Report 2018-112 Recommendation 2 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 #2 To: Veterans Affairs, Department of

To ensure that future leases of veterans home property are established in accordance with state requirements, CalVet should implement its property use policy when considering all proposed leases of veterans home property.

Annual Follow-Up Agency Response From October 2020

CalVet's Property Use Policy was formalized and published in December 2018, and has been used in daily practice for processing lease agreements and licensing events. Since January 2020, there were two license agreements for events which met the criteria and were approved per the Property Use Policy. However, due to the global COVID-19 pandemic that occurred, all third party events were cancelled or severely modified for infection control. There were two organizations which requested short-term use at one of the Veteran Home properties, to hold their ceremony at the picnic grounds, including overnight camping by vendors. These were denied as those events did not adhere to the requirement that such events primary benefit the Home's residents. In addition, CalVet works closely with the Department of General Services on all proposed leases of the Veteran Home properties to ensure the property use is in the best interest of the Home and its members. Recently, there were two lease agreements that met the criteria and were approved per the Property Use Policy.

Documented Evidence:

1) CalVet's Property Use Policy (All Homes), policy #7654v1

2) Denials Criteria Checklist Log with Correspondence

3) License Agreements

4) Renewal Lease and supporting documentation for Tug McGraw

5) Renewal Lease and supporting documentation for Golden1

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

CalVet provided renewed leases for two tenants at the Yountville Veterans Home. The lease documentation that CalVet provided demonstrates that CalVet has begun implementing its new property use policy when leasing property at the veterans homes. For both leases, CalVet documented how the leases were in the best interests of the veterans homes, in particular the best interests of the veteran residents. CalVet also documented how the rental fees in the leases satisfied DGS's determination of market value for the leased property where appropriate. Continuing to implement its property use policy when entering new leases will ensure that the uses of the veterans home property are consistent with the best interests of the veterans homes and their residents.

1-Year Agency Response

As mentioned at CalVet's six-month update, the Department implemented a new property use policy in early 2019 and is operating in accordance with the policy. The adopted property use policy is guiding decision making not only for all potential lease agreements but also for all events to be held on Home property. CalVet no longer allows for the private use of facilities for events that generally benefited the general public rather than the Veterans Home's residents. For example, use of the picnic grounds at the Veterans Home of California - Yountville is reserved for organizations that provide entertainment and or meals to the Home's residents. Examples of events that have been discontinued or denied since implementing the new policy are:

- Corporate annual picnics;

- Certain fundraisers that do not benefit the Home;

- Filming requests for movies and commercials.

Events the Department continues to permit are those whose organizers have demonstrated a clear benefit to the Home's residents, or those the residents have specifically requested, such as a car show hosted by a local classic car club that did not profit from the event. In the case of permitted events, the Department and each event's organizers develop a written agreement that captures appropriate parameters, structure, accountability, and expectations.

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

In its response, CalVet describes its implementation of its property use policy when considering short-term uses of its property. Although implementation of that policy would address some of the issues that we identified with CalVet's licensing of the property for short term uses, the recommendation is that CalVet implement its property use policy when considering proposed leases of veterans home property. CalVet informed us that it has not issued a new lease since our audit was published. As a result, it has not been able to demonstrate that it has implemented its new policy for leasing veterans home property. Once it does, we will assess its implementation of that policy.

6-Month Agency Response

CalVet implemented a new property use policy in early 2019 and is operating in accordance with the policy. The adopted property use policy is guiding decision making not only for all potential lease agreements but also for all events to be held on Home property. CalVet has recently rejected proposed leases and events that do not comply with the property use policy and will continue to do so.

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

CalVet has not yet provided documentation to support that it has fully implemented the recommendation.

60-Day Agency Response

CalVet has fully implemented this recommendation. The property use policy is currently guiding decision making for all potential lease agreements. CalVet has rejected proposed leases that do not comply with the property use policy and will continue to do so.

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

In order to determine whether CalVet has implemented its property use policy we will need to review leases that CalVet has approved and rejected. However, according to staff at CalVet there have been no new leases since we issued the audit report. Therefore, we cannot yet conclude whether CalVet has fully implemented the recommendation.

All Recommendations in 2018-112

Agency responses received are posted verbatim.