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Staff scrambles to update real estate records after audit finds problems

Tuesday, April 30, 2013 by Michael Kanin

An audit of the City of Austin’s Office of Real Estate Services reveals that at least some recent real estate transactions have not been recorded by the city’s Financial Services Department. As a result, according to the audit, the city may have inaccurate financial records.


Even worse, the audit also uncovered the fact that there is “no comprehensive inventory of city-owned real estate.” Without that list, the audit continues, “there is an increased risk that the City may not be able to manage its real estate assets effectively.”


In response to the audit, real estate services officials are running back through Williamson and Travis County property lists, and cross-referencing them with paper city records. This, they hope, will result in a complete listing of city property.


However, there appears to be no immediate or easy fix for the fact that four different city departments in addition to each of its enterprise funds all keep track of their own real estate.


Council Member Laura Morrison underscored the issue. “Is it possible that we own property that there is absolutely no electronic record of in the city?”


“Yes it is possible,” replied real estate officer Lauraine Rizer.


The issue has roots that go back for some time. The fact that several different city departments handle their own real estate issues could, for the enterprise divisions, be blamed on specialized needs.


Current city Chief Financial Officer Elaine Hart, who also served in a similar capacity for Austin Energy explained. “I believe that (Austin Energy) had (its) own real estate division because of the kinds of right of way acquisitions that they do for their transmission lines and those kinds of things – the volume of that work and the specialty of that – and so they have, for years, had a separate real estate division.”


As for the lapse in information sharing, that may also go back a ways. Indeed, Rizer said that the fact that departments were not informing each other about real estate transactions could date back several years.


The audit looked at fifteen percent (six out of 39) of the real estate acquisition transactions performed by the city in FY2012. According to the audit, none of the city’s four internal inventory systems listed all of those properties. Indeed, the most accurate database – the one that belongs to the city’s Financial Services Department – listed only four of the properties.


According to the report, each of the four departments tracks only real estate transactions that fall within its respective purview. That, city auditors argue “result(s) in duplication of efforts and an inefficient use of City resources.”


Audit staff also examined two sales. Of these, one was not listed across city databases.


Auditors recommended that the city’s real estate office meet with interested parties “to identify and implement a comprehensive solution for tracking City-owned property efficiently and effectively.” City staff concurred with that recommendation.


Council Member Bill Spelman wondered how long it would take real estate staff to reconcile its holdings. Staff replied that it could be a difficult job. Rizer suggested that “if we’re all using databases that are incompatible, then it will probably take a third party” to connect all of the information.


City staff will produce an interim report on their progress by the end of September.

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