Shasta County Grand Jury • 2016-2017

Grand Jury June 26, 2017 The Honorable Gary Gibson Presiding Judge of the Superior Court

Published: June 26, 2017 192 pages Consolidated Report

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Findings 23 findings

The $23 million cited cost for Stillwater Business Park does not accurately represent the true cost to citizens, because it does not include all expenses associated with the Park which currently total $40,835,789. Additional infrastructure development costs at Stillwater Business Park will likely be incurred by the City, depending upon future occupancy. 11

City residents, via the General Fund, have contributed $6,458,454 so far in interest and principal repayment on the 2007 Series A Lease Revenue Bond. An additional $13,664,689 will be contributed over the next twenty years unless the property is sold and parcel proceeds are used to pay off debt. These payments represent an ongoing drain on the City’s General Fund without providing any service to residents other than debt repayment.

REU customers, via utility bills, have contributed $10,269,831 to fund infrastructure development for Stillwater Business Park and will pay more than $4.9 million in future debt repayment. Since no electrical revenue has been generated from Stillwater Business Park, REU customers pay these expenses with little or no benefit.

Ten years of planning and developing and seven years of marketing have failed to create any new jobs or industry at Stillwater Business Park. Nevertheless, the City has never comprehensively re-evaluated the viability of Stillwater Business Park to determine whether additional funds should continue to be invested.

The Redding City Council does not, by policy or practice, direct all funds from lot sales back to Stillwater Business Park or the Stillwater Lease Revenue Bond debt, even though retiring the debt early would lead to significant cost savings to citizens.

The Redding City Council has no comprehensive, objective method, other than design elements, by which to guide its decisions on sales at Stillwater Business Park, contributing to lost time and money for both the City and potential buyers during sales negotiations.

There is no single City staff member tasked with oversight of the administration, finances, marketing, and evaluations of Stillwater Business Park, which may contribute to the lack of awareness of the cost and strategic evaluation of the future viability of Stillwater Business Park.

Redding City Council Members, City administrators, and other staff are not aware of the true cost of Stillwater Business Park, leaving them unable to make informed decisions about the project.

The Elk Trail Water Improvement Project demonstrates the great costs involved with designing and constructing a complex water distribution system.

F10

The efforts of both Public Works staff and Elk Trail residents to secure grant funding for the Elk Trail Water Improvement Project resulted in a lower property tax assessment than originally projected. Water Transfer between CSAs

F11

Public Works staff gave Elk Trail residents conflicting information about what water sources were available, how much water was required, and from what entities the County was willing to purchase water. This resulted in the residents unnecessarily paying $10,900 to ACID to reserve water they would never receive. 30

F12

The Water Agency Board of Directors adopted Shasta County Water Agency Resolution No: 2008-01, Resolution of Intent to Transfer Water from County Service Area #25 – Keswick Water to County Service Area #6 – Jones Valley Water, resulting in Jones Valley CSA incorrectly compensating Keswick CSA $13,090.11 to date.

F13

This incorrect compensation will continue until Water Agency Resolution No: 2008-01 is rescinded or expires, whichever comes first, potentially costing Jones Valley CSA an additional $39,000.

F14

Because all CVP water purchased by the Water Agency goes into a “common pool”, Jones Valley CSA did not and cannot enter into a long-term water transfer agreement with Keswick CSA. Rural Community Assistance Corporation

F15

Public Works fails to take advantage of all available assistance resources due to a mutually adversarial relationship existing between Public Works staff and the Rural Communities Assistance Corporation. This results in a loss of potential aid to the entire County for future improvement projects. Jones Valley Community Advisory Board

F16

Jones Valley CSA CAB’s requests for monthly interaction with Public Works staff have gone unheeded by the Board of Supervisors. Grand Jury Investigation Charges

F17

The Grand Jury found no legal authority by which Public Works may charge a CSA for staff time spent on a Grand Jury investigation.

F18

It appears Jones Valley CSA was improperly charged for Public Works staff time spent on a Grand Jury investigation under “CSA #6 Jones Valley Grand Jury Investigation” for an investigation about Public Works’ administration of all the water CSAs and the Water Agency.

F19

Without the County conducting an analysis, CSA residents cannot know how much they have been charged for any Grand Jury investigations.

F20

The Grand Jury questions if Public Works charging CSA residents for staff time spent on a Grand Jury investigation is in compliance with Proposition 218.

F21

The Grand Jury questions if Public Works charging CSA residents for staff time spent on a Grand Jury investigation is in compliance with Shasta County Code 13.12.120.

F22

Charging small County district residents for resources spent on Grand Jury investigations will likely have a chilling effect on both the public and future grand juries throughout the State. Grand Jury Admonishments

F23

The Grand Jury questions if a high-ranking Public Works engineer may have violated a signed confidentiality agreement.

Recommendations 17

R1

By December 31, 2017, the Redding City Council contract for an external audit of all funding and expenditures related to Stillwater Business Park. This audit can be paid for by existing funds allocated to Stillwater Business Park.
R2

By September 30, 2017, the Redding City Council request Colliers International and the EDC to jointly determine the continued market demand for existing Stillwater Business Park parcels and present their findings to the City Council
R3

By September 30, 2017, the Redding City Council direct staff to identify alternative uses of the Stillwater Business Park property and report their findings to the City Council by November 30, 2017. 12
R4

By December 31, 2017, the Redding City Council establish a formal procedure for comprehensively evaluating the viability of the Stillwater Business Park project.
R5

By September 30, 2017, the Redding City Council establish a policy directing funds received from any future parcel sales be utilized only for Stillwater Business Park debt repayment or infrastructure.
R6

By September 30, 2017, the Redding City Council establish a formal, documented procedure for comprehensively evaluating potential Stillwater Business Park sales using criteria such as financial viability, estimated wage rates, and number of jobs to be created.
R7

By September 30, 2017, the Redding City Council appoint an existing City staff member to manage the Stillwater Business Park Project. This person would be responsible for routine evaluation of Stillwater, including supervising marketing coordination, sales negotiations, and fiscal accountability. Further, this City staff member will report on a quarterly basis to the City Council on these Stillwater Business Park evaluations.
R8

By September 30, 2017, the Water Agency Board of Directors direct staff to immediately reimburse Jones Valley Water Fund – 0377 all monies paid to Keswick CSA under Shasta County Water Agency Resolution No: 2008-01, Resolution of Intent to Transfer Water from County Service Area #25 – Keswick Water to County Service Area #6 – Jones Valley Water.
R9

By September 30, 2017, the Board of Supervisors direct Public Works staff to open the lines of communication with the Rural Communities Assistance Corporation and report back to the Board of Supervisors on the Corporation’s response. 32
R10

By September 30, 2017, the Board of Supervisors direct Public Works staff to work with the Jones Valley CSA CAB to establish a mutually agreed upon CAB meeting schedule.
R11

By September 30, 2017, the Board of Supervisors direct staff to determine and report back what specific legal authority exists to allow Public Works to charge CSAs for time spent on a Grand Jury investigation.
R12

By September 30, 2017, the Board of Supervisors direct staff to provide a public report outlining legal justification for the charges under Project Number 111029 “CSA #6 Jones Valley Grand Jury Investigation” by December 31, 2017, or to refund Jones Valley CSA any and all charges under this project title.
R13

By September 30, 2017, the Board of Supervisors direct staff to conduct an investigation to determine how much each CSA has been charged for Public Works staff time spent on any Grand Jury investigation. By December 31, 2017, staff publicly report on their findings and the legal justification for the charges, or refund the amounts charged.
R14

By September 30, 2017, the Board of Supervisors direct Public Works staff to ensure and report back that they are in compliance with California Proposition 218.
R15

By September 30, 2017, the Board of Supervisors direct Public Works staff to ensure and report back that they are in compliance with Shasta County Code 13.12.120.
R16

By September 30, 2017, the Board of Supervisors direct County Administrative staff to either publicly report the legal justification for charging the CSAs, or create and present a policy ensuring CSAs are not charged for Public Works staff time spent on any Grand Jury investigations.
R17

By September 30, 2017, the Board of Supervisors direct Public Works staff to comply with Grand Jury confidentiality agreements.

Commendations 1

CM1

The Grand Jury commends: C1. Shasta County and the Cities of Anderson and Shasta Lake for recognizing the potential fiscal impact of unfunded pension liabilities and for the agencies’ efforts to control their increases. C2. Shasta County, at the recommendation of the Shasta County Auditor-Controller, for increasing its contributions towards its unfunded other post-employment benefits and saving interest by prepaying its annual CalPERS contribution. C3. The City of Shasta Lake for its efforts to reduce its pension and other post-employment benefit liabilities by refinancing its pension obligation debt. C4. The City of Anderson for its efforts to reduce its pension liabilities by using consultants and contracted labor when possible.

Observations 3

OB1

The Grand Jury’s investigation, supported by external research projects such as the Reason Foundation’s Pension Analysis and the Stanford Institute for Economic Policy Research’s Pension Tracker, revealed that, like most cities and counties in California, significant unfunded pension liabilities are confronting all four public agencies studied. These unfunded liabilities are threatening to increase as the CalPERS discount rate decreases, with potential investment losses in the future, and with the reduced number of current employees paying into the retirement system. Although much of this is beyond the control of local agencies, each has taken a variety of measures to mitigate these liabilities. Required contributions to CalPERS will continue to increase and therefore represent a budgetary dilemma for these agencies. Agencies will have to find ways to increase available revenues, reduce funding of public services, or a combination of both to balance their finite budgets. Options could include renegotiating employee benefit plans, increasing efficiency, or utilizing reserve monies. In this way, unfunded liabilities threaten to undercut services by these agencies that the public has come to expect and upon which the public relies. While none of the agencies are in immediate danger of insolvency, the goal is to be 100% funded.
OB2

One of the duties listed in the Grand Jury’s Procedures Manual is to serve as members of the JAC. Furthermore, previous grand juries have participated for 21 years in the external audit process through the JAC, including the 2015/16 Grand Jury. The unexpected announcement by high-ranking County Administrative personnel in late July 2016 that the JAC was dissolved became a cause for concern by the 2016/17 Grand Jury. After exploring the nature of the JAC and its purpose, the Grand Jury determined its existence is not “duplicative”. There is no other County process that parallels the JAC in either form or function. That the current Grand Jury was compelled to contact the Auditor-Controller’s office late in the external audit process demonstrated the importance of the JAC as a mechanism to fulfill the Grand Jury’s mandate under California Penal Code section 925. The Grand Jury also recognized its value to the Board of Supervisors and other county officials in becoming more familiar with the County’s CAFRs by participating in the audit as key members of the JAC. The greatest concern is the loss to the public of accountability and transparency by the County resulting from the JAC having been “dissolved”. Without the JAC, the annual external audit involves only two parties: the County Auditor-Controller, who prepares the financial reports, and the external auditing firm, whose contract is recommended by the County Auditor-Controller. The JAC provides an additional set of eyes and helps protect both the interests of the public and County officials by ensuring transparency and accountability.
OB3

Staff from Probation, the Sheriff’s Office, and the Public Defender support the monitor programs. While monitors are a good deterrent and encourage offender accountability, they are not 100% effective at preventing crime. Nevertheless, the monitor programs have become an effective tool for alleviating pressure for jail bed space, enabling participation in community- based custody programs, and increasing court appearances by offenders. Their use in Shasta County is mostly funded by AB 109 funds. Funding priorities will become more challenging and, combined with increasing release of offenders to county responsibility, the need for cost effective monitor technologies is heightened. It is imperative that Shasta County take steps to maintain and expand this valuable asset for law enforcement.

No Responses Found 1

Government entities assigned to respond to this report. No response documents have been linked in our database.

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