July 11, 2007 — A scathing federal audit report has pushed the Department of Property and Procurement to re-evaluate some of its operations and take a more comprehensive look at rental and leasing policies, officials said during the first round of budget hearings Wednesday.
The audit, released early last month, primarily cited the department's failure to collect some $6 million in rent from its lessees during a five-year period and spending more than necessary on rental properties. The department also lost out on close to $2 million in additional rental or related income, as it did not efficiently bill tenants for subleasing activities, the audit said. (See “Federal Audit: Property and Procurement Squandered $9 million.”)
The department has addressed a majority of the findings but is still working to effectively monitor government properties leased or subleased throughout the territory, said Property and Procurement Commissioner Lynn Millin during Wednesday's hearing.
"We did implement five out of the six findings listed in the report," she explained. "But we also did find that we have allowed, in the past, situations in which the tenant, for example, is subleasing the property at a rate as much as 400 percent more than what they’re paying the government. We have personnel now to monitor that. We took all the lease agreements and broke them down into different areas so inspectors can go out and hit all the properties in their area."
The process by which the department collects its delinquent rental payments is also being streamlined, as business and commercial leases are now being scanned into an electronic database where they can be accessed more easily, Millin added. A comprehensive listing of all the government's properties is also being compiled, she said. A majority of the department's records are intact, even though there have been some difficulties in finding certain leases or deeds, she added.
Though the department is relatively small, with about 117 employees, it does have tremendous responsibilities. In addition to buying or maintaining government vehicles, facilities and supplies, it also handles a majority of the government's professional services, construction and general-service contracts. The renting of government properties is also on the department's task list, along with reviewing various grants and printing documents upon request from other government agencies.
In an attempt to help the department better manage these tasks, senators suggested that Millin look into setting up a centralized warehouse or records facility, allowing both residents and officials to keep track of goods and services handled by Property and Procurement. While the department is currently looking into revamping one of its warehousing facilities, Millin also explained that other changes on the horizon would greatly improve a number of processes, keeping Property and Procurement running as smoothly as possible.
In addition to soliciting bids for a comprehensive government complex on both islands, the department intends to more carefully monitor the government's fleet of about 1,400 vehicles, putting in place more cost-effective methods for monitoring gas consumption and use.
Property and Procurement intends to cut the fleet in half within the next few years and dispense its own gas instead of paying higher prices at the pumps, Millin said. Currently the department's gas coupons — which are purchased by various government entities — are sold at a set price per gallon, which may not reflect increases in fuel rates, she said.
New gas coupons will now have a dollar value, Millin said, adding that the department is working on setting up its own refueling sites in both districts. She also said Property and Procurement would develop policies that regulate when government vehicles are used, restricting employees from driving them after business hours.
With all the talk about gasoline and rental policies, senators spent little time Wednesday exploring the nearly $6.4 million General Fund budget proposed for the department in fiscal year 2008, which Millin said would mainly go toward employee salaries.
"Our department is about 90 percent personnel and about 10 percent operations," Millin explained. "So any increase we have over this year is for utilities and employees."
Property and Procurement will also be able to supplement its budget by using some of the revenues it generates, helping to bring the department's overall recommended level of funding to about $11 million for FY 2008.
Also included within the department's overall budget is:
— an additional $700,000 which has been earmarked in the miscellaneous section of the FY 2008 budget proposal to obtain surveys, appraisal reports and maps on government lease agreements and land acquisitions; and
— another $405,300 in the government's new capital-improvement budget, which is covered by money in the Internal Revenue Matching Fund — the repository for the territory's rum revenues.
The department's capital improvement needs in the St. Croix district alone total about $3.5 million, since various government buildings on the island need to be revitalized, Millin said. Keeping that in mind, she explained that Property and Procurement would be taking a new approach in the upcoming years, assessing all projects on a territorial basis and requesting funding when necessary.
Present during Wednesday's meeting were Sens. Liston Davis, Juan Figueroa-Serville, Louis P. Hill, Neville James, Terrence "Positive" Nelson, Ronald E. Russell and James Weber III.
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