May 16, 2018
DENVER – While it has made some progress in collecting money owed, Denver’s airport still has work to do to make sure rental car companies are paying fees accurately, as well as work on updating airport controls and meeting deadlines, according to a follow-up report out this month from Auditor Timothy M. O’Brien, CPA.
“Our 2017 audit found the airport – and by extension the city – wasn’t getting everything it was owed by rental car companies,” Auditor O’Brien said. “We’re pleased the airport made some headway since then, but we’d like to see even more improvement.”
A 2017 audit report found some rental car companies were not paying the correct fees and rates to the airport. The airport was not enforcing part of contract agreement terms with the companies to collect all fees for airport customers at satellite offices within a 20-mile radius of the airport. Because two satellite offices were not paying proper fees for all airport customers before the audit, the team calculated Avis owed the airport just under $1.5 million.
Denver’s airport administers the fourth largest airport rental car market in the U.S. In 2015, Denver’s airport generated $85 million in revenue from 12 rental car companies. Rental car revenue accounted for 12 percent of the airport’s budget.
Today, the airport is still working to ensure rental car companies are gathering all the required information on customers to identify whether they are also airport customers. This information is important because the rental companies calculate how much they owe the airport in fees based on the number of airport customers they have throughout the year.
Our follow-up revealed the rental car companies have added a method to identify airport customers. However, the airport has not verified whether the companies are validating customer designations as they should under the agreement. Two rental car companies were still in negotiations with the airport to pay fees owed.
The 2017 audit also identified issues with updating building and land lease rates for the companies, which are located on airport property. The airport was missing deadlines to communicate rental rates, and administrators were failing to ensure all building and lease payments were correct. Neither of our recommendations to correct these issues were implemented.
The airport also still has work to do on the timely submission of statements to the rental companies and on identifying key controls to ensure rental companies are paying the correct fee amounts. The airport needs to do more work to clearly identify and define key controls and processes to track and analyze rental car revenue to ensure the timeliness and accuracy of payments.
Overall, only four of the 12 recommendations had been fully implemented as of our follow-up. Five were partially implemented, and three were not implemented at all.
The audit did inspire some change within the organization. Since 2017, the airport worked to define which satellite rental offices were within range to owe the airport fees. There had been some confusion as to whether the “20-mile radius” meant 20 miles by car or by air in a straight line. The radius is now defined as a 20-mile drivable distance. This helped identify satellite offices required to pay fees for airport customers. The airport also improved controls for recording credit memos and other accounting improvements.
“The airport is working to collect all money it is owed on behalf of the taxpayers,” Auditor O’Brien said. “I would still like to see more follow-through and updates to controls to ensure unpaid fees don’t happen with such frequency in the future.”