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Parks lose millions in uncollected payments

April 22nd, 2008 Leave a comment Go to comments

Park Closures Could Be Averted by Reaping Concessionaire and Easement Revenue

Questionable deals to reduce or waive rental payments from private leases and concessions throughout New Jersey’s State Parks is costing taxpayers a bundle, according to documents released today by Public Employees for Environmental Responsibility (PEER). The state has ignored repeated warnings that it is forfeiting millions of dollars each year by failing to collect what is owed by easement-holders and concessionaires, including some of the state’s largest corporations.
Governor Jon Corzine has proposed to close several parks serving an estimated two million visitors each year and lay off 80 park workers in order to save the state roughly $4.5 million. Yet, the Governor’s people failed to consider the unutilized revenue potential of the system they are trying to collapse.
“Collecting rents is basic management 101, but that is a course our top folks evidently failed,” stated New Jersey PEER Director Bill Wolfe, a former state Department of Environmental Protection (DEP) analyst, noting that utilities, oil companies and other big corporate players are not paying current market rates for use of state lands, facilities and right-of-ways. “Our parks can no longer afford corporate welfare.”
Internal documents from DEP, the parent agency for the Division of Parks and Forestry, indicate that uncollected and subsidized rents are common throughout the system. Problems include lack of lease agreements, failure to collect owed rents, rent-free arrangements, and outdated decades-old leases:
* Millions of dollars in lease revenue goes uncollected from major corporations granted use easements for transmission lines, pipelines and sewage lines across State Park lands;
* In Six Mile Run and Delaware and Raritan Canal State Park, for example, none of the agricultural tenants are paying any rent nor do they even have current leases; and
* The parks Office of Leases and Concessions routinely signs off on “rent abatements” and other give-aways described by one former superintendent as “a scam”.
Over the past few years, Parks Supervisors repeatedly identified similar problems, but DEP management took no action. DEP also ignored a series of Office of Legislative Services Audit reports issued in 1997, 1999 and 2003 documenting a lack of internal financial controls needed to track lease payments owed.
“With parks facing shutdowns and visitors hit with higher entry and parking fees, it is past time to put our fiscal house in order,” added Wolfe. “Our parks are supposed to be free for the enjoyment of the public, not the concessionaires.”
Look at 2003 OLS Audit finding that DEP had not addressed prior reports of lost lease revenue (see: http://www.njleg.state.nj.us/legislativepub/Auditor/42023.pdf
See the lease arrangements at one state park (see:http://www.peer.org/docs/nj/08_21_4_lease_problems_profile.pdf
Read e-mail describing Office of Leases and Concessions problems (see: http://www.peer.org/docs/nj/08_21_4_leases&concessions_email.pdf
New Jersey PEER is a state chapter of a national alliance of state and federal agency resource professionals working to ensure environmental ethics and government accountability.

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  1. ThomasReid
    April 22nd, 2008 at 14:43 | #1

    From your first link:
    “The cost to operate the 125 berths at Forked River averaged $3,210 per berth.Leonardo’s average cost per berth was $2,715 for its 175 berths. Annual revenues at Forked River averaged $175,000 while revenues earned at Leonardo averaged $350,000 during the audit period. This results in a net deficit for the state-operated marinas exceeding $300,000 per year which must be funded through agency appropriations.
    We compared the per berth operating costs with those of the private vendor leasing the 640 berths at Senator Frank S. Farley State Marina and determined they are operating the facility for an average of $970 per berth. ”

  2. nohesitation
    April 22nd, 2008 at 14:48 | #2

    ThomasReid – what is your point?
    Did you read the internal DEP memo’s about the value of the leases at D&R Canal State Park?
    That’s where the big money is, because revenues from easements across state lands are undervalued (negotiated decades ago) and some revenues are not even collected.
    This is where the big money is. The Audit you cite is chump change. I only posted this to document one small part of the problem.

  3. nohesitation
    April 22nd, 2008 at 14:50 | #3

    ThomasReid – in case you don’t get it – the DEP Office of Leases adn Concesions has SYSTEMIC problems.
    Do you know how many acres and easements there are across state lands in the entire state?
    Neitehr does DEP, who is charged with collecting the revenue.
    This kind of mismanagement should outrage everyone.

  4. nohesitation
    April 22nd, 2008 at 14:57 | #4

    ThomasReid – hint: the revenue data is found in a spreadsheet in this link to a DEP memo:
    See the lease arrangements at one state park (see:http://www.peer.org/docs/nj/08_21_4_lease_problems_profile.pdf

  5. nohesitation
    April 22nd, 2008 at 16:30 | #5

    BillWolfe – hey, great name you got there!
    Yes, and you forgot: those monkeys can also drive the car to get there.
    Now maybe if the title of my post was “Monetizing state asssets via market valuation of easement cash flows” or somesuch, the front office Wall Street types in the Corzien camp would sit up and listen.

  1. April 28th, 2015 at 01:19 | #1
  2. June 12th, 2015 at 18:44 | #2
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