Millions of square feet of real estate owned by the Department of Veterans Affairs are going unused by the agency, and it has bungled attempts to turn excess space into revenue, with even a laundromat, for example, operating for years on old VA property without paying rent.
Groups have been using and building on VA properties for years with no lease, and in some cases the department doesn't know who is occupying the space. In other cases when it did know, it has failed to collect rent. At least one tenant turned around and subcontracted the space to others without VA's knowledge.
VA manages one of the nation’s largest real estate portfolios, with 7,400 buildings on more than 35,000 acres. But millions of square feet became vacant or underused as treatment moved towards outpatient models over the last 25 years. Congress provided VA with “land-use authorities” that allow them to enter in to agreements in which they can exchange the use of their property for revenues or other benefits.
VA now has hundreds of land-use agreements worth tens of millions of dollars a year in revenue. Yet auditors found the agency had only a loose grasp on what was going on on its land.
It incorrectly billed tenants 40 percent of the time at medical centers surveyed by the Government Accountability Office, according to an August 2014 review by GAO auditors.
A medical school in New York with seven expired agreements remained on VA property and continued to occupy premises without written authorization.
VA offices in New York City, North Chicago and West Los Angeles did not bill $300,000 of nearly $5.3 million owed. A New York center sharing partner owed more than $1 million in rent after not being billed for several years. Though VA started collecting money after finding the error, $200,000 was still outstanding as of April 2014.
Two of the VA centers had unenforced agreement terms, expired agreements and some land-use agreements that simply didn’t exist at all, GAO found in a performance audit from May 2013 to August 2014.
The city of Los Angeles, for example, has been utilizing 12 acres of VA land for recreation since the 1980s without any signed agreement or payment.
VA rented space to a golf course in West Los Angeles, but it was not permitted to perform modifications. But when GAO auditors arrived, they witnesses an irrigation system being constructed. VA officials said they were unaware of the activity.
VA also allowed a non-profit organization in West Los Angeles to not pay $250,000 they owed in fiscal year 2012 because it was experiencing “financial hardship,” despite a VA policy that prohibits waiving revenues.
GAO also found that 13 agreements had already been terminated before 2012 but were still in the system at the time of the review and that more than $240,000 in revenue from one medical center was not recorded at all.
In some cases, it was difficult for GAO to evaluate the VA’s land-use deals because its data about who occupies land is in disarray, with one property accidentally duplicated 37 times.
The North Chicago VA originally told GAO that it had nine land-use agreements that generated $3.2 million in revenues, then said it actually had seven agreements that generated no revenue.
“VA does not perform systematic reviews and has not established mechanisms to do so, thus hindering its ability to effectively monitor its agreements and use of its properties,” the GAO found.
The GAO’s analysis was limited to only medical centers in New York City, North Chicago, and West Los Angeles, because they had the largest number of agreements or the highest estimated revenue.
The House Committee on Veterans Affairs will examine the VA's land-use agreements in a hearing Tuesday.