Office of Audits and Evaluations VETERANS HEALTH ADMINISTRATION VA’s Management of Land Use Under the West Los Angeles Leasing Act of 2016 On March 14, 2019, this report was revised to correct errors on pages v and 18. These corrections do not alter this report’s findings or conclusions. AUDIT REPORT #18-00474-300 SEPTEMBER 28, 2018 The mission of the Office of Inspector General is to serve veterans and the public by conducting effective oversight of the programs and operations of the Department of Veterans Affairs through independent audits, inspections, reviews, and investigations. In addition to general privacy laws that govern release of medical information, disclosure of certain veteran health or other private information may be prohibited by various federal statutes including, but not limited to, 38 U.S.C. §§ 5701, 5705, and 7332, absent an exemption or other specified circumstances. As mandated by law, the OIG adheres to privacy and confidentiality laws and regulations protecting veteran health or other private information in this report. Report suspected wrongdoing in VA programs and operations to the VA OIG Hotline: www.va.gov/oig/hotline 1-800-488-8244 VA’s Management of Land Use Under the West Los Angeles Leasing Act of 2016 Executive Summary Why the OIG Did This Audit Pursuant to the West Los Angeles Leasing Act of 2016, Pub. L. No. 114-226 (hereinafter referred to as the WLA Leasing Act or the Act), the Office of Inspector General (OIG) must submit a report to various congressional committees and members of Congress “on all leases carried out at the Campus and the management by the Department of the use of land at the Campus, including an assessment of the efforts of the Department to implement the master plan…” The objective of this audit was to determine if VA was complying with the WLA Leasing Act of 2016. Specifically, the OIG assessed whether • Leases, Enhanced Use Leases, and Land Sharing Agreements were used for purposes allowed under the WLA Leasing Act; • Leases and land use agreements complied with federal laws; • Leases and other land use agreements complied with the Draft Master Plan’s goal of being veteran focused and consistent with VA’s objective to revitalize the West Los Angeles (WLA) campus; and • Land use agreements were managed effectively. Background In March 1888, Senator John P. Jones and Arcadia B. DeBaker donated, by deed, approximately 300 acres of land in Los Angeles, California, to the National Home for Disabled Volunteer Soldiers to establish a home for disabled veterans. Two additional deeds were added later to expand the WLA campus to its current size of 387 acres. In June 2011, a class action lawsuit, Valentini vs. Shinseki, was filed against VA in the U.S. District Court for the Central District of California. The plaintiffs included veterans suffering from mental health disorders and other injuries who, as a result, were homeless; Vietnam Veterans of America; and a descendent from the family that donated the land. The plaintiffs asked the Court to find, in part, that VA had breached and continued to breach its fiduciary duty as trustee by allowing the WLA campus to be used for purposes other than for disabled veterans. On August 29, 2013, the court granted the plaintiffs’ claim alleging that nine Enhanced Sharing Agreements at West LA were illegal. The judge found the nine Enhanced Sharing Agreements were unauthorized by law and therefore void. The agreements did not constitute a sharing of health care resources consistent with VA’s legal authority. Enforcement of the judgment was pending the resolution of any appeal. The litigation continued until settlement was reached in 2015. VA OIG 18-00474-300 | Page i | September 28, 2018 VA’s Management of Land Use Under the West Los Angeles Leasing Act of 2016 On January 28, 2015, the Secretary of Veterans Affairs, the plaintiffs’ attorney, and the former mayor of Santa Monica announced that all parties involved had entered into a good faith agreement to end the lawsuit. This agreement, Principles for a Partnership and Framework for a Settlement, required the two parties to work together as partners, in coordination with key federal, state, and local government bodies, as well as community stakeholders and charitable and philanthropic entities, to end veteran homelessness in Greater Los Angeles in 2015 and beyond. From June through October 2015, VA officials met with key stakeholders, including local neighborhood leaders, offices of members of Congress, offices of California state legislators, and veteran and housing advocacy groups. The purpose of these meetings was to solicit input and brief these stakeholders on the status of the Draft Master Plan (DMP) for the WLA campus. On January 28, 2016, VA published the DMP, providing a framework to assist VA in revitalizing the campus to become veteran focused. The new veteran focus required VA to only enter into land use agreements that resulted in healthcare benefits, services, or resources being provided directly to veterans and/or their families. On September 29, 2016, President Obama signed the WLA Leasing Act into law. Under the law, the VA Secretary is required to ensure all Real Property Leases and Land Sharing Agreements on the WLA campus principally benefit veterans and their families. The law defines the term “principally benefit veterans and their families” as services provided by a person or an entity under a lease or Land Sharing Agreement that are1 · Provided exclusively to veterans and their families; or · Designed for the particular needs of veterans or their families as opposed to the general public; and · Exclusive of services in which the only derived benefit is revenue to the VA. What the OIG Did While the WLA Leasing Act requires the Secretary to report only on leases and Land Sharing Agreements carried out at the campus, the Act also mandates the OIG “report on all leases, and the management by the Department of the use of land [emphasis added] at the Campus.” To carry out this mandate, the OIG reviewed all land use agreements (not just leases) that were · In place or planned between September 29, 2016, and May 1, 2018, and · Of a duration of one year or longer. 1 For leases to the Regents of the University of California, the predominant focus of the lease must be additional services provided at no cost to VA and not compensated through an existing medical affiliation agreement which principally benefits veterans and their families. VA OIG 18-00474-300 | Page ii | September 28, 2018 VA’s Management of Land Use Under the West Los Angeles Leasing Act of 2016 The OIG also reviewed land use arrangements where · An entity was operating on the WLA campus under an expired land use agreement, or · An entity was operating on the campus without an agreement. The OIG identified 40 land use agreements that met these criteria. These land use agreements included Enhanced Use Leases, Real Property Leases, Real Property Leases to the University of California Regents, Land Sharing Agreements, and other land use instruments not specifically named in the WLA Leasing Act, such as Revocable Licenses.2 What We Found Finding 1: Inappropriate Use of WLA Campus The OIG reviewed 40 land use agreements on the WLA campus and determined that 11 did not comply with either the WLA Leasing Act, other applicable federal laws, or the DMP.3 Furthermore, 14 non-VA entities were operating on the WLA campus with an expired agreement or no documented land use agreement. The OIG determined that these key factors played a role in why 25 of 40 of the land use agreements (63 percent) on the WLA campus were improper: · Veteran input on WLA land use was insufficient. · VA policies lacked clarity on appropriate use of Out Leases and Revocable Licenses. · Greater Los Angeles Healthcare System (GLAHS) Capital Asset Inventory land use agreement records were incomplete. West Los Angeles’ Improper Land Use Agreements Improper land use agreements fell into two categories: (1) land use agreements that were not compliant with federal law or the DMP and (2) non-VA entities were operating on the WLA campus with an expired agreement or no land use agreement. The OIG determined that 11 land use agreements were not compliant. Following is a brief description of these agreements. · 1887 Fund – A Revocable License allows the 1887 Fund, a non-profit organization with a mission devoted, in part, to restoring five historic buildings on the WLA campus, to use Building 33 and three parking spaces to conduct fundraising activities to restore the 2 Real Property Leases to non-VA parties are described as “Out Leases.” 3 The OIG’s review included expired and undocumented agreements. VA OIG 18-00474-300 | Page iii | September 28, 2018 VA’s Management of Land Use Under the West Los Angeles Leasing Act of 2016 Wadsworth Chapel. The OIG found the 1887 Fund did not comply with federal regulations concerning soliciting donations on VA property.4 · American Red Cross – The American Red Cross occupies an office building that was designed and constructed pursuant to a Revocable License granted in 1989. The current Revocable License, dated September 11, 2016, states that the purpose is for “General office use and to terminate the 1989 Revocable License.” The Revocable License also states that the “Red Cross will prospectively provide additional Veteran-focused service,” but the agreement does not specifically describe any service to veterans. The OIG concluded that this general statement is insufficient to conform to the DMP’s requirement that land use be veteran focused. · Association for Parrot C.A.R.E. – A Revocable License allows Parrot C.A.R.E to operate the Serenity Park parrot sanctuary on the WLA campus.