Oops! The city of Berkeley for decades forgot it owned a small office building on the south side of town.
The East Bay city discovered it had lost track of the office building it owned at 1890 Alcatraz Avenue, San Francisco Business Times reported, citing a city audit.
A new report by City Auditor Jenny Wong, a follow-up from a 2009 audit, includes policy recommendations to city officials from 16 years ago, such as setting up a database of city leases and licenses, and a policy for setting rents. Of the 24 recommendations in the 2009 report, seven were never implemented.
The oversights caused the city to lose track of its small office building, according to the report.
For decades, the city had rented it out to an undisclosed nonprofit tenant, over time being forgotten and going unmonitored.
Around 2010, city staff identified the building and wanted to house city services there.
But when they researched it for a potential lease or purchase — they found the city already owned it, an unidentified source told the Business Times.
It’s not clear how much the forgotten building cost the city, as some nonprofits pay rents of less than a dollar.
Wong said the oversight is a prime example of why the city needs a centralized inventory of the buildings it owns and leases.
In her report, she said the city has 49 lease agreements and eight license agreements for outside tenants to rent city-owned property, but was unable to confirm the exact number of leases the city itself holds to rent space in non-city-owned properties.
Without centralized data on the city’s leases, she said, officials can’t assess the cost benefits of renting to, or from, other entities. And the city could be spending more than it needs in its leases with other landlords.
The city also has 20 holdover leases, which are effectively expired and on autopilot. In some cases those decades-old lease agreements are well below market-rate rents, according to the Business Times.
Since the city isn’t keeping track or adjusting the rents with the market, it’s likely losing out on monthly revenue. There’s also no process for determining when to offer below-market-rate rents, nor consistency with the amount to charge.
“Differences in agreements could lead to actual or perceived unfairness between current or prospective tenants,” Wong wrote in the report, slated to be reviewed by the City Council on Feb. 11.
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