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State agency's mishandling of land costs millions, auditor finds

August 23, 2011 | 10:51 am

The State Lands Commission has mismanaged public property, costing millions of dollars in lost revenue by not renewing expired leases, keeping rents at market level or evicting delinquent tenants, the state auditor concluded Tuesday.

"The commission has not always managed its more than 4,000 leases in the State’s best interest with the result that it has missed opportunities to generate millions of dollars in revenues for the State’s General Fund,’’ Auditor Elaine Howle wrote to the Legislature, which asked for the report.

The agency manages lands the state acquired from the federal government at statehood, including river and lake beds, submerged lands along the coast and school property.

The review found that the commission missed opportunities to generate up to $8.2 million in just some of the leases looked at by auditors. The commission is supposed to review rents periodically and increase them if necessary, but auditors said the agency failed to conduct the reviews promptly, "causing it to lose $6.3 million in increased rent it may have been able to collect.’’

Howle estimated that the state lost $1.6 million from 10 leases where the rent was delinquent but the lessee was able to remain on state land. In one case, a boating service company in Crockett had not paid any rent since 1989, but the commission had not taken action to remove the tenant.

Commission officials said they have been hampered by staff cuts, but agreed many of the recommendations for improving operations have merit.

The agency is overseen by a commission made up of the lieutenant governor, state controller and finance director. Executive Officer Curtis Fossum said the agency has seen its general fund staff cut since 1991 from 242 employees to 63.

--Patrick McGreevy