California has mismanaged its veterans home properties, audit finds

California has “mismanaged” properties where its state-run veterans homes are located, failing to charge market rents to private users and shortchanging programs that should benefit from the leases, a state audit concluded Tuesday.

The head of the California Department of Veterans Affairs agreed with the findings and said changes would be made, while a leading state lawmaker said Tuesday she was pursuing legislation to make sure the properties were handled properly.

The department oversees eight residential facilities in the state that provide rehabilitative and medical care to California military veterans, and the surrounding acres are managed by the state Department of General Services.

Property at the veterans homes has been leased for private uses including a theater, museum and a golf course, according to state Auditor Elaine Howle. The two agencies “entered into agreements with third parties that are inconsistent with the homes’ best interests and that violate state law by allowing the third parties to lease property for decades,” Howle wrote in a letter to Gov. Gavin Newsom and the Legislature.

State law requires the funds from leases to go back to the veterans facilities, but the two agencies “failed to ensure that $610,000 was appropriately directed to the homes” over three years, Howle told state elected officials.

The audit said officials could not explain how they had established the rental rates for most leases reviewed and that rents for two leases were far below market rates. The same problem existed with employee housing at the Yountville Veterans Home. The facility was in the news last March when a combat veteran shot to death three mental health workers there before killing himself.

At Yountville, the audit said, the state undercharged for rents by $152,000 in 2018.

The audit also found state officials allowed cycling events and fun runs on the properties without written agreements to protect the state from liability. In another case, a leasee allowed hot-air balloons to launch daily from a state property in violation of lease terms.

In a letter to Howle released Tuesday, CalVet Secretary Vito Imbasciani said he had already started taking action to fix problems.

He said his agency was revisiting existing leases, had taken steps to update rents charged to employees and was reviewing arrangements in which private groups were using property without a lease.

“CalVet will no longer permit arrangements that do not further our mission,” Imbasciani wrote.

The audit findings concerned Assemblywoman Jacqui Irwin (D-Thousand Oaks), the chair of the Assembly Committee on Veterans Affairs, who requested the review and said she had introduced a bill to reform the agency’s property management and finances.

“Through inattention and neglect, the residents of California’s veterans homes have been shortchanged in a process that has allowed these properties, which are supposed to be exclusively for the benefit of veterans, to be exploited,” Irwin said.

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patrick.mcgreevy@latimes.com

Twitter: @mcgreevy99