Bus Shelter Vendor Potentially Shortchanged County

An audit released today by Nassau County Comptroller Howard Weitzman revealed the company responsible for maintaining Nassau’s 248 bus shelters and benches has potentially shortchanged the County approximately $300,000 in revenue that it recorded from selling advertising on the shelters. The company, Signal Outdoor Advertising, signed a contract in 1997 under the Gulotta administration to maintain the shelters and benches bus riders use while waiting for transportation. The contract gave Signal the right to sell advertisements on the shelters, giving the County 55.5% of all the gross billings generated. However, auditors found that Signal had excluded agency commissions from its total advertising revenues before paying the County its percentage. In addition, auditors also found several other problems with the company--an outstanding balance for 2007 of $25,000 owed to the County’s Planning Department; and dirty and ill-maintained shelters.

"The performance by this County vendor was lacking in several areas,” Weitzman said. “The County was not getting its fair share from the advertising revenues; Signal’s sloppy bookkeeping practices resulted in an outstanding debt of $25,000 going unnoticed; and to top it all off, the company’s maintenance and repair record needs improvement.”

According to Weitzman, Signal claims that standard industry practice allows them to deduct the agency commissions from selling advertising space, but auditors note this is not what the contract said. The audit found that Signal should have been basing its remittance to the County on gross proceeds, which would have resulted in the County being due an additional $329,565 between 2001 and 2006. The comparable amount for 2007 could not be calculated due to lack of information from Signal. Since January 1, 2001 through December 31, 2007, Signal has remitted $5,087,041 in bus shelter revenue to the County.

Once the $25,000 outstanding balance owed to the County’s Planning Department was pointed out by auditors, Signal paid the balance and the books were adjusted to reflect payment in full.

The audit also stated that maintenance and repair of the bus shelters and benches requires improvement. Out of 27 checked by auditors, 21 of the shelters were missing one or more side panels, two bus shelters and their surrounding areas were not kept clean, one bus shelter was marred by graffiti and some shelters did not meet the minimum square footage requirement.

In 2007 when the Signal contract came up for renewal, the Planning Department requested that an audit be done by the Comptroller’s Office. This audit covered the time period between January 1, 2001 and December 31, 2007.

Signal is currently in the process of negotiating a new contract with the County and it is scheduled to go before the legislature for approval soon. The Comptroller has recommended that the Planning Department clarify the language in the future contract to ensure that the term “gross billings” is defined in the contract and understood by both parties. Weitzman said he is also recommending that the County Attorney review whether the County can collect the $329,565 for 2001 -2006 and any amount due for 2007 from Signal retroactively.

"The Planning Department needs more controls in place to provide oversight when dealing with Signal,” said Weitzman. “In turn, Signal needs to maintain complete accounts and provide written procedures, financial statements, budgets, and auditor’s reports.”

The audit also found that Signal did not keep complete financial records for five of the past seven years and when recent records were reviewed, auditors questioned the company’s financial stability. The Comptroller recommended that the Planning Department include a clause in the new contract that would allow the County to cancel its commitment upon the occurrence of certain indications of financial collapse by Signal.

Signal is headquartered in Orlando, Florida and owns and operates 7,000 shelter, bench and kiosk advertising displays nationwide. Signal has bus advertising franchises in Nassau, Suffolk County, Hartford, Ct. and also maintains an office on Long Island.

Weitzman: ‘Bus shelter vendor has potentially shortchanged County $300,000.’

Auditors also found $25,000 outstanding balance due County; some shelters dirty and in disrepair