[Evaluation of the Bureau of Land Management's Controls Over Receipts and Disbursement of Funds Derived From Land Sales Authorized by the Southern Nevada Public Lands Management Act]
[From the U.S. Government Printing Office, www.gpo.gov]

Report No. 01-I-406

Title: Evaluation of the Bureau of Land Management's Controls Over
       Receipts and Disbursement of Funds Derived From Land Sales
       Authorized by the Southern Nevada Public Lands Management
       Act

 
Date:  June 5, 2001

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H-IN-BLM-001-01-R


June 5, 2001

Advisory Letter

Memorandum			

To:  Director, Bureau of Land Management

From:  Roger La Rouche
Assistant Inspector General for Audits

Subject:  Evaluation of the Bureau of Land Management's Controls Over Receipts and Disbursement of Funds Derived From Land Sales Authorized by the Southern Nevada Public Lands Management Act (No. 01-I-406)

This advisory letter presents the results of our review of controls over the tracking of receipts and the disbursement of funds derived from land sales authorized by the Southern Nevada Public Lands Management Act (SNPLMA).   Our review was conducted in September and October 2000 at the Bureau of Land Management's (BLM) SNPLMA Project Office, which is part of the Las Vegas Field Office.  Our review included Project Office activities that occurred from inception of the SNPLMA through September 2000, including the completion of all actions for the first auction held in November 1999 and partial completion of activities for the auction held in June 2000.   The review was requested in August 2000 by the then-Director of the BLM.

We believe that the SNPLMA Project Office has established sufficient internal controls for the tracking of receipts for the sale of SNPLMA properties.  During our review, we also noted that clarification is needed regarding land transactions covered by both the SNPLMA and by the Santini-Burton Act.  Specifically:

* A determination is needed of whether interest earned on the proceeds from the sales of the Santini-Burton Act properties should go into the SNPLMA special account for project purposes or be used for Lake Tahoe acquisitions. 

* A determination is needed of whether proceeds from the sales of Santini-Burton Act properties should be available for future purchases or for repayment of losses on prior land transactions conducted under the Act.

The BLM is aware of these issues and has requested an opinion from the Office of the Solicitor.

Background

The SNPLMA (Public Law 105-263), signed into law in October 1998, provides for the disposal of public lands within a specific area in the Las Vegas valley.  It creates a special account in which 85 percent of the proceeds of the sale of properties are to be expended for five specified purposes.  The remaining 15 percent of the sales proceeds are divided, with 5 percent going to the State of Nevada for the general education program and 10 percent going to the Southern Nevada Water Authority.  The SNPLMA also authorized the transfer of all rights and titles and interest in lands identified in the Cooperative Management Area to Clark County.  However, Clark County agreed that in the event the land is sold, leased, or other otherwise conveyed, it would be at fair market value and the proceeds divided as described above.  Further, the SNPLMA states for any of the properties included in the CMA that are identified on the map as those covered by the Santini-Burton Act (Public Law 96-586), the proceeds from sales, lease, or conveyance are to be contributed to the SNPLMA special account and used for acquisition by the Secretary of Agriculture for environmentally sensitive lands in the Lake Tahoe Basin.
 
As identified in the SNPLMA, approximately 40,000 acres of land are available for disposal, of which 27,000 acres included in the SNPLMA are planned to be sold.  Since inception of the SNPLMA, there have been four auctions--November 1999, June 2000, November 2000, and December 2000.  At the time of our review in October 2000, approximately $18 million for 225 acres was generated from the first two auctions and another $151,000 from the interest on the proceeds that the Project Office can use in connection with the project.  The potential revenues from the sales are expected to be up to $1 billion.

First Two Auctions


The SNPLMA Project Office administered two successful auctions of properties identified for disposal.  The results of the auctions exceeded the appraised values of the properties. Our review showed that there was appropriate tracking over the sales receipts. The amount shown in the accounting records for the special account fund, including interest from investments, reconciled with transaction records. 

The SNPLMA Project Office also coordinated the efforts of its partners, the Forest Service, the U.S. Fish and Wildlife Service, the National Park Service, Clark County, and the BLM, in identifying and selecting properties to acquire with the special account funds. In addition, the SNPLMA Project Office limited administrative costs, especially indirect costs that would be covered with special account funds, in order to maximize the amount available to acquire properties and for other authorized uses for the funds.

Santini-Burton Properties

In connection with the provision of the SNPLMA entitled "Airport Environs Overlay District Land Transfer," the BLM transferred approximately 5,200 acres of BLM public land to Clark County.  The SNPLMA also required that, in the event of sale, lease, or conveyances of any of this property, 85 percent of the proceeds of the sale would be deposited into the special account.  Further, if any of these properties were covered under the Santini-Burton Act, proceeds of the sale would also be deposited into the special account for acquiring environmentally sensitive Lake Tahoe property.  However, the Act did not state how the interest from the proceeds should be used.  Our review showed that the Project Office was including the interest with the balance of the funds for SNPLMA purposes and not for Lake Tahoe purposes.  As of October 2000, approximately $38,000 in interest had been derived from these properties. 

Our prior audit report (July 1996) on Nevada land exchange activities (Report No. 96-I-1025) found that there was a negative balance from acquisitions of Lake Tahoe properties that was due, in part, from exchanging properties identified in the Santini-Burton Act rather than from selling them.  However, in implementing the SNPLMA, it is unclear whether the proceeds from current sales of Santini-Burton Act properties should be used to offset prior debt from Lake Tahoe purchases or to make new purchases of Lake Tahoe properties.  

Subsequent to our review, we requested input from our General Counsel on the two issues.  Our General Counsel concluded (see the Attachment) that the interest earned on land sales authorized by the Southern Nevada Public Lands Management Act must be used to purchase environmentally sensitive land and should not be used for other purposes under the SNPLMA.  Regarding proceeds from land sales under the Santini-Burton Act, our General Counsel stated that the BLM did not have authority to use the proceeds to pay for "losses" it incurred on prior land transactions.  We coordinated our conclusions with officials from the Office of the Solicitor, Pacific Southwest Region.

Since this letter does not contain any recommendations, a response is not required.  

This advisory letter will be listed in our semiannual report to the Congress, as required by Section 5 (a) of the Inspector General Act (5 U.S.C. app. 3).



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