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Wednesday, August 24, 2011

California State Government a Lousy Landlord, Audit Finds

Posted By on Wed, Aug 24, 2011 at 7:05 AM

Not a good rent collector
  • Not a good rent collector

A report issued yesterday by the California State Auditor's office reveals that the state has missed opportunities for millions in revenue through poor management of leases issued through the State Lands Commission.

The commission is responsible for managing public lands that were bestowed to California by the federal government at the time it was granted 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," according to the auditor's report.

However, auditors found the agency has not done its job effectively. According to the report:

... the commission is not effective or consistent in seeking payment from lessees whose rent is past due--known as delinquent lessees--in part because it does not have policies and procedures specifying the steps it needs to take to appropriately manage these leases. Furthermore, it does not consistently take any other actions, such as evicting delinquent lessees, to ensure that it is protecting the State's interest in its properties.

The report found that failures to collect rent from delinquent tenants -- in some cases, according to auditors, years and even decades passed without occupants of state lands paying rent -- resulted in losses "estimated to be as much as $8.2 million for just some of the leases in the sample of 35 we reviewed."

The State Lands Commission oversees 4,000 leases.

The report also found that the commission has not taken time to review expired leases or adjust rent upward to current market rates.

Commission officials agreed with most of the report's findings, according to auditors. They explained their handling of delinquent leases by citing the money and staff time required to pursue litigation against non-paying tenants.

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Peter Jamison


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