Let There Fred R. Bockmiller Be Light*

Agency Formation Commission (LAFCO) have been incapable or unwilling to consolidate, absorb, or eliminate these outmoded and/or redundant agencies. PAUL E. SHOENBERGER, P.E. LAFCO typically addresses larger issues such as merging of cities and elimination General Manager of "islands" within the county. The special districts themselves have not worked COLEEN L. MONTELEONE District Secretary/ seriously toward their consolidation or demise. In this regard, the enterprise Treasurer special districts and the non-enterprise special districts require independent BOWIE, ARNESON,WILES & GIANNONE evaluation and handling. Legal Counsel

Special districts have made very little progress in complying with the recommendations made by various governmental agencies. To ensure recommendations are followed, more coordination and cooperation is needed from the city and county agencies. 1965 Placentia Avenue Costa Mesa, California 92627 Telephone (949) 631-1200 • FAX (949) 574-1036 www.MesaWater.org Mesa Consolidated Water District July 10, 2012 Grand Jury District Mission: Dedicated to Satisfying our Community's

The sixteen enterprise districts typically started as local agricultural irrigation TRUDY OHLIG-HALL Vice President providers and sanitation providers for local communities. These special districts Division III have transitioned into providers of potable water and sewage 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 PAUL E. SHOENBERGER, P.E. General Manager these local smaller providers have already been absorbed by larger districts under COLEEN L. MONTELEONE one management. District Secretary/ Treasurer

The sixteen enterprise special districts of Orange County founded between 1919 Water Needs and 1964 have grown with the urbanization of the county. Thirteen of these special districts rely upon 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 subsidies and rely on fees for BOARD OF DIRECTORS their revenue. Severance from the tax subsidies would enable financial FRED R. BOCKMILLER transparency and let the customers see the true cost of the services provided. President Division I JAMES R. FISLER

The unrestricted reserves of the special districts are available to the governing TRUDY OHLIG-HALL Vice President boards to spend as they please. Local citizens are not openly informed of this Division III wealth when agencies ask for fee increases, special assessments, or bond measures. Most of the special districts do not appear to have specific criteria for amassing these reserves nor do they have published long-range plans for their PAUL E. SHOENBERGER, P.E. General Manager constructive use. COLEEN L. MONTELEONE District Secretary/

The twenty-seven special districts in Orange County have amassed unrestricted Water Needs 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. BOARD OF DIRECTORS FRED R. BOCKMILLER

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.

Only one of the special districts, The South Coast Water District, has had recent SHAWN DEWANE Vice President performance audits. The lack of performance audits for the remaining special Division V districts leaves the potential for inefficiencies, poor practices, outmoded TRUDY OHLIG-HALL Vice President operations, etc. hidden from the governing boards and the communities they Division III serve. The lack of published performance audits has contributed to the public's ignorance of these districts. PAUL E. SHOENBERGER, P.E.