East Orange - County " Water District September 17. 2009-*

Water Districts' procedures for the selection of professional consultants' contracts are somewhat lax and in some instances non- existent, thereby creating a perception of bias in the selection of candidates, especially in the selection of board members from other member agencies to provide professional services. Response to F1(a): Partially Disagree We concur that comprehensive procedures for the selection of professional services are important and serve to provide clarity and openness to the selection process. We find it difficult, however, to understand the second part of the finding and will assume that by the use of the term "other member agencies" that the Grand Jury may be referring to the District and one of its retail member agencies. If so, we disagree with this finding as there is no factual basis for it. This situation has not occurred at the District (we have no current or historical Board Member that provides professional consulting services to water districts). Further, the District's procedures require soliciting proposals from a selection of prequalified firms. If a sensitive relationship exists, we would expect it to be disclosed, would discuss it with District counsel to determine if a conflict exists and if so, would reject the firm's proposal. If no conflict exists, the firm's proposal would be evaluated and ranked. We can imagine no scenario under which staff would be forced to accept substandard work (as was alluded to in the report), or be forced to redo it. This work is the responsibility of the registered engineer that performed it and any changes to it would not only breech our contract, it would limit their liability – which is one of the important benefits that professional services provide.

Some board members are conducting their professional practices with member agencies and use their elected positions to promote their competitiveness. The second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second o Presiding Judge September 17, 2009 Response to "New Era" Grand Jury Report Response to F2: Disagree. Since the facts of this situation are not specified, we are again left to speculate. With regards to the District, there is no basis in fact for this finding as again, we have no Board Members providing professional services to our member agencies. However, in support of the Grand Jury, if a Board Member was using his/her elected position to elicit special consideration for their business, this is clearly not allowed under conflict of interest laws. However, we are not certain that this has actually occurred (i.e., there is a lack of detail in the report), or that the potential for its happening is great enough to limit very qualified individuals from running for and holding office. In fact, holding an elected position would seem to result in the elected official's firm potentially losing work, as they would be precluded from working with the official's own district. It does not seem reasonable to imply that they should not be able to solicit work - under the same rules as any other firm from any other agency because they sit on the Board of a separate agency.

Codes of ethics among districts are quite varied. Some are very comprehensive and some do not exist other than to reference state laws. Response to F3: Agree. The finding is more of a statement of fact rather than a finding of some problem. The District defers to state conflict-of-interest laws for its code of ethics - these laws are very comprehensive and far-reaching - as do most cities, counties and state agencies. District Board members undergo mandatory ethics training every two years as required by law. ------

Water Board meetings are frequently scheduled for times that discourage public attendance. Response to F4: Wholly Disagree. With regards to the District, for over 25 years, our Board Meetings have been scheduled for 5:00 p.m. on the third Thursday of the month. Additionally, during our recent rate increase, after publicizing our meeting by sending a notice out with our water bills, we held a specific rate hearing Board Meeting at 6:00 p.m. on June 10, 2009. We had only two members of the public attend. Presiding Judge September 17, 2009 Response to "New Era" Grand Jury Report

An unusually high percentage of water board directors were originally appointed, not elected to their position. Response to F5: Disagree. Since the term "unusually high" is undefined, we are unsure as to the basis for the statement. The Grand Jury failed to present evidence that water districts use the appointment process with any greater frequency than does any other sector of government (i.e., cities, school districts or other special districts). It is not unusual that Councils/Boards will use the appointment process rather than incurring the cost of a special election to fill a vacancy. The cost savings can be huge and the district potentially refills its Board/Council quickly, thus preserving the ability to conduct business and have tie breaking votes. In the absence of evidence that there is a problem with this practice (e.g., incompetence and/or "selling" the seats to the highest bidder) we believe that Boards and Councils should retain the ability to use the appointment process in the event of a Board/Council vacancy.

Some board members hold multiple elected positions that under certain circumstances could create an appearance of a conflict of interest unless the person recuses himself on an issue-by-issue basis. Response to F.6: Wholly Disagree. While no District Board Member fits this description (i.e., no basis in fact for this finding), and we are unaware of the specific person/situation that is being referred to, we agree that there may be circumstances that arise that can pose a problem if a Board Member were to hold multiple elected positions and should recuse themselves if conflicts arise.

There are no time limits for how long individuals can serve on any water district board in Orange County. Response to F7: Agree. Again, this is a statement of fact; one that has been and continues to be a benefit to the District. We will enlarge on these benefits in our response to Recommendation 6. Presiding Judge September 17, 2009 Response to "New Era" Grand Jury Report Response to Recommendations