City Lost Millions in Revenue from Advertising on Street Furniture

The city of Los Angeles lost out on $23 million in revenue originally promised by a company that manages advertising on public bus shelters, kiosks and other street "furniture," an audit released Thursday showed.

The revenue was lost partly because city officials were slow to issue permits for furniture sites and advertising, the audit released by City Controller Wendy Greuel found.

The city took an average of 129 days to issue a permit, which must be approved by the City Council, Bureau of Street Services and Department of Water and Power.

Greuel also found that a six-year review of the contract that might have discovered the problems was never conducted.

"One thing is certain, the city did not realize the amount of proceeds it was led to believe it would be receiving when the contract was executed," Greuel wrote in a letter to city officials.

Greuel's audit found problems with a formula for the street furniture company, CBS Decaux, that determines how much revenue the company is supposed to hand over to the city each year.

If nothing is done to expedite the permitting process and change the revenue formula, the city could lose out on another $57 million during the remainder of the 20-year contract, according to Greuel.

She urged the Bureau of Street Services and the City Attorney's Office to revisit the contract in order to better the terms for the city.

Greuel also called for City Council members to forego their districts' shares of the revenue generated by the contract, an average of $100,761 per year. Half of the annual street furniture revenue is divided among the 15 council districts.

"I am calling on the mayor and City Council to put 100 percent of these funds into the General Fund," Greuel said.