DEP to Examine ‘Broken’ Process of Leasing of State-Owned Property

Tom Johnson | August 5, 2010
Commissioner calls for overhaul after approval of controversial Highlands lease and highly critical audit by OLS

Department of Environmental Commissioner Bob Martin is moving to fix the agency’s handling of leases involving state-owned lands and property, an issue that has triggered criticism from lawmakers and environmentalists during his short tenure.

The commissioner yesterday announced the creation of a special panel to recommend ways to revamp the process of leasing property to private companies that run pipelines, cables and other infrastructure across many thousands of acres of state-owned land.

“This process is broken,” Martin said. “How we determine compensation for allowing use of our precious state property, much of it preserved as unique open space and recreational land, needs to be overhauled.”

The action comes less than a month after the Statehouse Commission approved a much-contested lease between the DEP and Tennessee Gas Pipeline Company to build a 23-mile natural gas pipeline through two state parks and a wildlife management area in the Highlands, a major source of drinking water for millions of people.

It also followed the release of a highly critical audit from the Office of Legislative Services, which found that 112 of the 236 leases under the DEP’s purview had expired. More than half of the leases negotiated by the agency could not be validated for fair market value, the audit found.

Martin’s action was not unexpected. In urging the commission to approve the Highlands lease, DEP officials conceded changes had to be made in the lease program. At the time, the agency said it was reviewing a new methodology for negotiating the leases to ensure the state gets fair value for the land.

The new panel, to include representatives of the DEP, Treasurer’s Office, Board of Public Utilities, Economic Development Authority and New Jersey Highlands Council, will examine how lease agreements are currently structured and created. It will then develop and recommend a new leasing formula intended to treat all companies that do business with the state fairly and equally, while getting the best deals for taxpayers.

“We must ensure that the compensation we get for allowing use of these lands accurately reflects the value of the property,” Martin said. “Especially in these tough economic times, the State cannot afford to leave money on the table, and we have an obligation to get the best deal for the public.

“In some cases, over the last few decades, it seems leases were crafted without a consistent and logical determination,” he continued, “and the State has not even kept accurate records of all the lease transactions. It’s time to change that system, to bring it up to date, to develop a better process that will result in proper payments to the state for use of its land, providing the best deals for the people of New Jersey.”

Jeff Tittel, executive director of the New Jersey Sierra Club, said the agency had to do something to fix the process. “The properties being leased are not even getting pennies on the dollar,” he noted, adding that the state also should put a moratorium on all leases until the panel can come back with its recommendations.