Wed | Oct 16, 2019

Local government ministry overpaid $7.1 million in rent over two years

Published:Thursday | January 10, 2019 | 12:00 AMPaul Clarke/Gleaner Writer
Auditor General Pamela Monroe Ellis

Having overpaid by some $7.1 million on the five-year lease agreement for its Hagley Park Road, St Andrew, offices over a two-year period, the Ministry of Local Government and Community Development is being asked by the Auditor General's Department to immediately seek to recover the sum.

In addition, Auditor General Pamela Monroe Ellis says that she will be recommending surcharge proceedings, pending appropriate action being taken by the accounting officer.

The assessment was made in the Auditor General's Department Annual Report for 2018, which was tabled in Parliament on Tuesday.

Monroe Ellis pointed out that the local government ministry entered into a $76 million per annum five-year lease agreement, effective December 1, 2016, for the Hagley Park Road premises.

The report stated that the ministry paid $132.3 million in rent between the signing of the lease agreement and occupation of the building since 2018 and that "the Ministry of local Government did not independently verify the square footage of the area rented but relied on an appraisal dated January 15, 2016, which was commissioned by the landlord".

"The lease agreement stipulates 40,000 square feet of rentable space. However, arising from our request, the National Land Agency (NLA) confirmed that the area actually measured only 38,130.81 square feet or some 1,870 square feet less than the amount stipulated in the agreement," the report said.

The auditor general also mentioned in the report that the ministry has been paying $2.7 million per year for a 1,413.5-square foot parking shed, which was not negotiated separately from the office space at $1,900 per square foot.

"We were formally advised by the NLA that a market rate of $8,500 per month per parking space can be applied to this parking shed. Consequently, the local government ministry would have locked the Government into an agreement with an attached cost of $2 million per year above market rates," said Monroe Ellis.

She said that in December 2018, the ministry indicated that it was not opposed to having its technical services division revisit the measurements.

paul.clarke@gleanerjm.com