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State Lands Commission leaves millions on table

By Josh Richman
Tuesday, August 23rd, 2011 at 3:54 pm in California State Senate, Dave Cogdill, state budget.

California’s State Lands Commission is doing a poor job of managing its more than 4,000 leases, leaving millions of dollars of potential state revenues on the table, the State Auditor’s office reported today.

The commission – which consists of the lieutenant governor, the state controller and the state finance director – is responsible for managing lands that California acquired from the federal government at statehood, including the beds of navigable rivers and lakes, submerged land along the State’s coast, and school lands granted to the State for the benefit of public education.

The audit found the commission has missed chances to generate millions of dollars in revenues for the state’s beleaguered General Fund — as much as $8.2 million for just some of the leases in the sample of 35 reviewed. Specifically, the audit found the commission:

  • lacks policies and procedures specifying steps needed for managing leases and is ineffective or inconsistent in seeking payment from or evicting lessees whose rent is past due; more than 10 percent of the revenue-generating leases were past due on rent and yet some of the lessees have remained on state land without paying rent for up to 22 years.
  • does not take timely action to renew its expired leases, conduct rent reviews, or appraise properties; the commission lost up to an estimated $269,000 for the leases the audit reviewed that have not been extended or renewed.
  • lost $6.3 million in increased rent that it may have been able to receive on a sample of leases because it failed to promptly conduct rent reviews, which frequently result in increased rent amounts.
  • may be losing up to $174,000 each year for a sample of pipeline leases reviewed because it has not updated the rate — established in 1981— to use when calculating rent.
  • is not appropriately tracking the status of some of its leases – its Application Lease Information Database has inaccurate and incomplete data and staff do not always use it to track lease information.
  • lacks a plan for monitoring its revenue-generating leases, in particular those leases that are potentially the most profitable because they involve the extraction of oil and gas from state properties.
  • hasn’t taken sufficient steps to quantify its need for additional staff.
  • “We agree with many of the Bureau’s recommendations and, in fact, are implementing or plan to implement most of them,” commission executive director Curtis Fossum wrote to the auditor’s office Aug. 1. “We do appreciate the efforts of the Bureau in providing constructive criticism and analyses of past and present practices, as well as its recommendations, which we look forward to implementing where feasible and appropriate. Many of the recommendations suggested by the Bureau are practical and achievable if the Commission is provided the opportunity to acquire and retain adequate staff to address these areas.”

    Former state Sen. Dave Cogdill, R-Modesto, who had chaired a Senate Select Committee on Surplus Property, called for this audit last year, citing various anecdotes of waste. Among those examples was USS-POSCO, a steel company that continued to occupy 490 acres of state-owned land in Pittsburg for 12 years after the lease expired. The property originally was leased at $235,137 per year, but the commission only collected a total of $66,784 in back rent during the 12 year period even as California’s land prices peaked.

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    • Elwood

      A state commission grossly incompetent?

      Who woulda thunk it?

    • Elwood

      Speaking of gross incompetence:

      “Mt. Diablo school district, teachers eye possible shortened school year”

      “Trustees also appointed nine administrators”

      “They heard a report about solar projects under construction”

      Those solar projects are being built with 88 million dollars of borrowed money on which interest must be paid, of course. The sun may go out before those solar projects amortize themselves.

      Shorter school year, nine new administrators, foolish expenditure of bond funds–do you have to be a dumbass to sit on a school board, or is it just very helpful?

      http://tinyurl.com/3n3ok8z