Report 2010-125 Recommendation 11 Responses

Report 2010-125: State Lands Commission: Because It Has Not Managed Public Lands Effectively, the State Has Lost Millions in Revenue for the General Fund (Release Date: August 2011)

Recommendation #11 To: Lands Commission, State

To ensure that it is charging rent based on the most current value of its properties, the commission should appraise its properties as frequently as the lease provisions allow—generally every five years.

Annual Follow-Up Agency Response From September 2015

Response: Commission staff is now following the established protocols for obtaining appraisals for leases with rent of $10,000/year or higher. The Commission is still working with one in-house appraiser and is actively recruiting for a senior appraiser. Staff is now also contracting with outside appraisers to meet demand. Outside appraisers will be used on an as needed basis until additional staff can be recruited. Additionally, the greater reliance on inflation adjustment being built into leases, with the option to perform an appraisal at specified intervals, is also being used to better manage the workload.

Commission staff believes this recommendation is fully implemented.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

Annual Follow-Up Agency Response From September 2014

Management has provided staff with instructions (Exhibit 3) for determining lease values and the use of appraisals. While it is the goal of Commission staff to at a minimum, appraise those leases that would result in an annual rental of over $10,000 annually, current staffing realities preclude this. As noted in the initial response to the report, the Commission has only just recently hired a single qualified appraiser. Recruitment continues for additional appraisers but there are challenges in competing with the private sector. The instructions to staff require a comprehensive review of the various methods and criteria to be used in determining rental values. This analysis will be required for all rent reviews, renewals and new leases and must be submitted to management for approval after which it will become part of the lease file for future reference and review.

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

Aside from the commission's instructions to staff for determining lease values and the use of appraisals, the commission stated that current staffing realities or a shortage of appraisal staff precludes it from fully implementing our recommendation. Until the commission can hire a sufficient number of appraisers to perform periodic appraisals of its significant leases, it likely will miss opportunities to increase rental revenues.

All Recommendations in 2010-125

Agency responses received after June 2013 are posted verbatim.