Company that would oversee parking meters had trouble in other cities
ACS also target of federal probe, Canadian inquiry
Kevin Osborne, WCPO Digital
10:02 AM, Mar 4, 2013
2:32 PM, Mar 4, 2013
CINCINNATI - A company on track to assume control of Cincinnati's parking meters was the subject of a blistering audit in 2007 for its performance managing meters in Washington, D.C.
Among the audit's findings, more than 6,800 parking tickets were improperly issued to motorists parked at broken meters.
Also, complaints from residents increased 903 percent after Affiliated Computer Services (ACS) took control of meters from a district department.
The audit concluded that outsourcing the meters to ACS increased costs by almost $9 million over a seven-year period, from 1999 to 2005, than if district personnel had handled the work.
Cincinnati City Council is considering turning over operation of the city's parking meters, garages and lots to the Port Authority. It was unclear Monday morning if city administrators were aware of the audit, but said they were reviewing materials before responding.
Under the proposal, unveiled publicly Feb. 19, the Port Authority would use subcontractors for the actual operation and management of the facilities. Meters would be overseen by ACS, which became a subsidiary of Xerox Corp. in 2010.
Council's Finance Committee is scheduled to vote on the proposal Monday. If it recommends approval, the full City Council could make a final decision Wednesday – 15 days after the proposal was introduced.
As of Monday morning, a Xerox spokesman had not replied to a WCPO Digital reporter's questions about the audit, saying the company was "working on a response."
Some residents and small business owners think council is rushing into the deal, and are worried that the D.C. audit's findings have never been raised publicly.
"I'm really concerned that our city government is entering into a contract with the very same sub-contractor without vetting documents properly and putting in safeguards so we don't have the same problems down the road," said Piper Fennimore Rogers, of Oakley.
Rogers works at 20th Century Theatre and Habits Café, which are owned by her husband, and is a member of the Oakley Community Council.
Rogers is one of several business owners worried about Cincinnati's parking plan. They believe higher meter rates will drive away some customers.
City Council is considering the plan primarily to avoid a $25 million deficit, along with generating other revenue to jumpstart several development projects citywide.
Under the deal, the city would lease the meters to the Port for 30 years; and lease garages and lots for up to 50 years.
In return, the city would get $92 million in an upfront payment. Also, it would receive annual payments that would begin at $3 million and increase over time.
Some say the cash may not be worth it, if D.C.'s experience is any indication.
The 2007 audit found that ACS got paid nearly $645,000 in fees by the District of Columbia that it shouldn't have received. That was because ACS submitted bills for items it wasn't entitled to under the contract, which were paid.
Additionally, the audit found ACS routinely failed to repair parking meters within the 72-hour period specified in its contract.
ACS issued 6,888 tickets to vehicles parked at broken meters during the seven-year period. That resulted in $159,975 in improper fines charged to motorists, the audit added.
Citizen complaints about meters increased from about 3,700 in 1997 to nearly 89,900 in 2005.
The audit also stated that the district could have managed the meters for $17.6 million over the seven-year period – $8.8 million less than the $26.4 million it paid to ACS.
The District Department of Transportation (DDOT) still uses ACS to oversee its meter system, and disputed some of the audit's findings.
For example, DDOT said the formula used to calculate costs versus expenses was faulty, and that ACS saved the district money.
But ACS has had other problems, too.
The Securities and Exchange Commission (SEC) investigated ACS for allegedly improperly back-dating stock options from 1995 to 2006.
The SEC's complaint stated, "ACS engaged in a fraudulent and deceptive scheme to provide executives and other employees with undisclosed compensation."
It also states that, "while the company was conducting an internal investigation of the backdating ACS -- through its former CEO and former CFO -- made false denials that intentional backdating by officers had occurred at ACS."
In 2010, without admitting or denying the SEC's allegations, ACS consented to a permanent injunction in court and agreed not to violate anti-fraud rules in the future.
In July 2011, after Xerox bought ACS, it submitted a letter to the SEC that sought a waiver of some of the provisions in the settlement. The waiver was denied.
ACS also was criticized for allegations involving its bid to operate red-light cameras in Edmonton, Alberta in Canada. ACS allegedly bribed police officers with gifts and trips in an effort to secure the $90 million contract.
A judge decided in November 2007 there was insufficient evidence to charge ACS with a crime. Nevertheless, Edmonton decided to operate the cameras in-house after the scandal.
In 2008, a judge cleared the police officers who accept gifts like Oilers hockey tickets. The judge said the officers displayed "some poor choices and errors in judgment," but their primary motivation was to work for ACS or be rewarded after retiring from their jobs.
Tabitha Woodruff, a lawyer with the Ohio Public Interest Research Group, said the company's history should give local officials pause. The grassroots group is a frequent critic of outsourcing public assets.
"Cincinnati City Council is days away from voting on an ordinance allowing the Port Authority to run our parking system with private companies, some of which have links to scandals and bribery in other cities," Woodruff said.
"It is irresponsible for City Council to move forward on the parking proposal without first providing details to the public on these private contracts," she added.
The city of Cincinnati owns seven parking garages and lots, and has 4,978 parking meters.
Of those meters, 4,844 currently are in-service. The remaining amount includes 98 that are damaged, and 36 that are temporarily out of service due to construction projects.