San Diego County Grand Jury • 2021-2022

City of San Diego Leasehold Management Still Has Weaknesses

Published: June 23, 2022 9 pages
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Findings 6 findings

F1
The City has received multiple notifications that holdover leases are a concern, yet the percentage of leases in holdover status has continued to increase. Fact: The Torrey Pines Gliderport lessee paid a required $5,000 deposit when it submitted a proposal for the 2016 RFP. Fact: The $5,000 fee was applied to the 2017 RFP, when no proposals from the 2016 RFP were deemed to be responsive. Fact: The current Torrey Pines Gliderport lessee was the successful bidder for the 2017 RFP, but the lease was not implemented due to the lessee’s required improvements being dependent on the unfunded Torrey Pines General Development Plan. Fact: DREAM retained the $5,000 fee, even though the 2017 RFP was not executed Fact: DREAM continues to hold the $5,000 agreement fee from 2016 and plans to use it to offset costs incurred in the three-year lease currently being negotiated.
F2
There are processes in place for handling the faithful performance deposits for RFPs successfully executed, but no process found for handling deposits for successful RFPs that cannot be executed due to no fault of the proposer, resulting in extended retention of funds. Ibid. Fact: The 1998 lease for Torrey Pines Gliderport required public liability and property damage insurance in the amount of not less than $1 million Combined Single Limit Liability and not less than $1 million in third person liability covering flight operations. Fact: Since the 1998 lease is still in effect, required insurance coverage has not increased in 24 years. Fact: The 2016 and 2017 RFPs specified increased insurance coverage for public liability and property damage insurance in the amount of not less than $5 million Combined Single Limit Liability and not less than $5 million in third person liability covering flight operations. Fact: The three-year lease that will be finalized and executed in 2022 includes insurance requirements for $5 million for any one occurrence and $10 million aggregate, with the City as an additional insured
F3
The increased insurance requirements in the pending 2022 three -year lease indicate a need for a substantial increase in coverage for the TPG, which could also be a concern for other properties in long-term holdover. Fact: There is no requirement in older, holdover current leases for annual property inspections at the Torrey Pines Gliderport.
F4
DREAM does not have a consistent process for inspecting Torrey Pines Gliderport; property report forms do not include detail on resolution of deficiencies noted, nor responsible party. Fact: City Council Policies 700-10 (Disposition of City-Owned Real Property was last revised in 2012. Fact: The 2016/2017 Grand Jury recommended updating these documents and DREAM replied that this would be done by June 30, 2017. Fact: The February 2022 City Auditor report noted that these policies had not been updated.
F5
DREAM had previously agreed to updating Council Policies 700-10 in 2017; five years later, this has not been done. Fact: The 2016/2017 Grand Jury found DREAM did not have adequate staffing to accomplish necessary tasks. Fact: Despite DREAM’s response to the 2016-2017 Grand Jury report indicating it would have adequate resources by 2017, inadequate staffing levels persist until this day. Fact: The February 2022 City of San Diego audit found that the department was significantly understaffed, and that budgeted positions have decreased instead of increased, since 2017.
F6
Inadequate staffing is the reason for ongoing operational shortcomings, such as continuing large numbers of holdover leases, inconsistent documentation of insurance records, and irregular property inspections.

Recommendations 6