RTvERSTDE. CA 92501 RIvEnsroE CouNTY Grand Jury P.o. Box 829 RTvERSTDE. CA 92502 Rrvensroe CowrY CLERK-RECoRDER

In violation of the Cali_fornia Government Code $6505.6 awl its own joinl powers authority agreement, lhe March JPA Commission has not appointed a professionally qualified commissioner or slaff member as ils treasurer (i.e., qualiJied to serve as a treasurer for one oflhe cities or the county). The respondent disagrees with the finding. The CEO is identified as the March JPAs 'freasurer in multiple documents approved by the Joint Powers Commission ("JPC") I of l0 (D ***.-"rchj lr, 95 0 14205 Meridian Parkway Ste. Riverside, CA 92518 pa.com including. for example. the quarterly investment reports. Nevertheless, all purchases, sales. and other transactions related to investments are presented to the entire JPC for approval.

The March JPA did not perform monthly bank reconciliotions for the 202 2-202 3 .fiscal year until the end of the 2022-2023.fiscaI year. The respondent agrees with the finding. This was due to staff tumover. and has long since been addressed.

The March JPA Commission has not complied with its own joint povrers agreement by ./itiling ttt complete annual financial uudits within six months following the end of each ./iscal year. The respondent agrees with the finding. This is true lbr some recent years. and was due to staff tumover. The March JPA has since obtained the appropriate resources to ensure the completion of annual financial audits in a timely manner. F-l For the past.four years. auditors huve consislenlly reported internal control issues to the March JPA Commission und management, pdrticularly regurding the segregation ol tluties. These unresolved issues increase lhe risk ol errors, Jiuud, and unauthorized tronsactions. The respondent partially agrees with the finding. The intemal control findings in the audits. and management responses to those findings. are a matter of public record. Management is currently implementing a corrcctive action plan to implement intemal control recommendations identifled bv the auditors.

Persislenl unresolved internal conlrol issues creule uncerlainty regording lhe accurucy of March JPA's financial records and the e/Jictiveness of ils financial procedures. The respondent partially disagrees with the finding. [n the vast majority ofyears. the March JPA has received unmodified opinions irom its auditors. The only modification received was related to the land valuation identified in the Grand Jury report. In terms of the reliability ofthe March JPA s financial slatements. auditors have found that they fairly state the financial position ofthe March JPA such that they were able to issue an opinion. I.-6 The March JPA oversees an airport authoritr,. The oirporl's opersting expenses consislently surpass ils operalional income. The respondent partially disagrees with the finding. F'or FY22, FY23. and F'Y24. the Airporl Authority improved its net position. The Grand Jury is misreading the statements ol'cash flows in audit reports and as a result. has incorrectly identihed the "operating loss" line ilem in the report as the Airport's net operating position. The Grand Jury needs to ref'er to the line item labeled "Total cash provided by operating activities" to correctly identify the Airport's net operating position lor that given year. The Grand Jury must also reler to 2 of l0 ***.-"rchj I42O5 Meridian Parkway Ste. I4O Riverside, CA 92518 6.!) pa.com total cash and investments to understand the Airporl's overall net financial position. For example, in the year ending June 30, 2022. the Airport's total net position stood at $7,448.372 (p.12 ofthe 2022 report). To correctly assess the Airport's financial health, the Grand Jury must consider the whole of the Airport's Statement of Cash Flows for each given year. as well as its Cash and Investments and Statement of Net Position. Pasted below is March Inland Port Airport Authority's (MIPAA) actual operational position from 2016 to 2023. Of the eight years identified in the Grand Jury's reporr. only two of those years were reported in the negative in its net operating position. Fiscal Years Reconciliation of Net Operating Ending On Income to Net Cash Provided By (tJsed For) lor Operating Activities 6t3012016 s284.798 6130120t7 ($ 59.e46) 1 6/30/201 8 (s112.237) 6130t2019 $ I .1 73.036 6/3012020 $435.71 9 6130t2021 $9i4.692 6t30t202?. $ 144.962 613012023 s39l .880 The Grand Jury inconectly stated that the March JPA's land use authority is tied to MIPAA's financial health. MIPAA is a separate fund with revenue sources that are separate and apart from the March JPA's revenues. MIPAA's primary source of income for operations is in its airport ground leases. The land use transition to the County. would not impact MIPAA's ability to sustain its operations through its ground lease agreements and airport-related agreements with Airport tenants. With regard to MIPAA s capital projects. MIPAA s capital projects are tied to federal and state grants. MIPAA is a designated reliever airport in the FAA's National Plan of Integrated Airport Systems (NPIAS) and is recognized as a general aviation and air cargo airport by the FAA. As such, MIPAA is entitled to FAA grant funding on an annual basis toward capital projects. These annual allocations allow MIPAAto address its capital needs -l-he in a phased approach and as approved by the FAA. master plan is a 2O-year planning document that outlines strategies and goals that support the implementation ol airport projects. and the full buildout ofthe airport as desired by MIPAA and in collaboration with the March Air Reserve Base. We recognize that MIPAA cannot selfl-fund proposed projects but as with any major airport. the airport master plan allows MIPAAto pursue the necessary federal and state grant opportunities that can help complete those projects over the next 20 years. 1'his is a tool that is used by airports to address their funding needs on the lederal and state levels. 3 of l0 **.-"rchjpa.com I42O5 Meridian Parkway Ste.l4O Riverside, CA 92518 @ The Grand Jury incorrectly characterizes Amazon as a major contributor to MIPAA s capital improvemenl funds. The primary source of funding for MIPAA's capital projects is its federal grants. Moreover, MIPAA's major source of revenues is lrom its ground lease agreements with its Airport operators. Amazon did not hold a ground lease with MIPAA and as such, their absence from the Airport will have no impact to our ground lease revenues or our grant lunding toward capital projects. Besides the foregoing. the Airpo( should not be treated like a business. It is a regional asset, controlled cooperatively through the March JPA by the County and the Cities of Moreno Valley. Perris. and Riverside. The Airport plays a critical role in the long+erm stability of the March Air Reserve Base. Airport revenues are anticipated to improve over the next five years. L- '7 The March JPA was not originally intended to hecome a permanent, stand-alone oirport authority governed by non-elected oLficiuls who rely heavily on a single udministrative staJf member The respondent disagrees with the finding. Thirty years on. it is very difficult to assess the original intent oi the March JPA beyond what is contained in the Joint Powers Agreement. as amended. Nevertheless. the March JPA was nol provided an end date. whether in statute or through the Joint Powers Agreement. l;-ll March JPA Commissioners are appointed lo serve on the March JPA ('ommission. The ('ommission is not uccotmtoble to ony single city, county. or slote government. including roters. The respondent disagrees with the finding. The commissioners appointed to serve on the March JPA Commission are all elected officials. ultimately accountable to voters. In addition, for the most part, theses commissioners are appointed by their legislative bodies and may be removed and replaced by those legislative bodies. The March JPA is, ofcourse. accountable to the State. which has the capacity to regulate the agency. The notion that the commissioners are not accountable to the public is absurd.

March JPA ('ommissioners' votes mqy somelimes conflicl with lhe posilions held by their respective ciry* councils or coun\i board. The respondent agrees with the finding. This is true when any representative is appointed by their legislative body to another entity's board. For example. this is true for the County when the Board of Supervisors appoints its members to other joint powers authority boards or to regional authorities like the Southem Calilornia Association of Govemments. This issue was clearly addressed in the March JPA s response to the prior Grand Jury report (see F-4 from that response, which is copied below verbatim). With this said. generally speaking. the votes of commissioners generally align with the interests of the communities from which they are elected - they are ultimately accountable. after all. to those voters. 4 of l0 **.-r.chjpa.com 14205 Meridian Parhivay Ste.I4O Riverside, cA 92518 6D "The Mrtrch JPA Commissioners in/iequently seek a consensus on March ,lPA issues Jiom other elected officials on their cit1,c'ouncil/boanl.. The respondent agrees with lhe finding. The March JPA is not in the best position to confirm u'hether this is the cose- However, the./requent seeking oJ consensus on Marc'h JPA items al memher agency boards would be inappntpriate. lVhen a member agency appoinls a represenlative lo ct position on another public agency hoard. they confer on that represenlotit'e the responsibilitl'./br making rhe decisions on that hoard. (See 83 Ops C'al. (2000)) Atty. Gen. The decisions are made b1, thar appointed official, and thar appointed official alone. To the extent the home.iurisdi.'tion:\ bourd v'ishes lo direct lheir so fficials lo vote in a particular wuy, they may not do the individual official reloins lhe discretion to vote their conscience as purt o/- the appointment. ln addition, the consideration o.f March JPA items at u member agency'.s board prior to a decision by the Morch JPA C'ommission could ruise significant due prucess concerns. (See I01 Ops Cal. Atty. Gen. 3l (2021)). Member agency hourds are.fiee. in most cuses, to odjust their representalion on a.joint pou,ers boord i/ they are unhappy u'ith their represenlalion. ll u'ould de/eat lhe operational e.fficiencies of a joint pon'ers uuthority.fbr member agency boqrds lo weigh in on evert'agendu item coming he.fbre the.joint ptn'ers boord prior to action. In addition. it trould signiftcantly burden the memher agency hourds to hate to hold advance hearings on evert- single item coming be./bre every regional board to u,hich " they appoint members. t''- I () The Counry, of Riverside has departments and personnel u,ith specialized expertise and resources thal the Msrch JPA lacks, enahling il b meel lhe commercial and general aviation needs ot the Merch Air Resem-e Base more efficiently than the small Morch JPA staff. The respondent partially disagrees with the finding. While the County of Riverside certainly has departments and personnel with specialized expertise and resources. it does not necessarily follow that the County is better able to run the Airport. No other County- run airpo( is similar in nature to the Airport. Riverside County operales five general aviation airports within the Counly of Riverside. The County does not currently own or operate any commercial airports. The Airport is difl-erent from County airports in thal it is an air cargo airport with a general aviation component that operates on a military base which makes it a Joint Use Airport with ties to the Air Force. Moreover. it is designated as a reliever airport within the FAA s NPIAS. No county airport has the military joint use designation. FAA reliever designation. or relationships within the military. The March JPA has extensive experience in federal delense policies with critical relationships at the Pentagon level and Department ol Defense that allows it lo be an effective pa(ner 10 the March Air Reserve Base. MIPAA's federal relationships have been in place for decades and they have allowed the Authority to facilitate over $60 million worth olprojects around the Base. Moreover. March JPA does not have competing interests within its operations and is highly capable of supporting the warfighting missions at March. 5 of l0 142O5 Meridian Parkway Ste.l4O Riverside, CA 92518 (D ***.rn rchj pa.com " In addition, our Airport is located immediately adjacent to the Cities of Moreno Valley, Perris, and Riverside. Those jurisdictions presently have a say in how the Airport is run. Under County operation, this would be less so. I F- I March JPA can legally transfer its ulility outhorily to the California Gas Compony and its Successor Agency to the Counry' of Riverside. The respondent partially agrees with the finding. The March JPA is presently working with SoCal Gas to transfer services to the company. The March JPA Successor Agency has bond debt tied to the agency and the agency land. Attempting to transfer the Successor Agency to the County would require bondholder consent. and would be a complicated and expensive process. This question may be better addressed by the Califomia Department of Finance. which has oversight of the dissolution ofredevelopment agencies. t l2 The March JPA does not hate a.ruccession plan to replace upper mqnagemenl personnel should it be necessary. The respondent agrees with the finding. It is highly unusual for a public agency to have a formal succession plan lbr upper management personnel. The JPC is responsible lor appointing the position oICEO should the position become vacant.

R-j The Rirerside County Civil Grand Jury recommends that the March .loint Powers Authority dissolve its Ulility Authority no luter than July l, 2028. The recommendation requires further analysis. The March JPA is actively working with SoCal Gas to transfer gas services. It is unnecessary to set a deadline for such a transaction because it requires cooperation. ('ivil

The March JPA has over 510,000,000 in its "unrestricted" .funds. The respondent agrees with the finding. It should be noted that this number includes the March JPA general fund as well as all other funds and its related entities (including the Airport. Green Acres. and a reserve fund set aside for CaIPERS tiability). Healthy and well-run agencies have ample unrestricled funds available. In the past year. the March JPA distributed over $15 million in land sales revenues to member agencies. Responses to Recommendations R-t The Riverside County Civil Grand,lury recommeruls thal lhe Mqrch Joint Powers Authority Commission comply with Calilbrnia Government Code ,s6505.6 and its own.joint pov'ers authoril), agreement by, appointing a pro-fessionully qualdied commissioner or aff member ds treasurer by Octoher l. 2025. (A pro/bssionalll' qualified treasurer is defined as o person rhose academic and work experience qualifies them to serve as treasurer u'ithin the cities qf Moreno lhlley. Perris, or Riterside.) The recommendation will not be implemented because it is not warranted or is not reasonable, with an explanation therefore. l'here is nothing to implement because -['reasurer. March JPA is not in violation of this Code. The CEO serves as March JPA's and began serving in that lunction tbllowing the departure of March JPA financc' stafl The CEO has been signing investmcnt reports as'l'reasurer since at least July 2022. Those 6 of l0 l4iloS Meridian Parkway Ste. l4o Riverside, CA 92518 G) **.rn"rchjpa.com reports were taken to the JPC for approval and the action was included in the March JPA's minutes. With regard to the CEO's qualifications to the Treasurer position, the CEO holds a master's degree from an accredited university in business leadership and management and a doctorate degree from an accredited university in public policy. The CEO also has over eight (8) years ofexperience in managing budgets in a supervisory capacity.