Report 2010-125 Recommendation 21 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 #21 To: Lands Commission, State

To ensure that it manages delinquent leases in an effective and timely manner and collects all the amounts owed to it, the commission should develop and adhere to policies and procedures that incorporate the administrative manual’s guidance, including the steps staff should take when a lessee is delinquent, time standards for performing those steps, and a process for consistently tracking the status of delinquent leases between divisions.

Annual Follow-Up Agency Response From November 2017

The Commission received authority from the Legislature in Chapter 247, Statutes of 2012 (AB 2082) to prohibit a person from constructing, placing, maintaining, owning, using, or possessing a structure or facility on land that is under the Commission's jurisdiction without first obtaining the Commission's authorization. The bill established a civil penalty for a violation of that provision. On January 1, 2013, Public Resources Code sections 6224.3 and following became effective. These sections authorize the Commission to hold administrative hearings to determine whether a person has built or maintains an unauthorized structure on land under the Commission's jurisdiction. On September 7, 2016, the OAL endorsed the Commission's rulemaking that implements this authority. The regulations became effective January 1, 2017. The administrative hearings provide the Commission with a streamlined and cost-effective process for addressing unauthorized structures and delinquent lessees. In addition to the specific cases addressed, the increased enforcement presence is also expected to result in more compliance going forward. Staff is following SAM requirements for the notification of past due lessees by letter; however, failure to collect timely rents results in the Commission declaring lessees in trespass and seeking ejectment through the courts. The Commission has been reluctant to pursue this course due to the high costs associated with it. Recent analysis of cases successfully pursued by Commission staff and the Attorney General show costs to be in excess of $300,000 per action and involve annual rents of only a few thousand dollars. Writing off small amounts that are not economically feasible to recover is not an option as the delinquent lessee is still occupying State-owned land. With the new regulations, staff believes it has the policies and procedures in place to address delinquent leases. For this reason, staff believes it is in full compliance with this recommendation.

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

Annual Follow-Up Agency Response From October 2016

The Commission received authority from the Legislature in Chapter 247, Statutes of 2012 (AB2082). On January 1, 2013, Public Resources Code sections 6224.3 and following became effective. These sections authorize the Commission to hold administrative hearings to determine whether a person has built or maintains an unauthorized structure on land under the Commission's jurisdiction. On September 7, 2016, the Office of Administrative Law endorsed the Commission's rulemaking that implements this authority. The regulations become effective January 1, 2017. The administrative hearings will provide the Commission with a streamlined and cost effective process for addressing unauthorized structures and delinquent lessees. In addition to the specific cases addressed, the increased enforcement presence is also expected to result in more compliance going forward. Staff is following SAM requirements for the notification of past due lessees by letter; however, failure to collect timely rents results in the Commission declaring lessees in trespass and seeking ejectment through the courts. The Commission has been reluctant to pursue this course of action due to the high costs associated with it. Recent analysis of cases successfully pursued by Commission staff and the Attorney General show those costs to be in excess of $300,000 per action and involve annual rents of only a few thousand dollars. Writing off small amounts that are not economically feasible to recover is not an option as the delinquent lessee is still occupying State-owned land. This recommendation will be fully implemented when the regulations become effective on January 1, 2017.

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented

Annual Follow-Up Agency Response From September 2015

Response: The Commission has received authority from the Legislature in Chapter 247, Statutes of 2012 (AB2082) and is currently promulgating regulations to give it the authority to levy penalties to those in trespass, including those in breach by failing to pay rents due the State. These regulations are expected to be considered by the Commission in early 2016 and in effect by Fall 2016. Once operational, this will provide a more effective tool for dealing with delinquent lessees.

Staff is following SAM requirements for the notification of past due lessees by letter, however, failure to collect timely rents results in the Commission declaring lessees in trespass and seeking ejectment through the courts. The Commission has been reluctant to pursue this course of action due to the high costs associated with it. Recent analysis of cases successfully pursued by Commission staff and the Attorney General show those costs to be in excess of $300,000 per action and involve rents of only a few thousand dollars a year. Writing off small amounts not economically feasible to recover is not an option as the delinquent lessee is still occupying State-owned land.

Commission staff believes this recommendation is fully implemented.

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

According to the commission it is developing regulations that will allow it to levy penalties on leases in trespass. Until the regulations are adopted and followed, the recommendation is not fully implemented.

Annual Follow-Up Agency Response From September 2014

These processes are currently under review for inclusion in the workflow of the State Lease Information Center (SLIC) database. We will report further on progress in the next status report. The Senior Staff Enforcement and Compliance team protocols dealing with trespass and delinquent accounts are being updated. These protocols were developed in response to the previous audit and need to be updated to reflect integration of the new database in the processes and workflow.

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented

All Recommendations in 2010-125

Agency responses received after June 2013 are posted verbatim.