Report 2018-112 Recommendation 7 Responses

Report 2018-112: California Department of Veterans Affairs and Department of General Services: The Departments' Mismanagement of the Veterans Home Properties Has Not Served the Veterans' Best Interests and Has Been Detrimental to the State (Release Date: January 2019)

Recommendation #7 To: General Services, Department of

To ensure that all leases of veterans home property protect the interests of the State and the homes, DGS should review the current lease that is void under state law and any that do not meet its criteria for being in the best interests of the veterans homes. DGS should attempt to reach new agreements with these lessees that address any areas of noncompliance and concern.

Annual Follow-Up Agency Response From October 2020

DGS completed the review of the existing leases and reached out to all the lessees. Although the lessees declined to renew/amend their respective lease agreements at this juncture, DGS plans to negotiate the leases when they come up for renewal. Any such negotiations will ensure they meet the definition in SAM 1323.1. This recommendation is complete as of October 2020.

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

DGS provided records of its contact with the lessees and the lessees' stated desires not to amend their leases. DGS also provided documentation regarding its attempts to establish a valid lease for the lessee whose lease was void under state law - the Town of Yountville's lease of the veterans home pool - but the Town declined to enter a new lease and returned the property to the veterans home.

1-Year Agency Response

DGS has completed its review of existing lease terms, and worked closely with CalVet in understanding the current practices/operations of the lessees to understand whether they are complying with the agreements and whether they are providing services beyond what is required in the leases. Subsequent to these reviews/internal discussions, DGS/CalVet held discussions with the lessees. DGS was able to achieve some gains, including additional free tickets to the home for each engagement at the Lincoln Theater for the members, the provision of exclusive use of the theater to the Administrator without any fee or remuneration for two Veteran Home events per calendar year. Likewise, the Napa Valley Balloon company has vacated the property relieving the state of the liability associated with the launching of balloons from the Yountville property. While several of the lease discussions with lessees are ongoing, DGS will continue to comply with the RESD Bulletins as new leases are requested and existing leases come up for renewal.

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

DGS provided the assessments that it and CalVet conducted regarding whether the active leases meet the criteria for being in the best interests of the veterans homes. DGS has not yet provided evidence of the additional gains it obtained for the veterans homes in its discussions with lessees, including evidence of free tickets from the Lincoln Theater for home residents.

6-Month Agency Response

DGS and CalVet have continued to work together to identify paths forward on existing leases. To date, the departments have met with 4 of the 14 lessees and are using these initial meetings as a template for the remaining 10. We will continue to work closely with CalVet on the current terms of these leases to explore any possible advantages to void or renegotiate current documents.

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

60-Day Agency Response

DGS has had an initial meeting with CalVet to discuss leases identified in the audit of concern. Future meetings have been scheduled with CalVet to review in detail the leases as well as to meet with the lessees in Yountville to see where leases, if appropriate, can be voided or renegotiated with more favorable terms for the State of California and CalVet.

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

All Recommendations in 2018-112

Agency responses received are posted verbatim.