How Santa Clara County Decides to Lease Property at Below Fair Market Rates.

Recommendations 3

• R1
  relates to the information that should be included in a staff transmittal to the Board before approval of a BFM lease. First, we note that existing County policy regarding BFM leases is set forth in Board Policy 5.9.5.2, which clearly gives the Board discretion to approve BFM leases. In instances where a BFM lease is presented to the Board for consideration, it seems reasonable to quantify the difference between the actual fair market value (FMV) and the proposed lease amount, as well as the rationale for the proposed BFM lease rate, in order to assist the Board in making an informed decision. Appropriate language could be added to Board Policy 5.9.5.2 to require this information in staff transmittals. The Streets and Highways Code generally requires that Road Fund real property assets be leased or sold at Fair Market Value; a similar requirement exists in the Federal Aviation Administration (FAA) regulations for airport property. Board of Supervisors: Mike Wasserman, George Shirakawa, Dave Cortese, Ken Yeager, Liz Kniss 7-007 County Executive: Jeffrey V. Smith .
• R2
  relates to the process for determining FMV rates. We agree that a consistent process for determining FMV rates, either by outside professionals or in-house staff possessing the appropriate expertise, should be employed to provide the information recommended in Recommendation 1.
• R3
  proposes that the County centralize responsibility for County- owned real estate. We note that this recommendation has been suggested internally in the past and rejected. Each Department Head has cognizance over a variety of resources such as labor, equipment, funding and real property assets that he or she utilizes to achieve the department's mission. There is no compelling reason to strip the department head of responsibility for one particular type of resource, which must be deployed in a strategic manner in concert with the other types. Moreover, Road Fund property and Parks property have special statutory standing and constraints associated with their lease or sale. The respective directors of the Roads Dept. and the Parks Dept. are thus best qualified to manage these assets. We would also note that the Board's Finance & Government Operations Committee (FGOC) provides centralized oversight on all proposed leases and sales of County real property before being agendized for Board action. If standardization of policy and practice relating to real property leases is the goal, there are methods of achieving such standardization without resorting to centralizing responsibility for real property management. Recommendations 1 and 2 are a good start. Thank you for the opportunity to review the report. Please let me know if you require any additional information from Roads & Airports. Sylvia Gallegos, Deputy County Executive CC: Robb Courtney, Director, Parks & Recreation Dept. Jeff Draper, Director, Facilities & Fleet Dept. The foregoing instrument is a correct copy of County of Santa Clara the original Parks and Recreation Department ATTEST: Lynn Regadanz, Interim Clerk of the Board 298 Garden Hill Drive Los Gatos, California 95032-7669 (408) 355-2200 FAX 355-2290 By: Reservations (408) 355-2201 Deputy Clerk www.parkhere.org AUG 2012 Date: MEMORANDUM July 26, 2012 Date: To: Gary Graves, Chief Operating Officer Office of the County Executive Robb Courtney, Director From: Parks and Recreation Department Response to Santa Clara County Civil Grand Jury Report Subject: In response to your memorandum of July 3, 2012, Parks and Recreation Department (Parks) staff reviewed the Grand Jury Report, and offer the response below: The leases reviewed by the report are administered by Facilities and Fleet (FAF), so the Department will not comment on those findings. Parks does have feedback related to the three recommendations of the Grand Jury as those recommendations relate to the Parks' ongoing business activities and to Parks administration of existing Board policies which govern leasing parkland for park purposes. As an overarching concept, it is important to note that parkland is subject to unique legal and policy requirements that are not applicable to other County real property assets. The leasing program for Parks is not only utilized for commercial partners to provide park services; it is utilized for establishing partnerships with public agencies and not-for- profit entities to provide parks and recreation services on County parkland that are not feasible for the County to provide.