Harbor Audit Reports L.A. Overcharges

The City of Los Angeles last year overcharged the Harbor Department at least $182,000 for fire services that could not be substantiated or that were undertaken outside the port, a state audit has found.

In a report issued this week, the auditor general also suggested that port managers may be shortchanging harbor coffers by computing tenant leases on less than the full market value of the waterfront land.

The audit report stated there was no evidence in Fire Department records to justify $136,000 in billings to the harbor. Another $46,000 was charged for protection provided outside the sprawling port.

$6.7-Million Bill

City Administrative Officer Keith Comrie said the reported overcharges would be corrected if valid and that they represent only a fraction of the total $6.7-million bill for harbor fire services.

Fire Department Chief Donald Manning could not be reached for comment on what state Auditor General Thomas Hayes described in an interview as the “administrative error.”

The city assesses the Harbor District for providing special port-related fire services such as fireboats.

As for the harbor leases, Hayes said his auditors concluded that port executives could be “charging higher rates” and had not kept the mayor-appointed Harbor Commission fully apprised of matters affecting port revenues.

Harbor Commission policy states that all leases be based on market value of the land and yield a 10% annual return. For example, a property valued at $100,000 would bring a yearly rent of $10,000.

Collected Less Than 10%

However, according to the audit, port property managers have not been assessing the property at full market value and therefore the port has been collecting less than the required 10%.

In one case, land was valued by port managers at only half the market potential, the audit said, noting that the five-member board of Harbor Commissioners had not been briefed on the property valuation practices.