Thursday, June 25, 2015

[San Benito County] Grand jury questions CSDC lease designation


The county’s civil grand jury released its annual report and claimed, among other allegations on various government entities, that a local agency’s lease and future financial sustainability are in question.
The San Benito County Grand Jury report culminated the past year’s work of 19 volunteers who investigated taxpayer-funded agencies, either upon request or on their own volition. Those government entities are required to respond in some manner to the report’s allegations within 90 days.
While much of this year’s report underscored the grand jury’s own financial problems and the county’s hesitation to increase funding during the current budget cycle—hashed out in public at several prior county board meetings—one of the more serious allegations has to do with the Community Services Development Corp. and its lease with the county.
The CSDC is a nonprofit organization that pursues affordable housing opportunities for low-income residents, according to its website. The county created the CSDC in 1984 as a partnership with health and human services and constructed a one-stop access center on San Felipe Road in 1992 with assistance from low-interest federal financing, according to background information in the report.
CSDC has a 30-year lease term with the county along with a clause extending that lease another 99 years starting in 2023 at a rate of $1 annually, according to the grand jury report.
That report is alleging that the county’s consultants have misclassified the lease—broadly considered a commercial lease—as “operational” instead of “capital” under that commercial category. The report implies that the seemingly subtle difference means a lot, because it allows the CSDC to receive federal reimbursements that essentially create a rent-free situation.
The report makes the allegations and associated recommendations—as is the case with all of the investigations in the document—which include changing its accounting methods and removing the lease option calling for an additional 99 years at a rate of $1 annually.
June 23, 2015
Hollister Free Lance
Posted by Kollin Kosmicki

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