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Surplus Property Sits Idle, Audit Finds

The city controller says L.A. mismanages its real estate, spending millions of dollars leasing office space. Chick blames lack of a central database.

August 21, 2003|Patrick McGreevy | Times Staff Writer

The city of Los Angeles has failed to effectively manage its vast real estate holdings and spends millions of dollars on private leases even as surplus properties sit empty, according to an audit released Wednesday by the city controller.

City officials do not have a central database of all city-owned property, which was last valued in 1995 at $3 billion, and do not plan ahead to avoid costly leases, Controller Laura Chick concluded.

"The real estate holdings of the city of Los Angeles are vast, valuable and diversified," Chick said.

"But instead of a clear vision and mandate in overseeing these assets, the city is flying by the seat of its pants."

Chick cited the city's mishandling of its large portfolio of surplus properties. Officials said 2,400 properties have been identified as potentially surplus and they may be worth tens of millions of dollars, although many have not been given recent appraisals.

But officials must follow a 30-step process before a piece of surplus property can be sold. As a result, the city is selling only 11 surplus properties a year.

"At the current rate of disposal, the city would be well into the 24th century before most of its surplus property is sold, assuming that no new property is acquired," concluded the audit, prepared for Chick by KH Consulting Group.

Chick called for changing the process for identifying and selling surplus property, and increasing staff at the city's Asset Management Division, which oversees 800 city buildings and hundreds of other properties.

Reginald Jones Sawyer, the city's director of asset management, said he embraces the audit's recommendations and has begun working with the mayor's office to increase staffing and improve the effectiveness of his office.

"We are definitely going to work toward most, if not all, of what she recommends to better manage our portfolio," Sawyer said.

Part of the problem, auditors said, is that Sawyer's division has two separate databases, and neither includes all the property owned and maintained by proprietary departments, including the Department of Water and Power, the Harbor Department and the Airports Department.

In addition, city agencies handle their own leases of private office space, which the audit estimated to total $37.8 million a year in 219 locations, many on expensive month-to-month terms because of poor planning.

City Council members have complained that there have been times when one city department entered into an expensive lease for private office space when another department had surplus office space.

"The bottom line is, it's taxpayer money I believe is being wasted to the tune of millions of dollars," Councilman Dennis Zine said.

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