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Report: Caltrans Passed Up $22 Million in 710 Rental Income

The report, requested by Assemblymember Anthony Portantino, states that tenants' rents are on average 43 percent below market rate.

The California State Auditor released a report Thursday confirming Caltrans' mismanagement of 345 homes along the 710 Freeway corridor in South Pasadena, Pasadena, Alhambra and L.A. 

The report states that tenants' rents are on average 43 percent below market rate—estimating that Caltrans "missed the opportunity to generate roughly $22 million in rental income between July 1, 2007, and December 31, 2011."

Here is an overview of findings in the report:

  • Caltrans has spent an average of $6.4 million per year on repairs to SR 710 properties; however, it could not demonstrate that the repairs for 18 of the 30 projects we reviewed were reasonable or necessary. 
  • To maintain the SR 710 properties, Caltrans has transferred an average of $4.7 million each year to General Services since fiscal year 2005–06. However, Caltrans does not provide proper oversight of the repairs General Services performs.
  • Caltrans also stated that it does not charge market rates for many of the SR 710 properties because in 2002 the former Caltrans director instructed the District 7 office not to increase rents to market rates.
  • Once Caltrans completes the necessary reviews and plans for the SR 710 extension project, it can determine if it requires all of the properties that it currently owns.
  • The sale of these properties will be restricted by legislation enacted in 1979 known as the Roberti Bill, which requires the State to offer the properties at significantly reduced prices to any current tenants who have low or moderate incomes and have not owned real property in the three years prior to the sale.

The California State Auditors gave a slew of recomendations to Caltrans to ensure the following:

  • That the repairs it makes to the SR 710 properties are necessary and reasonable;
  • That it collects fair market rents for the SR 710 properties on the State’s behalf;
  • Only eligible tenants receive the benefit of the affordable rent policythat all taxable fringe benefits or gifts state employees receive are appropriately included in their gross income;
  • That only eligible tenants receive the benefit of the affordable rent policy. 

For the full report, click HERE.

This audit was requested by Assemblymember Anthony Portantino after a Los Angeles Times public records request last year, in which Caltrans provided documentation of roof repairs and replacements between 2005 and 2010 on homes it ownes in Pasadena. The average cost to taxpayers was $70,994, which is higher than what a typical homeowner would pay, the publication reported.

Patch Asks: Are you surprised by these findings? Do you live in a Caltrans-owned home? Do you think Caltrans should sell these properties? 

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