Report 2011-120 Recommendation 15 Responses

Report 2011-120: California Department of Transportation: Its Poor Management of State Route 710 Extension Project Properties Costs the State Millions of Dollars Annually, Yet State Law Limits the Potential Income From Selling the Properties (Release Date: August 2012)

Recommendation #15 To: Transportation, Department of

To ensure that the repairs it makes to the SR 710 properties are necessary and reasonable, Caltrans should develop a written policy to ensure that it considers the cost-effectiveness of repair costs for historic and nonhistoric projects in relation to the potential rental income for the property. Such a policy should establish the maximum acceptable cost-recovery period for the amount it will spend for repairs, above which the repairs will be considered wasteful.

1-Year Agency Response

Please see Attachment 5 for a copy of the "Property Management Cost Recovery Analysis Policy" implemented on June 26, 2013. This policy requires the use of cost-recovery forms to analyze the cost of necessary repairs, and has established 36 months as the maximum acceptable cost-recovery period.

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Caltrans has established a written policy that ensures repairs to SR 710 properties are necessary and reasonable by considering the cost-effectiveness of repairs in relation to rental income for the property. Our review in May 2017 found that files reflected a consistent use of a cost analysis form with a 36 month maximum recovery period.

6-Month Agency Response

Caltrans stated that it now has a policy in place that requires the use of cost-recovery forms to analyze the cost of necessary repairs and that establishes 36 months as the maximum acceptable cost-recovery period. Caltrans also stated that it plans to conduct training during March 2013 to instruct staff on the proper use of the form.

California State Auditor's Assessment of 6-Month Status: Partially Implemented

Caltrans did not provide a copy of the policy.

60-Day Agency Response

Caltrans stated that it is developing a policy to assess the cost-effectiveness of repair costs, which will include evaluating a cost-recovery period for repairs. Caltrans also stated that it is on track to issue the policy and provide training to all employees by December 31, 2012. (See 2013-406, p. 171)

California State Auditor's Assessment of 60-Day Status: Partially Implemented

All Recommendations in 2011-120

Agency responses received after June 2013 are posted verbatim.