Conservancy Accused of Misspending

A state audit of parkland acquisitions accuses some agencies of wasting millions of taxpayer dollars, failing to properly control spending and violating some state laws.

The report singles out the Santa Monica Mountains Conservancy for going into debt for the 1991 acquisition of Paramount Ranch property in the Calabasas-Malibu area and Towsley Canyon in the Santa Clarita Valley.

In a report released last week following a two-year audit, state examiners chastised the conservancy for adding $2.2 million in interest to the principal cost of the purchases.

“That money could have been better spent in finding other properties to conserve,” said Robert Cabral, a state supervising auditor.

The criticism triggered an angry response Monday from conservancy Executive Director Joseph T. Edmiston, who said the projects under question are among the most important undertaken by the mountains conservancy--one of five state agencies charged with acquiring land under the California Wildlife Protection Act of 1990.

Edmiston said the acquisitions were “once-in-a-lifetime opportunities” to protect wilderness areas from encroaching development. The Paramount Ranch purchase involved buying 336 acres on which county authorities had already approved construction of 150 homes. The purchase of 273 acres in Towsley Canyon blocked the county from turning the area into a landfill.

In both cases, the conservancy used promissory notes to acquire the properties because it lacked sufficient funds to purchase the properties outright.

Edmiston said his approach was no different than any home buyer acquiring a mortgage. “It is precisely the machinery used by everybody to purchase land in the entire world,” Edmiston said. “It is amazing to me that state auditors would take on two of our best projects.”

Edmiston said the agency negotiated the time-payment agreements in 1991 after it had already undertaken a record 32 transactions to acquire a total of 3,819 acres that year. “We had scheduled out the appropriations for that year,” he said, “but we knew we were going to have the money in the future.”

In a written response to the audit included in the state report, Edmiston estimates that, while the conservancy spent $2.2 million in interest, it was able to acquire more than $10 million worth of land in exchange. He said the conservancy “faced a situation of too many vitally needed projects chasing too few dollars.” He said deferring purchases meant risking loss of a project if real estate prices climbed in a market turnaround.

However, in a written rebuttal, state auditors said the “conservancy’s logic is flawed. Specifically, when land is purchased outright, there is no risk of loss. However, when land is purchased using a note, both the money invested and the land are at risk of potential loss if the note cannot be paid.”

The state auditors and the conservancy are at odds over whether time-purchases of land by a public agency are legal under state regulations.

The conservancy, formed in 1980, has acquired a total of about 28,000 acres of land. Of that, about 3,000 acres were purchased under agreements entailing promissory notes. He said all of the time-payment purchases have now been paid in full.

However, the state audit warned that mortgage-backed purchases are risky because the land could be lost if the agency fails to meet its payments. It also said that the state and other public agencies typically purchase property in full to avoid interest costs.

The audit also criticized operations of the State Coastal Conservancy, the Wildlife Conservation Board and the Department of General Services, all over purchases of land for conservation purposes.