Overview
In our prior audit, we found several problems with the way DCR administered its use agreements, including allowing lessees to continue using or occupying a property even though the agreement had expired and allowing multiple lessees to use a property for a period of time without a use agreement. Without agreements properly executed on a timely basis, liability-related legal protections may not be in effect for all parties. During our current audit, we found ongoing problems in the following areas:
- Four properties leased under 4 of the 64 use agreements we sampled continued to be used with either expired or terminated use agreements. Two of these were agreements with utility providers, and the other two were skating rink agreements. Our review of all use agreements indicated that DCR was still not ensuring that all of them were active and up to date.
- Of the 64 use agreements we sampled, 4 were not executed with the DCR Commissioner’s signature while the property was occupied. The agreements were 1 high-ground agreement, 1 boat and yacht club agreement, 1 legislatively authorized lease agreement, and 1 Memorandum of Understanding. In addition, we followed up on the prior audit’s 20 cases in which use agreements had not been properly executed with the DCR Commissioner’s signature (16 for concession stands and 4 for skating rinks). We determined that 5 of the concession stands still lacked executed use agreements and 9 of the 11 that had executed use agreements after the prior audit were now operating with expired agreements. In addition, though the 4 skating rinks that lacked properly executed use agreements in our prior audit had subsequently obtained them, all 4 use agreements had since expired.
Authoritative Guidance
Prudent business practices suggest that use agreements should be signed by all parties named in the agreement; that those that come up for renewal should be renegotiated and updated to reflect the needs of both the lessor and the lessee as well as the current business environment; and that use agreements should be in place before a property is occupied or used.
Reasons for Issues
DCR does not have written policies and procedures or a complete and updated register of use agreements to help ensure that all agreements are renewed in a timely manner. DCR senior management indicated that the agency was working with its contractor to improve its ability to register and track all aspects of use agreements that are under the control of DCR’s Long-Term Permits and Leases Unit.
Recommendations
- DCR should follow up on, and resolve, all expired use agreements.
- DCR should develop and follow written policies and procedures to ensure that use agreements for all of its properties are properly executed and renewed before they expire.
Auditee's Response
DCR agrees that it is important to have current agreements in place for users of DCR properties. However, we note that these agreements are typically the product of a negotiation between the parties to arrive at mutually acceptable terms, and that process may take a substantial amount of time. As discussed below, DCR has been addressing this issue by improving our internal processes.
Although the OSA report does not specifically identify which agreements were not fully executed, we will review our files and, to the extent those agreements are active and have not been signed, we will follow up to ensure that they are properly executed.
As noted above, DCR contracted with TRA in April 2014 for real estate advisory services. TRA has assisted DCR by scanning agreements and creating an initial database of information about those agreements. The database was enhanced by a program/application called Agreement Tracker, created to show agreements and related information to DCR staff until a more permanent or Commonwealth-based system may be implemented. The database and Agreement Tracker contain information about current and newly issued agreements, as well as those that are expired/inactive/terminated, and that information is used by Permits and Leases staff to monitor and administer DCR long-term permits and leases. Since 2014, staff has been cross-checking agreements with actual field information to determine which agreements should be renewed or archived and removed as an active agreement from the database. In addition, since 2014, Permits and Leases staff has been meeting with TRA staff on a monthly basis to review specific agreement information produced by TRA for the purpose of determining the status of agreements. Those meetings now include DCR Finance staff as well. For example, in 2013, the Permits and Leases agreements were scanned into the database; at that time, there were approximately 1,100 agreements. Currently, there are approximately 800 agreements in the database, reflecting staff’s efforts to identify and eliminate inactive and expired agreements.
We also note that effective July 1, 2015, G.L. c. 92, § 33 was amended to increase the maximum term of a permit from 5 years to 10 years. The availability of a longer term has reduced the administrative work associated with renewing or extending permits, thereby enhancing DCR staff’s ability to more effectively manage existing agreements and prepare new ones. In addition, the Boat and Yacht Club and Cottage permits, both of which had one-year terms, have had their terms extended to five years and two years, respectively.
Permits and Leases staff continues to draft templates with standard language for certain categories of agreements to decrease the amount of processing time for new agreements.
The Permits and Leases unit has a Procedures Manual which contains detailed information on the work processes of the unit, including information pertaining to different types of agreements, the [Request for Proposals] process, file maintenance, insurance requirements, work flows, and the approval process. The Manual will be revised to include the process improvements described above with respect to identifying and taking action on expired permits. The Manual is in draft form, and we anticipate it will be finalized shortly. The final version will include relevant policies for the unit.
Auditor's Reply
Based on its response, DCR is continuing to take measures to address our concerns in this area.
| Date published: | June 14, 2018 |
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