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Commercial Reservoir Land Use Agreements

Report Information

Date Issued
Report Number
2023-17447
Report Type
Audit
Description
Land use agreements are contracts that permit operators to use specific Tennessee Valley Authority (TVA) reservoir property for a specific purpose and for a limited amount of time, subject to management and control retained by TVA. Reservoir land use agreements are typically for commercial recreational operations such as campgrounds and marinas. We performed an audit of TVA’s commercial reservoir land use agreements due to reputational risks associated with the potential inconsistent treatment of operators within the program. Our audit objective was to determine if TVA is managing commercial reservoir land use agreements appropriately and in accordance with applicable regulations, policies, and procedures. Our audit scope included commercial reservoir land use agreements (1) in place as of October 1, 2023, and (2) invoiced from October 1, 2021, through September 30, 2023. During this period, TVA had 169 reservoir land use agreements with total billings of approximately $3.6 million.We determined TVA had (1) accurately invoiced most periodic and all minimum rental payments according to payment terms and (2) obtained required certificates of insurance from operators. However, TVA could improve its management of commercial land use agreements by enforcing requirements for (1) operators to submit documentation of gross revenues, which is necessary for verification of rental payments due to TVA; (2) Natural Resources personnel to confirm all security assurances; and (3) campground operators to submit updated annual operating plans.
Joint Report
Yes
Participating OIG
Tennessee Valley Authority OIG
Agency Wide
Yes (agency-wide)
Questioned Costs
$0
Funds for Better Use
$0
View report on Oversight.gov

Recommendations

We recommend the Vice President, Environment and Sustainability, develop specific guidance for Natural Resources representatives that includes a timeline and specific steps representatives should follow when an operator is not providing required gross revenues documentation. Consider developing standardized letters or notifications that can be sent to the operators that include the contract language and ramifications of noncompliance.

We recommend the Vice President, Environment and Sustainability develop specific guidance for the threshold at which the Tennessee Valley Authority should request additional security assurance amounts from operators.

We recommend the Vice President, Environment and Sustainability take action to obtain the appropriate amount of security assurance for the one exception noted and confirm the Tennessee Valley Authority holds the appropriate amount of security assurance for all other active commercial reservoir land use agreements.

We recommend the Vice President, Environment and Sustainability determine what information is needed to be submitted in the campgrounds’ annual operating plans, if any, and enforce the requirement. If the Tennessee Valley Authority determines annual operating plans are not necessary, then instead require one submission at the onset of the agreement and only require a new submission to reflect relevant changes, as needed. If this requirement is removed, add a “no change” confirmation to the standard review items to be completed during Natural Resources representatives’ compliance inspections.