Joint Powers Subscriber Agencies: Authorities: Issues of Viability, Control, Transparency, and Solvency*

Vertical Joint Powers Authorities with a single controlling entity, such as a City of Newport Beach city council, have the potential to use this organizational structure as a shell company to avoid other legal constraints on the controlling entity and to obfuscate taxpayer visibility. City of Orange Response: The Authority disagrees with this finding. Authority is not a vertical joint powers agency as that term is used in the Grand Jury Report. Authority is a horizontal joint powers agency very similar to the Metro Cities Fire Authority example used as an example of a horizontal joint powers agency in the Grand Jury Report. Authority's members are the cities of Anaheim, Fullerton, Huntington Beach, Newport Beach and Orange. Each member city designates a representative approved by its respective city councils, which representatives compromise the Board of Directors. Each member has equal representation. Orange County Superior Court September 18, 2015

Vertical Joint Powers Authorities in which the controlling entity transfers assets from itself to a Joint Powers Authority for the purpose of obtaining additional funding, or signs a long-term lease to a Joint Powers Authority to obtain assets, are avoiding transparency and are not acting in the best financial interest of the taxpayers. Response: The Authority disagrees with this finding. Authority is not a vertical joint powers agency as that term is used in the Grand Jury Report. Authority is a horizontal joint powers agency very similar to the Metro Cities Fire Authority example used as an example of a horizontal joint powers agency in the Grand Jury Report. Authority's members are the cities of Anaheim, Fullerton, Huntington Beach, Newport Beach and Orange. Each member city designates a representative approved by its respective city councils, which representatives compromise the Board of Directors. Each member has equal representation. Recommendations