Orange County Grand Jury • 2011-2012

2011-2012 Grand Jury Final Report 7/2/12, 17.34mb

Published: August 16, 2012 313 pages Consolidated Report
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Findings 15 findings

F1 Page 53
Most Orange County special districts, with or without the assistance of the Local Agency Formation Commission (LAFCO), have been incapable or unwilling to consolidate, absorb, or eliminate these outmoded and/or redundant agencies. LAFCO typically addresses larger issues such as merging of cities and elimination of “islands” within the county. The special districts themselves have not worked seriously toward their consolidation or demise. In this regard, the enterprise special districts and the non-enterprise special districts require independent evaluation and handling.
F2 Page 53
Special districts have made very little progress in complying with the recommendations made by various governmental agencies. To ensure recommendations are followed, more coor- dination and cooperation is needed from the city and county agencies.
F3 Page 53
Most non-enterprise special districts in Orange County have outlived their purpose and usefulness. Services that they once only available through the special district are now being pro- vided by the surrounding cities and the expanding county.
F4 Page 53
The eleven non-enterprise special districts of Orange County founded before 1965 have not reflected the growth of the cities and county. The services that were unavailable from cities or the county have long since been made available as both the cities and county grew. Some of these special districts could be removed from the county tax rolls, and their services funded and absorbed by the county, surrounding cities or homeowners associations wherein they abide. INDEPENDENT SPECIAL DISTRICTS OF ORANGE COUNTY, CALIFORNIA
F5 Page 54
The sixteen enterprise districts typically started as local agricultural irrigation providers and sanitation providers for local communities. These special districts have transitioned into providers of potable water and sewerage disposal for the cities that blossomed around them after 1950. These districts grew until their boundaries met a neighboring special district that was also growing. Some of these local smaller providers have already been absorbed by larger districts under one management.
F6 Page 54
The sixteen enterprise special districts of Orange County founded between 1919 and 1964 have grown with the urbanization of the county. Thirteen of these special districts rely up- on taxes collected by the county while three rely on fees and other sources for their revenue. This suggests that all of these enterprise special districts could wean themselves from tax subsi- dies and rely on fees for their revenue. Severance from the tax subsidies would enable financial transparency and let the customers see the true cost of the services provided.
F7 Page 54
The unrestricted reserves of the special districts are available to the governing boards to spend as they please. Local citizens are not openly informed of this wealth when agencies ask for fee increases, special assessments, or bond measures. Most of the special districts do not ap- pear to have specific criteria for amassing these reserves nor do they have published long-range plans for their constructive use.
F8 Page 54
The twenty-seven special districts in Orange County have amassed unrestricted reserves of over $866,000,000. That is enough money to fund all of these special districts for more than year without taxes, fees, interest, or other sources of revenue. The boards of directors have the sole discretion to spend these unrestricted reserves.
F9 Page 54
The Orange County Auditor-Controller allocated nearly $35,000,000 to four enterprise special districts (Costa Mesa Sanitary District, South Coast Water District, Trabuco Canyon Wa- ter District, and Yorba Linda Water District) that did not show this revenue in their budgets pro- vided to the Grand Jury. What happened to that money is not clearly recorded. Budgeting with- out the allocated taxes indicates that, along with the three other enterprise special districts that do not rely on tax revenue, these enterprise special districts could function without tax revenues.
F10 Page 54
The enterprise special districts could save millions of dollars in administration costs by consolidation into regional special districts. Five or six such enterprise special districts within Orange County could save at least $500,000 per year for each special district absorbed.
F11 Page 54
The Buena Park Library and the Placentia Library (the oldest special districts in Orange County) have long outlived their original intent of providing reading materials for their original isolated communities with an electorate of about 100 people. They could readily be absorbed into the County Library System or the cities.
F12 Page 54
The community services that the original non-enterprise special districts provided can be provided by the surrounding cities and the county that have engulfed these districts. Continuing INDEPENDENT SPECIAL DISTRICTS OF ORANGE COUNTY, CALIFORNIA to collect taxes for these special duplicative services is a disservice to both the community they serve and the surrounding communities that provide the same or similar services.
F13 Page 55
The Surfside Colony Storm Water Protection District was formed in 1941 to protect the community from ocean swells during storms and high tide. Since then the community has changed and the local governments have grown to where these services can be performed by other county or city services, resources and equipment.
F14 Page 55
The true cost of water and sanitary sewers in the enterprise special districts is hidden when both taxes and fees fund these districts. Only when the monthly service bills to the cus- tomers include all the costs for these services without the tax subsidy will the public understand the true cost of these services and achieve financial transparency.
F15 Page 55
Only one of the special districts, The South Coast Water District, has had recent perfor- mance audits. The lack of performance audits for the remaining special districts leaves the po- tential for inefficiencies, poor practices, outmoded operations, etc. hidden from the governing boards and the communities they serve. The lack of published performance audits has contribut- ed to the public‟s ignorance of these districts.

Recommendations 10

Conclusions 28

Comments 1

Observations 8

Agency Responses 1

Government agencies' official responses to this report's findings and recommendations. Click on a response to see the structured breakdown.