On The Money: Underwater Loans
SACRAMENTO (CBS13) ― A California lawmaker is calling for an investigation of a state agency that loaned out millions of dollars without even doing basic background checks. In a story you'll see only on CBS 13, On The Money documents how some of those loans are now underwater.
Under the spotlight is the California Department of Boating and Waterways, which loaned a boatload of money to Willowest Harbor Marina, a privately owned facility located on Bethel Island in the Sacramento-San Joaquin Delta.
The money was supposed to go towards improvements, but that loan to Willowest is now delinquent by $423,439, according to documents from the Department of Finance. It's money that comes from public funds supported by gas taxes and boating fees.
CBS 13 found Willowest's Harbor Master Bob Butler, who defended his loan from the State.
"If it wasn't for them I wouldn't be here, I would have been long gone," said Butler. The Harbor Master told CBS 13, "And as I say the money that I owe them that is completely secured by the value of the property."
But taking over distressed properties is not part of Boating and Waterway's mission statement, which calls for providing safe and convenient public access to California waterways. The loan at Willowest is one of six currently underwater, according to this chart from the Department of Finance.
"We need a thorough investigation," said Assemblywoman Audra Strickland.
The Camarillo Republican lawmaker is calling for an investigation of loan procedures at the Department of Boating and Waterways.
CBS 13 has uncovered this document showing the Department of Boating and Waterways is drowning in bad loans to marinas both public and private – with $2.9 million now delinquent, according to the audit from the Department of Finance.
What's more, the audit is highly critical of the Department of Boating and Waterways for:
• Failing to perform basic background or credit checks before loaning money
• Not reviewing financial reports before loaning money
• Failing to conduct site visits of the marinas before loaning millions of dollars
"Basic checkbook skills don't even seem to come into play," said Assemblywoman Audra Strickland.
In an exclusive interview with CBS 13, Strickland noted, "They don't even have a record of who the contracts are made out to, contact information, how much the loan was made for and what the interest rate was."
Boating and Waterways Acting Director Lucia Becerra declined to be interviewed on camera for this report. She did however, send a written statement to CBS 13, noting that her department had loaned $351 million to marinas statewide and "while the delinquent amount in question represents less than one percent of that portfolio, we consider every dollar we administer to be held in public trust."
But to Assemblywoman Audra Strickland, $2.9 million in delinquent loans is wasteful.
"When we talk about people losing their homes, talk about 12% unemployment, when we talk about cutting services for foster youth and education and seniors and law enforcement, that's a lot of money," Strickland told CBS 13.
The Department of Boating and Waterways has now agreed to make site visits to marinas before lending out money – and has also hired a manager to oversee the multi-million dollar loan program.
If you see examples of government waste or questionable spending, send us an e-mail to onthemoney@kovr.com. You can also follow On The Money stories in progress via Twitter at http://twitter.com/mikeluery.
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