Illinois (ECWd)
During our review of State Auditor General reports for the Illinois Department of Corrections, farm ground revenues were outlined for several correctional facilities. See the audit report at this link.
In the FY 2018 compliance examination performed by ADELFIA LLC, farm ground revenue for one of the Menard Correction facility farm leases reflected 583.4 acres of farm ground that generated $58,340.00. That equates to a whopping $100 an acre, which is well below market value for ground in Livingston County. While we know the Menard Correction Facility is not in Livingston County, this particular acreage operated by the Menard Facility is actually in Livingston County. We also note that in that report, it indicates the farm lease information is NOT AUDITED, and then includes a very interesting entry.
The Department of Central Management Services (DCMS) is responsible for the negotiation of the lease arrangements including determining fair market conditions and customary practices for the lease arrangements. DCMS has a practice of obtaining bids in order to obtain fair market conditions.
All new leases require each lessee to provide a letter of credit from a bank. Rent for the above leases is negotiated as a flat rate per acre per year. As expressly written in the leases, annual rent for the most of the lease agreements, is due in two installments, April 1 and October 1.
If an item is bid out, there should not be negotiations. The auditor notes DCMS has a practice of obtaining bids; however, our request for such records resulted in no bid publications included in the response. The actual leases indicated payment due dates of July 15 and December 15, not April 1 and October 1, as the auditor claimed was “As expressly written in the leases”. Who audits the auditor?
While anyone connected to farming knows $100.00 an acre is well below market value. Those who are not familiar with farm ground lease rates, the University of Illinois provides a pretty good PowerPoint on the subject with lots of historical data, which can be viewed at this link.
In April of 2021, DCMS signed a new 5-year contract for the above-referenced 583.4 acres of farmground for an even lower amount than found in the 2018 audit report. For years 2021-2025, the local farmer paid $51.00 an acre, which is 49% less than the prior rate of $100 an acre and even lower than the average market rates for Livinginston County. Due to Livingston County requiring a paid subscription to view the parcel map and the Department of Corrections not including the map of the leased property with the contract, even though it says it’s part of the contract, we are unable to pinpoint the actual location of the farm ground being leased.
- Livingston County Market rate in 2021 -$226.00 an acre
- Livingston County Market rate in 2023 – $278.00 an acre
- Livingston County Market rate in 2025 – $253/acre for average quality land to over $381/acre for excellent quality land.
Utilizing the lowest market rate of $226.00 per acre on the 5-year contract, it appears the state lost out on over half a million dollars, just with this one contract.
While there are a lot more questions to be asked and answered on this matter, it is clear someone did not do their due diligence on this. We suspect the excuse is going to be something along the lines, this was the only bid we received. If that was the case, they could have rejected the bid and gone back to a publication seeking bids and done a better job getting the word out. While we are sure the farmer is quite pleased with this rate, the taxpayers of the state are the ones taking the hit.
Another interesting twist with the NOT AUDITED information in the 2021 report is the fact that there is zero reference to any farm lease revenue in financial and compliance reports since then. Why would such information no longer be included, even though there are contracts earning revenue for DOC clear through 2025? There are 6 other farm ground leases for the Department of Corrections, and those too, are missing from all audit reports after the 2021 report. We reviewed the CMS financial and compliance reports and found nothing there on these leases either.
How is it that millions of dollars can be flowing into the Department of Corrections through a total of 7 farm leases (this article only covers 1 of those), and there is no record of those funds since the 2021 audit report? The contract clearly indicates payments are to be made to “Correctional Industries, 301 Working Capital Revolving Fund”.
The last Auditor General report for the Department of Corrections Industries was in 2014.
Where is the money, and how is it being audited?
