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.
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.
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.
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.
†Response Type refers to the interval in which the auditee is providing the State Auditor with their status in implementing recommendations made in an audit report. Auditees must submit a response regarding their progress in implementing recommendations from our reports at three intervals from the release of the report: 60 days, six months, and one year or subsequent to one year.
*Agency responses received after June 2013 are posted verbatim.