Dysfunctional DCR tries to be smarter landlord (Commonwealth Magazine)

 

Underfunded, understaffed agency struggles to raise the rent

by Colman M. Herman and Bruce Mohl, October 10, 2016, Commonwealth Magazine


THE HEAD OF THE CHARLES Regatta is a major draw for Massachusetts. Attracting more than 11,000 athletes and tens of thousands of spectators from all over the world, the October regatta is to rowing what the Boston Marathon is to long-distance running.

For the Department of Conservation and Recreation, the state agency that owns the Charles River and its shores, the regatta also presents a dilemma. Should the agency offer access to the river and its shoreline as a public service, or should it share in the profits from the event and use the money to bolster the agency’s tattered finances?

DCR faces these types of questions on a daily basis. The agency is the largest landowner in the state. It owns the Esplanade, the Walden Pond State Reservation, Nickerson State Park, and many other parks and beaches. It also owns 2,000 buildings, four working piers, three ski areas, two golf courses, two summer theaters, six bocce courts, and assorted ice rinks and pools. In all, the agency owns 450,000 acres of land.

Despite its massive responsibilities, DCR has the image of a sad-sack state agency. Over the years, governors have used the agency as a patronage haven, commissioners have come and gone at lightning speed, and the agency’s budget and workforce have never kept pace with its responsibilities. The parks, pools, and rinks that DCR oversees generally keep operating, but day-to-day financial management of many of the agency’s properties, particularly those leased to third parties, has been neglected.

Four years ago, CommonWealth reported that some DCR tenants had been operating for long periods of time without leases and other tenants were paying rents that were either well-below market rate or not paying anything at all (“Freeloading,” CW, Winter ’12). State Auditor Suzanne Bump was called in and in 2013 she recommended a number of initiatives to put the agency on solid footing. The Legislature also passed a law in 2010 authorizing DCR to negotiate long-term leases with yacht and boat clubs that for years had been paying cut-rate rents.

Progress has been slow, painfully slow. DCR has yet to implement many of the recommendations in the audit report. Some DCR tenants continue to pay no rent, while the yacht and boat clubs are just now being required to increase their payments. An outside consulting firm brought in more than two years ago to help the agency get a handle on all its leases is still on the job, running up a tab that will reach $777,000 next year.

In August, a report commissioned by the administration of Gov. Charlie Baker documented in stark terms how DCR is poorly managing state piers in New Bedford, Fall River, Plymouth, and Gloucester. In New Bedford, for example, the consultant says accurate revenue and expense reports for the pier did not exist, but guessed that DCR suffered a $28,000 loss operating the pier in 2015.

Against this backdrop of mismanagement, DCR’s permit arrangement with the Head of the Charles Regatta might seem like small potatoes. Yet the lease with the nonprofit that runs the regatta is symptomatic of the agency’s mindset, a mindset that DCR commissioner Leo Roy hopes to change.

DCR offers the regatta access to the Charles River and eight designated areas along the shore for 13 days for a base fee of $45,000, plus reimbursement of any agency expenses in excess of that amount. In 2015, DCR collected a total of $97,650 from the regatta organization.

By contrast, the nonprofit brought in $3.1 million last year from the event, and a third of that amount was pure profit. While DCR struggles to maintain services with a declining budget, the nonprofit’s tax return indicates it has built up a $5.1 million endowment. The regatta’s executive director, Frederick Schoch, is paid $306,489 a year, more than twice the salary of the DCR commissioner.

Roy, a little over nine months on the job, says it is time for DCR to start collecting fair-market rents on the properties it leases. He says many of the agency’s permits and leases go back decades, and reflect the attitude that below-market rents are acceptable if the tenant is providing a public service in line with DCR’s mission.

“I approach this on a fairness basis,” Roy says in a telephone interview. “If I let one group use a piece of riverbank on the Charles River at a below-market rate, that’s revenue that I’m starving from the system as a whole. So maybe there is a park in the central part of the state that’s not getting the resources it needs because I’ve got a below-market situation here. What I’m trying to do over time is really systematically get all of the rents across the system up to a market rate, or up to a near-market rate. It’s a multiyear effort.”

Read the full article in Commonwealth Magazine

 

Comments are closed.