Fall River Line Pier, Inc.

This is a Massachusetts State Auditor report about Fall River Line Pier, Inc., a nonprofit corporation that operates and maintains a pier in Fall River for water-based freight and merchandise shipping.

“On November 19, 1946, FRLP was chartered as a not-for-profit corporation under the provisions of Chapter 180 of the Massachusetts General Laws to establish, operate, and maintain a pier in Fall River, Massachusetts.”

The auditor reviewed whether the pier organization was keeping accurate financial records, protecting its assets, following rules, and fixing problems found in the prior audit.

“The objectives of our audit were to assess the adequacy of FRLP’s management control system for recording, reporting, and monitoring its financial activities and safeguarding its assets.”

The pier leases public property from the Commonwealth, so its budgets, capital spending, and use of profits are subject to state oversight.

“According to the FRLP lease agreement dated June 16, 1981, the DCR, formerly the Department of Environmental Management, has been designated as the Commonwealth’s oversight agency, and all FRLP budgetary matters and capital expenditures require written approval by DCR.”

For residents, the key point is that money from the pier’s operations is now set aside to cover future losses and pay for pier repairs, improvements, and equipment with state approval.

“The second stabilization account is the establishment of a Capital Stabilization Fund that will be, with prior approval of the DCR, used to fund capital repairs, improvements, and purchase of equipment.”

The earlier problem about unpaid net profits was resolved, and the pier funded two required stabilization accounts with its accumulated net operating profits.

“Our follow-up review revealed that this issue has been resolved pursuant to the agreement under the April 2, 2010 Fifth Amendment to the lease the Commonwealth of Massachusetts represented by the Department of Conservation and Recreation (DCR) and the FRLP.”

The pier keeps its net operating profits in stabilization accounts, and when the lease ends, any remaining balances must be paid to the Commonwealth within 30 days.

“Upon the expiration of this lease, or any extensions or renewals thereof, the FRLP shall within 30 days subsequent to said expiration date pay over to the Commonwealth all remaining balances in said FRLP stabilization accounts.”

The report is significant because a prior audit found $368,065 in profits had not been transferred as required, but the lease was amended and the issue was treated as resolved.

“Specifically, FRLP had not transferred net profits totaling $368,065 as of December 31, 2008 to the Commonwealth as required by its lease.”

“Stabilization accounts” are reserve funds: one helps cover future losses, and the other pays for approved capital repairs, improvements, and equipment.

“The first stabilization account is the Operating Stabilization Fund which has been increased from $20,000 to $50,000 and will be used to offset future losses.”