In addition, the City has not developed key performance indicators to monitor KC Streetcar’s accomplishment of strategic goals.
The audit includes recommendations to reduce the City’s risk of conflicting with federal grant agreements; making the streetcar budget process more transparent; improving the City’s ability to account for its revenues; and improving the City’s ability to track the project’s performance in accomplishing goals and objectives. Management agreed with the recommendations.
To view the report, go to /cityauditor.