Report 2011-120 Recommendation 10 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 #10 To: Transportation, Department of

To ensure that the affordable rent policy is enforceable and that only eligible tenants receive the benefit of the policy, Caltrans should annually review and document the tenants' household incomes using income certification forms. If tenants no longer qualify for the program because their income exceeds the income requirement or one of the income-producing tenants in the household has been replaced by a new tenant, it should increase their rent to fair market rates after giving proper notice.

1-Year Agency Response

In September 2012, Caltrans instructed its staff to annually review the tenants' eligibility using the income certification forms as required in Chapter 11 of Caltrans' Right of Way Manual (manual). On August 15, 2013, District 7 management sent out a memo to its staff reminding them of the need to follow the requirements in the manual. For a copy of the memo and relevant section of the manual , please see Attachment 2.

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

Caltrans has a policy of annually reviewing income for tenants in the affordable rent program (program). Our review in May 2017 of Caltrans' process for annually verifying tenants' eligibility for the program found significant improvements such as a more robust income certification packet, which requires that tenants complete a form requesting the release of their tax information, and a secondary review of tenant eligibility. Additionally, our review found tenants who did not qualify for the affordable rent program received rent increases to raise their rent to fair market rates.

6-Month Agency Response

Caltrans stated that it and the agency determined that continuing to offer the ARP and expanding it to other eligible tenants was the appropriate action to take concurrent with the rental rate increases effective March 1, 2013. The emergency regulations were approved by the OAL on December 24, 2012, and the permanent regulations are expected to be in place by August 31, 2013. Caltrans plans to notify the tenants who applied for the ARP, by the stated deadline, whether they qualify by February 15, 2013.

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

60-Day Agency Response

Caltrans stated that the director is reviewing the affordable rent program to determine if it is appropriate to continue offering it to certain tenants and/or to expand it to include other tenants. Caltrans also stated that the director's decision is expected by November 2012. (See 2013-406, p. 170)

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

All Recommendations in 2011-120

Agency responses received after June 2013 are posted verbatim.