Report I2015-1 Recommendation 4 Responses

Report I2015-1: Investigations of Improper Activities by State Agencies and Employees (Release Date: August 2015)

Case Number I2014-1440

Recommendation #4 To: Transportation, Department of

To remedy the effects of the improper governmental activity substantiated in this report and to prevent it from recurring, Caltrans should continue its efforts to recover the undercharged rent from the telecommunications companies.

Agency Response From April 2017

Caltrans reported that several telecommunications companies contested its efforts to recover the undercharged rent by citing conflicts with the master license agreement signed by Caltrans and each telecommunications company. Specifically, they cited that the master license agreement remains in effect for 25 years if all extensions to the agreement are exercised. In addition, the annual increase in rental rates is set at 3.5 percent and no other increases were applicable until 2012. Further, the base rental rate could be renegotiated by mutual agreement only in 2012 to reflect the fair market value. Finally, the master license agreement requires Caltrans to notify the telecommunications companies in writing about any rental rate increases. However, in 2014 and 2015 Caltrans only notified the telecommunications companies of the rental rate increases by email or telephone. Consequently, Caltrans stated that it is revising the master license agreement to reflect the appropriate rental rate increases and other issues, and Caltrans stated that it will ensure that it follows appropriate notification procedures.

California State Auditor's Assessment of Status: Resolved


Agency Response From October 2016

Caltrans reported that it has confirmed that the correct fair market rental rates were applied and stated that it has sent letters to all the telecommunications companies requesting payment for undercharged rent. Consequently, Caltrans stated that 35 telecommunications companies have paid their outstanding balances. In addition, Caltrans stated that it received approximately $500,000 from the telecommunications companies and that it is continuing its efforts to recover any remaining undercharged rent.

California State Auditor's Assessment of Status: Partially Implemented


Agency Response From July 2016

Caltrans reported that it has continued its efforts to recover the undercharged rent from the telecommunications companies. Specifically, it sent payment notices to the 30 accounts that have outstanding balances. However, Caltrans stated that its legal division must confirm that the correct fair market rental rates were applied.

California State Auditor's Assessment of Status: Partially Implemented


Agency Response From June 2016

Caltrans reported that it is continuing its efforts to recover the undercharged rent from the telecommunications companies. In particular, Caltrans stated that it has received full payment of the outstanding balances for 29 of the accounts and that it is continuing to recover the undercharged rent from the remaining accounts. Caltrans reported that next it will send these accounts "pay or quit" notices.

California State Auditor's Assessment of Status: Partially Implemented


Agency Response From April 2016

Caltrans reported it is continuing its efforts to recover the undercharged rent from the telecommunications companies. In particular, Caltrans stated that it has received full payment of the outstanding balances from about 10 of the companies. It also reported that within the next few weeks, it expects to receiving full payment from about 12 companies. For the remaining accounts, it is continuing its efforts to collect the undercharged rent.

California State Auditor's Assessment of Status: Partially Implemented


Agency Response From October 2015

Caltrans reported that by October 31, 2015, it plans to notify each of the affected telecommunications companies regarding how much undercharged rent is owed.

California State Auditor's Assessment of Status: Pending


All Recommendations in I2015-1


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