Audit - Real Property Division

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The Office of Internal Audit (OIA) conducted a management audit of the Department of Finance and Administrative Services (DFAS), Real Property Division (Real Property).  The audit was included in the fiscal year (FY) 2012 approved audit plan.

Real Property acts as a central professional real estate service organization for the City of Albuquerque.  The division operates under the Real Property Transactions Ordinance, §5-2.  The division’s responsibilities include:

• Acquiring real estate for parks, open space and public facilities
• Selling surplus properties that have been declared non-essential for municipal purposes
• Acquiring and vacating public rights-of-way and easements
• Acting as valuation consultants to determine current market values
• Negotiating and managing City leases

Real Property has eight full-time professional staff. The division has been part of DFAS since 2010, prior to which it was under the City’s Legal Department.

Real Property is currently nearing completion of a database of City owned properties. From the development perspective, the project is nearly complete.  On the data-entry side, the project is approximately two-thirds complete.  The remaining properties are those with little or no data available with which to populate the database. Research on these properties is still underway.  

Is the inventory of City-owned properties complete and accurate?  Does the database match paper records?

The database of City owned properties was reviewed for accuracy and completeness by matching data fields to source documents.  The process compared individual database elements to available paper records or other electronic sources. In a random sample of 23 parcels, we noted that overall the database records were representationally accurate to the physical properties.  However, some instances of missing or incomplete data were noted.  All discrepancies noted were reported to Real Property.   Quality control should be a key component of an electronic information storage system.  

Are purchases of City properties negotiated at a fair price to ensure public resources are used in an effective manner?  Are purchases in accordance with City Ordinance § 5-2-5?

OIA reviewed recent purchases and sales of real properties, and purchases and vacations of rights-of-way (ROW) properties.  Applicable purchases tested were in conformance with City Ordinance § 5-2-5.  Audit tests also considered conformance with internal operating procedures.  To facilitate processing of all real property transactions Real Property has established written procedures for many key duties.  OIA noted two areas for which a written checklist had not been drafted:

• Appraisal Order and Review Process and
• Processing Vacations of Right-Of-Way.

Is the bidding process for selling non-essential properties conducted in a fair and open manner in accordance with § 5-2-1 and § 5-2-2?

OIA reviewed recent sales of properties deemed non-essential for municipal purposes.  Each sale was tested for conformance with City Ordinances, Administrative Instructions and Real Property’s internal procedures.  No exceptions to City Ordinances or Administrative Instructions were noted.  In the course of reviewing each sale for conformance with the division’s Surplus Agent Checklist, we noted that in each sale, the City shared the closing costs with the buyer. The Surplus Agent Checklist contains outdated wording which states that closing costs are paid by the buyer.

Is access to the database properly secured?  Is the database backed up on a regular basis?  Are user roles and responsibilities appropriately defined?

The database of City owned properties includes a public view and more detailed internal view. The internal view links to scanned images of complete record of the related paper files.  Real Property has not yet established a formal procedure for requesting access to the Real Property database.