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Audit: DCR is terrible landlord
Agency fails to collect rental fees and late payments and neglects to charge market rates
July 17, 2013
A new state audit
reveals that the understaffed Department of Conservation and Recreation is a terrible landlord, often failing to collect rental fees and late payments and neglecting to charge market rates for its properties.
State Auditor Suzanne Bump’s staff surveyed nearly three-quarters of DCR’s long-term leases and permits and employee housing arrangements, and discovered uncollected fees in fiscal 2011 of approximately $200,000, or about 7 percent of the total permit and housing revenue collected that year. Bump traced some of the contracts back to 2005 and found an additional $166,000 in fees that had gone uncollected.
The money went uncollected largely because DCR officials failed to enforce the agency’s agreements or weren’t even aware the agency was owed any money. For example, DCR leased a skating rink to the town of Arlington in 2002, but then failed to collect the revenue it was owed starting in August 2010. The agency also licensed telecommunications towers at the Middlesex Fells Reservation in Medford and the Blue Hills in Milton, but didn’t bother to collect its share of sublicensing fees.
In a number of instances, the fees were paid once DCR asked for them. According to the auditor’s report, DCR has already collected $198,000 of the $366,000 in fees that had not been paid since 2005, including $128,000 related to the telecommunications tower in the Blue Hills.
The findings of the audit mirror what CommonWealth
reported in a cover story
last year on the agency’s lax oversight of public land leases and permits. The magazine noted that DCR’s records were in terrible shape, too few employees were monitoring leases, and oversight of the leases was often chaotically split between DCR and the state Department of Capital Asset Management and Maintenance, the real estate arm of the state. CommonWealth
’s investigation prompted then-DCR commissioner Ed Lambert to call in Bump to do the audit.
The auditor’s reported cited breakdowns in oversight at many levels. Rental fees, for instance, were rarely updated to reflect fair-market value, as evidenced by many utility providers that were using DCR property and paying fees that were established 90 years ago. In addition, late payment fees were not included in some user agreements and not enforced in others, and late payments were often not referred for debt collection. Tenants often failed to obtain required liability insurance, thus exposing the agency to potential lawsuits. And DCR properties were being used without executed user agreements or after the agreements had expired.
In one instance, Harvard University’s $1-a-year use agreement for a sailing pavilion on the Charles River expired on Dec. 31, 2004, but was allowed to continue uninterrupted despite a new fee schedule for other boat and yacht clubs that kicked in during 2005.
The audit did not mention a memorandum of understanding with the Department of Capital Asset Management that Lambert, the former commissioner, had promised to develop back in Nov. 2011 as a means for improving the agency's messy dealings with the DCAM. Almost 20 months later, the memorandum has yet to be finalized.
The auditor’s report recommends, among other things, that DCR develop written policies, procedures, and internal controls to address all the issues identified, collect all unpaid fees identified by the audit, and conduct a physical inventory of all DCR properties and facilities covered by leases and permits.
The report makes no specific recommendation concerning the number of employees overseeing DCR’s leases and permits, but Bump highlighted the lack of manpower in a press release accompanying the audit report.
In 2003, the agency had 13 employees managing its property use arrangements. But by 2009, there was only a program manager and a paralegal, and for a brief period in 2011 no employees were assigned to the program.
“The results of this audit illustrate the importance of investing in systems of accountability,” she said. “DCR’s lease management staff has been gutted to the bare minimum over recent years, which led, in part, to the significant deficiencies identified in the audit.”
According to Bump’s audit, DCR believes new budget revenues for the agency should result in an increase in staff as well as other resources to carry out its duties.
One of the more vexing problems hanging over DCR’s head involves the Wollaston Yacht Club in Quincy. It stopped paying its rent in 2006, and over time ran up a tab of $32,000. After the CommonWealth
report came out, DCR general counsel Douglas Rice, in April of last year, threatened to evict the club if it didn’t bring its rent payments up to date.
Despite the ominous words, the Wollaston Yacht Club has paid only $1,000 toward its $32,000 back debt, although it has made two $5,000 payments to cover its 2012 and 2013 rent. Commodore Michael Pelosi claims that Rice told the club, “You have a bar there. Sell more beer.” Rice, however, denies saying that.