Commercial Reservoir Land Use Agreements

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.