Overview
During our audit, we became aware of research conducted by the Hyde Square Task Force, a stakeholder in the Jackson Square Recreation Center development project. The task force discovered that the New Boston Garden Corporation’s (BGC’s)8 original use agreement with the then–Metropolitan District Commission (MDC) required BGC to conduct at least three charitable events per year in consultation with MDC9 to raise money for recreation centers in Massachusetts and turn over a specified amount of the proceeds to MDC. This requirement was established by Section 7 of Chapter 15 of the Acts of 1993, “An Act Furthering the Establishment of Multipurpose Arena and Transportation Center,” which states,
In consideration of the property interests and easements authorized to be transferred by this act, the new Boston Garden Corporation shall administer, produce, promote and sponsor no less than three charitable events per year at the New Boston Garden while the new Boston Garden is in operation which events shall be in consultation with the metropolitan district commission, and shall pay the net proceeds, after the deduction of expenses of said events, which expenses shall not include any rental payment for the use of the new Boston Garden, to said metropolitan district commission.
However, since the establishment of this use agreement, the owners of TD Garden have not conducted these charitable events and turned over any funding to the Department of Conservation and Recreation (DCR). This has resulted in revenue lost to the Commonwealth. After our audit period, on December 28, 2017, a settlement agreement was established among the Executive Office of Energy and Environmental Affairs, DCR, and Delaware North Companies, Inc.—Boston, according to which the owner of TD Garden agreed to pay DCR $1.65 million and hold at least three annual charitable events. Although the matter is under discussion by these three parties, DCR management indicated that there was still no agreement among the parties regarding how best to conduct the three annual charitable events.
Auditee's Comments
In its response to our draft report, DCR objected to the Office of the State Auditor (OSA) including this matter in our audit report because DCR contends that it was outside the scope of our audit and does not relate to the broader issue of permits and leases, “since Section 7 of Chapter 15 of the Acts of 1993 (the ‘1993 Statute’) imposed obligations upon the Boston Garden Corporation (‘BGC’) but did not require that BGC enter into a permit or lease with DCR’s predecessor, the former Metropolitan District Commission.”
DCR also provided the following comments:
To the extent this matter is addressed in the final Audit Report, we note that, as stated in the draft Audit Report, DCR and Delaware North Companies, Inc.—Boston (”Delaware North”), entered into a settlement agreement executed . . . on December 28, 2017, in which Delaware North agreed to pay $1.65 million into an escrow account, with such monies to fund the design and construction of an ice skating rink and recreational center in the Jackson Square area of the City of Boston, to resolve all claims arising from the 1993 Statute prior to December 28, 2017. Delaware North has made the required payment. In the settlement agreement, Delaware North further agreed to fulfill the statutory requirement of administering, producing, promoting and sponsoring no less than three charitable events per year and to pay the net proceeds to DCR beginning in calendar year 2018. As DCR noted by e-mail to the OSA, DCR and Delaware North are still in discussions regarding the resolution of Delaware North’s obligations on a going forward basis beginning in 2018. DCR anticipates that this matter will be resolved shortly.
| Date published: | June 14, 2018 |
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