New Jersey Forfeits Millions on Park Leases and Concessions

Despite a declared fiscal emergency, New Jersey taxpayers are losing
millions of dollars every year on lapsed leases and other concessions on
state forest and recreational lands, according to a state audit report
posted today by Public Employees for Environmental Responsibility
(PEER). Failure to keep leases current or charge full market rates
gives an underhanded subsidy to some of the state's biggest corporations
at taxpayer expense.

The Office of State Auditor report covers
"Natural Resource Management" by the New Jersey Department of
Environmental Protection (DEP) for the period from July 1, 2007 through
September 30, 2009. The audit found that long-standing deficiencies in
DEP property management had still not been remedied:

• Nearly
  half of the leases (112 of 236) on a state inventory list are expired;
• More than half of leases sampled (17 of 28) could not show
  that market rates are charged. This chronic problem is compounded by
  the fact DEP "does not have a system that can easily determine the rent
  receivables." As a result, state marinas and other concessions operate
  at a loss; and
• Lack of required insurance can also increase
  state liability. For example, at the Aero-flex-Andover Airport in
  Kittatinny State Park only 3 of 45 hangar and business rentals had proof
  of insurance on file. Only two of those 45 tenants had current rental
  agreements; 16 of the tenants had no agreements at all on file.

"This is the fourth audit in a row highlighting these same problems,"
stated New Jersey PEER Director Bill Wolfe, a former DEP analyst. "The
state is in dire fiscal straits; is it too much to ask DEP to simply
collect the rent?"

A related and perhaps larger deficiency is
that DEP does not charge utilities, oil companies and other big
corporate interests the full market rate for use of state lands,
facilities and right-of-ways. This problem was illustrated last week
when DEP proposed that Tennessee Gas Pipeline Co. pay only $45,000 on a
24-year lease for a $2 billion pipeline that will cross through several
state parks and preserves. While the deal was temporarily shelved by
the State House Commission, during the hearing DEP was unable to find a
copy of the appraisal on which the lease schedule was based. PEER today
sent a letter to the State House Commission asking it to remedy severe
deficiencies in its property management and appraisals before
reconsidering the Tennessee pipeline deal.

"It is scandalous
that the State of New Jersey does not know what it owns or what it is
worth," added Wolfe, noting that the DEP does not even have a complete
list of all its leases. "One simple but seemingly revolutionary economy
measure that we should enact right now is to ensure that all holders of
state easements, leases and other concessions pay their fair share."

Read the
State Auditor report

View
the PEER letter to the State House Commission

Look at past
warnings ignored