BERKELEY — Berkeley’s disorganized and disjointed oversight of lease agreements has resulted in an unclear picture of its facility portfolio, causing the city to lose track of a building and potential revenue losses, despite changes being recommended 16 years ago, a new audit finds.
Concerns about Berkeley’s lease management practices and recommendations for how to improve its system were documented in a 2009 audit. Without making changes, the city was at risk of losing money due to its inability to track properties and maintain proper facility and lease oversight.
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Some of those risks still exist, according to the latest report out of City Auditor Jenny Wong’s office which revisited that audit after learning seven out of 24 original recommendations hadn’t been implemented more than a decade after being proposed.
More specifically, the city still does not have a complete list of leases, which typically are agreements for a single organization to fully use a city building, and license agreements, which are normally entered into with multiple organizations to use parts of a city facility.
When attempting to create a list, Wong said key details like property location, contract numbers, start and end dates and monthly rent rates were missing for multiple properties, making it impossible to estimate revenue amounts.
The initial 2009 audit noted staff could not find copies of two lease agreements. The updated review said the city had completely lost track of one building at 1890 Alcatraz Ave.
Developing a detailed list of city facilities in addition to tracking property values would help the city assess whether it’s charging fairly for the use of its properties and prevent financial losses or losing track of a building altogether, according to the audit.
“We understand that implementing some recommendations may depend on additional resources but we want to stress that the most important part is to start with maintaining a complete central list of leases and licenses,” Wong said during a Berkeley City Council meeting Tuesday night. “Following through on these plans will strengthen the city’s ability to effectively oversee its leases and licenses.”
The audit also found that the city does not have a standard practice for when to enter into below-market-rate lease agreements or when to opt for license agreements instead. And the Public Works Department is often not consulted on lease agreements despite city policy calling for that step to take place.
Plans to move to a centralized property oversight and lease management system have been on the books since 2002, according to the 2009 and 2025 audits. The initial audit noted that a real property administrator position was established but plans to unite oversight had not been completed. That position was then eliminated in 2014, according to the updated audit.
Councilmember Terry Taplin noted current councilmembers were not serving at the time the initial audit was adopted and executive leadership was also different at the time. He shared his support for giving staff the resources they need to begin to correct the decades long issue.
“For me, these findings underscore the importance of having clear priorities and labor focus on the strategic plan goals. We have a new city manager, new public works director and the opportunity to course correct,” Taplin said.
Vice Mayor Ben Bartlett, who called the audit “groundbreaking,” also asserted “the city is working hard to get it right.” He noted the shift to managing documents digitally and converting decades of paper records to electronic form has been costly and challenging.
Bartlett said he’d like to see the city review the value of its properties, pointing to current arrangements to rent the courthouse to the Superior Court of California for $1 while the city pays the Berkeley Unified School District $1,200 a day to use its meeting room.
“Rationalizing our assets and making them work for us is job one this year,” Bartlett said.
City Manager Paul Buddenhagen said the council will be presented with a cost analysis for hiring a full time employee or two who’d be responsible for overseeing city leases and license agreements during the upcoming budget review process.
Buddenhagen noted the council will be facing tradeoffs given that staffing demands are present across departments, including among emergency services, and budget possibilities are limited.
Public Works Director Terrance Davis, who took on the role in April 2024, noted Dionne Early is currently serving as the city’s real property administrator but said that’s a working title.
Davis said “lower hanging fruit” administrative work could be completed by the end of this calendar year and city management has agreed to all recommended changes in the audit, creating a repository, or “really good spreadsheet” as Davis put it, detailing all city property information, defining clear roles and responsibilities for overseeing agreements, updating city policy on lease oversight and management and communicating changes to relevant departments.
Standardizing lease language is another short-term goal but reviewing and updating older lease agreements will likely require more time, Davis said.
An update on the implementation of audit recommendations is slated to come back before the council in the fall.
