- Audit Slams Ca. Lands Panel for Failing to Collect Millions from Leases
Wednesday, August 24, 2011
The Sacramento Bee, Calif.
by David Siders
The state is mismanaging oil and other leases on public land, failing for years to collect rent from some companies and costing California millions of dollars in lost revenue, the state auditor said Tuesday.
State Auditor Elaine Howle said in a blistering report that the State Lands Commission could have generated as much as $8.2 million in revenue from just a sample of the leases her office reviewed.
The commission "is not effectively managing its leases, and as a result it has failed to collect or generate millions of dollars in potential revenue for the state's General Fund," the report said.
Of the commission's nearly 1,000 revenue-generating leases, the report found 130 were past due on rent. In one case, Howle's office said, a marine services company remained on public land for more than 20 years without paying its $10,170 annual rent. The company itself, the report said, subleased the land and collected rent from its tenant.
Howle accused the commission of failing to adequately track the status of its leases, sometimes losing track of them. Her report said the commission failed to appraise its land as often as lease agreements allow and failed to quickly renew expired leases, missing opportunities to increase rent.
The State Lands Commission manages about 9 million acres of land granted to California by the federal government when it became a state, including tidelands and submerged lands on California's coast and rivers. Of its revenue-generating leases, the commission manages about 85 oil and gas, geothermal and mineral leases, and about 900 agricultural, commercial and other leases, according to the audit report.
The three-member commission consists of Lt. Gov. Gavin Newsom, Controller John Chiang and Finance Director Ana Matosantos.
Commission Executive Director Curtis Fossum blamed staffing reductions. He agreed with many of the auditor's recommendations but said in a written response that the commission has endured severe staffing cuts, from 242 general fund positions in 1991 to about 63.
He called the commission staff "a relatively small, hardworking and professional group dedicated to acting in the state's best interest."
Fossum also criticized the auditor for selecting to review in depth a 35-lease sample he said is not representative.
"What is clear is that this was not a representative sample of State Lands Commission leases, but rather a subjectively selected list of leases chosen to highlight specific problem areas," Fossum wrote, adding that the report relies on examples that "distort the bigger picture of commission successes."
AT A GLANCE
State Auditor Elaine Howle said that of the State Lands Commission's nearly 1,000 revenue-generating leases, an audit found 130 were past due on rent. In one case a company remained on public land for more than 20 years without paying its $10,170 annual rent, the report said.
Copyright (c) 2011 The Sacramento Bee (Sacramento, Calif.)
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