April 17, 2013

KC should try to recover $135,000 from Port Authority, audit says

A report says Kansas City overpaid the Port Authority for Richards-Gebaur project expenses and should be paid back. The Port Authority says it will work with the city to rectify any problems, but they occurred years ago and the agency has new staff and financial controls.

Kansas City overpaid the Port Authority more than $135,000 for redevelopment expenses at the former Richards-Gebaur Air Force Base and should be paid back, a city auditor’s report said Wednesday.

The Port Authority asked for and received about $92,000 for previously reimbursed expenses and was paid an additional $42,000 above the vendor rates listed in its service contracts, the audit said.

It recommended that the city development and finance departments seek to recover that money and improve tracking of city payments. The department directors agreed.

Port Authority president Michael Collins told the City Council’s Finance and Audit Committee he is willing to work with the city to rectify any problems and pay the money back if necessary. But he noted that the reported overpayments occurred years ago and the agency has had all new staff and financial controls since 2011.

The City Council requested the audit in December 2010 after questions were raised about a possible conflict of interest involving lawyer Bill Session, who was counsel to the Port Authority and also owned a construction company that did $9.7 million worth of excavation work at the former Richards-Gebaur air base.

After the U.S. attorney cleared Session of any federal violations in that work in early 2011, the urgency of the audit diminished and other audit work took priority, according to City Auditor Gary White. It also took a great deal of time, he said, because the council resolution sought a broad-based examination of the Port Authority and required scrutiny of voluminous documentation.

The audit itself did not mention Session or any other agency individual by name. It only cited improper payments to the organization and did not specify any funding recipient by name.

The invoices dated from 2003 to 2008, and the improper payments dated from 2006 to 2008.

Collins took over as head of the Port Authority in early 2011, when the agency spun off from the Kansas City Economic Development Commission and became an independent agency.

“None of us on staff today were there at the time,” he said, adding that the first thing the agency did was to create its own finance and accounting office, with its own internal controls.

City Controller Eric Clevenger said the finance department has also improved its internal controls for tracking and verifying that payments are correct.

The committee will hear an audit update in six months.

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