Cheap rents on state land face review

What’s a fair price for a waterfront home between Newport Beach and Laguna Beach?

The state parks department charges two rangers $148 a month each to live in cottages at Crystal Cove State Park. Newport Beach Assemblyman Chuck DeVore thinks that’s far too little, and a recent report from state auditor Elaine Howle seems to agree.

Howle began the audit after a whistle-blower alleged the state Department of Fish and Game allowed employees and volunteers to live rent-free on state property, but the audit also included 12 other state departments that own and provide housing for employees.

The audit found that in 2003, the state may have lost more than $11 million in rent charges and tax revenue because of housing benefits that weren’t reported and rents that were “well below market rates.” The state is required to charge fair market value for housing except when employees meet specific criteria.

The investigation was made public on March 22. It estimated most of the lost revenue was due to the state parks department, which owns the largest share of the housing that was studied ? 487 of 1,181 units. The department charged just $763,488 in rent for those units in 2003, but it could have brought in close to $4.8 million if the units were rented at fair market value, according to the audit.

The audit also estimated parks department employees received $3.6 million in taxable fringe benefits that weren’t reported that year.

DeVore isn’t surprised by the audit results. He came to a similar conclusion through his own investigation in 2005, when he battled with parks officials over a bill to let residents keep living in the El Morro Village mobile home park.

“Right now it’s California’s best-kept secret that there are 1,800 employees that are getting a benefit that the taxpayers don’t even know about,” DeVore said.

But state parks spokesman Roy Stearns said if rents are low, there’s not a lot his department can do about it. Contracts with union employees leave parks officials limited discretion in raising employee rents, he said.

Also, the department doesn’t know what “fair market” rates should be because no appraisals have been done, and its request for money to pay for appraisals was refused, Stearns said.

In response to the audit, the department argued that some employees, such as the two park rangers who live at Crystal Cove, need to live on-site to provide security for the park property, assistance to park visitors and law enforcement.

Changes to the parks department’s employee rents could be coming, but it’s not clear when or how that will happen. Howle said the auditor’s department can raise the issues but doesn’t have authority to force the departments to do anything.

Stearns said the parks department is working on a plan to determine fair market value for its properties.

“To the extent that we have the authority to correct problems we will correct them, but as we’ve pointed out, raising rates in many circumstances requires authority beyond what we have,” he said.

DeVore wants to give that authority to the Department of Personnel Administration, which keeps track of what the state charges for fringe benefits such as housing but can’t make rules to change it. He wrote a bill under which the personnel department director could require departments to determine fair market costs for housing and then charge those costs.

Assembly members passed the bill in late January, and it is awaiting a hearing in the Senate.