State Spends $2.6 Million to Rent Vacant
Building for Two Years. The
state has spent $1.3 million a year to rent a vacant office building for the
past two years, investigative reporter Mike Luery
reported July 13.
Mr. Luery, who frequently unveils government waste in his
"On the Money" feature for Sacramento television station CBS-13, found that the building in
Rancho Cordova is leased by EdFund, the non-profit
auxiliary of the California Student Aid Commission, which had planned to move
there.
"CBS-13 learned
that the Student Aid Commission was told not to move in," Mr. Luery reported. "The state was planning to sell EdFund and didn't want to have the Student Aid Commission
move in to the empty building – only to have the commission move out, in the
event of a sale."
Instead, the Student
Aid Commission was moved to another location where the rent reportedly is
cheaper than it would have been in the EdFund
building. A spokesman for the state Department of Finance said that by not
moving the commission into the empty building, the state saved more than $1
million.
Still, the rent for
an empty office is coming out of the student loan operating fund, and
apparently will continue to be paid until EdFund is
sold. The Student Aid Commission said the $2.6 million could have provided
financial aid for up to 1,000 college students (while the money comes out of
the "student loan" fund, the report said the aid to students would be
in the form of grants, not loans, so the money would not have to be paid back
by the students).
When the television
crew went to the property to film the empty office space, it initially was met
by a security guard and EdFund lawyer who attempted
to stop the cameraman from filming, and threatened to call police to remove the
crew from the property. An EdFund spokeswoman later
agreed to be interviewed and said the guard and lawyer may have been
overprotective because of the "confidential nature of what we do."
Commenting on the
report, news anchor Sam Shane noted: "No private business would be in
business if they ran it like this." (Source: CBS-13's "On the Money," July 13.)
Cal-Tax
recommendation: The state should identify any other unused properties that are
being rented or maintained with tax dollars, and should take immediate steps to
improve the management of its resources. It doesn't make sense that while
taxpayers are paying $1.3 million a year to rent an empty building, the state
is moving forward with plans to sell state-owned offices and then rent them
back from the new owners.
Cal-TaxReports, July 19, 2010
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