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Extracted from Consolidated Report
This investigation was originally published as part of a larger consolidated report containing multiple investigations. View the consolidated PDF for the complete document.
Orange County Grand Jury
• 2014-2015
Joint Powers Authorities: Issues of Viability, Control, Transparency, and Solvency
⚠️ Translation Notice: This content has been automatically translated. The original English text is the official version. Translation may contain errors.
⚠️ Este contenido ha sido traducido automáticamente. El texto original en inglés es la versión oficial. La traducción puede contener errores.
Note: Missing finding numbers detected: F3
Findings 9 findings
F1
Page 191
Orange County has nine “inactive” Joint Powers Authorities that have no viable REPORT activity, revenue, expenditure, assets, or liabilities. The Grand Jury determined 13 that these Joint Powers Authorities serve no benefit to the public or the taxpayers and have the potential for misuse or obfuscation of public funds. REPORT
F2
Page 191
Horizontal Joint Powers Authorities among peer organizations appear to meet 14 the intent of State laws to delegate a common service for a city or other legal entity for the purpose of reducing cost on behalf of the taxpayers. REPORT 15 F.3. Orange County has 18 vertical Joint Powers Authorities created by a city along with its redevelopment agency that no longer exists. The Grand Jury determined REPORT 16 2014-2015 Orange County Grand Jury REPORT Joint Powers Authorities: Issues of Viability, Control, Transparency, and Solvency 1 REPORT that these Joint Powers Authorities serve no benefit to the public or the taxpayers 2 and have the potential for misuse or obfuscation of public funds.
F4
Page 192
Vertical Joint Powers Authorities with a single controlling entity, such as a city REPORT council, have the potential to use this organizational structure as a shell company 3 to avoid other legal constraints on the controlling entity and to obfuscate taxpayer visibility. REPORT 4
F5
Page 192
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, REPORT are avoiding transparency and are not acting in the best financial interest of the 5 taxpayers. REPORT
F6
Page 192
32 of the Joint Powers Authorities identified in Orange County are not complying 6 with the California State reporting requirements in code Section 6500 and SB 282 according to the latest information available from the year 2013. REPORT
F7
Page 192
The Orange County Auditor-Controller knows of the Joint Powers Authorities in 7 which the County is a member, but does not have a list of all of the Joint Powers Authorities in Orange County and cannot confirm compliance of their submittal REPORT for public access. The Orange County Auditor-Controller does not provide easy- 8 to-use online access to the data submitted to it by the Joint Powers Authorities that are compliant with the requirement to submit. REPORT
F8
Page 192
The Foothill Transportation Corridor Agency and the San Joaquin Transportation 9 Corridor Agency have a joint debt level of over $4.5 billion. The Grand Jury has determined that this debt level is excessive based on their revenues, and it REPORT threatens to render them insolvent. 10
F9
Page 192
The Orange County Fire Authority has an off-the-books unfunded debt liability of REPORT $577 million which the Grand Jury has determined to be of concern since it is a 11 real liability on the County taxpayers.
F10
Page 192
The Anaheim Pubic Financing Authority has a debt exposure of $1.2 billion which REPORT the Grand Jury has determined to be excessive in light of the fact that it was 12 incurred without voter approval. REPORT RECOMMENDATIONS 13 In accordance with California Penal Code sections 933 and 933.05, the 2014- 2015 Grand Jury requires (or, as noted, requests) responses from each agency affected REPORT by the recommendations presented in this section. The responses are to be submitted 14 to the Presiding Judge of the Superior Court. Based on its investigation titled “Joint Powers Authorities in Orange County,” the REPORT 2014-2015 Orange County Grand Jury makes the following eight recommendations: 15
Recommendations 5
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R1Page 192All Orange County Joint Powers Authorities that are “inactive” should submit the REPORT official paperwork with the State of California requesting termination of their 16 2014-2015 Orange County Grand Jury REPORT 1 Joint Powers Authorities: Issues of Viability, Control, Transparency, and Solvency REPORT existence or provide at the next public meeting the justification for continuing the 2 Joint Powers Authority. (F.1.) REPORT R.2. All Vertical Joint Powers Authorities created by a city along with its 3 redevelopment agency should submit the necessary paperwork with the State of California requesting termination of their existence. (F.3.) REPORT
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R3Page 193All Joint Powers Authorities should take the following actions to insure 4 transparency to the taxpayers: (1) have an annual outside audit, (2) post the complete audit on their city website as a separate Joint Powers Authority entity, REPORT (3) send the audit to the County Controller and the State Auditor, and (4) ensure 5 the required reports are filed annually to the County and the State. (F.4., F.5.)
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R4Page 193The 32 Joint Powers Authorities that are not complying with the California State REPORT Law requiring annual reporting should become compliant by submitting their 6 2014 report by December 31, 2015, and submitting the required reports annually thereafter. (F.6.) REPORT 7 R.5. The Orange County Auditor-Controller should maintain a current list of all of the Joint Powers Authorities in Orange County, confirm that reports have been submitted annually, and post the completed reports with all the details on an REPORT easy-to-use Internet public access website. (F.7.) 8
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R6Page 193The Foothill Transportation Corridor Agency and the San Joaquin Transportation REPORT Corridor Agency should address their solvency by an aggressive plan to reduce 9 their public debt. (F.8.)
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R7Page 193The Orange County Fire Authority should address their lack of transparency by REPORT providing public disclosure of their off-the-books unfunded public liability in their 10 financial statements and address their solvency by an aggressive plan to reduce their unfunded liabilities. (F.9.) REPORT 11 R.8. The City of Anaheim City Council should redress the debt incurred by the Anaheim Pubic Financing Authority under its direction by an aggressive plan to REPORT reduce their public debt. (F.10.) 12 REQUIRED RESPONSES REPORT The California Penal Code section 933 requires the governing body of any public 13 agency which the Grand Jury has reviewed, and about which it has issued a final report, to comment to the Presiding Judge of the Superior Court on the findings and recommendations pertaining to matters under the control of the governing body. Such REPORT comment shall be made no later than 90 days after the Grand Jury publishes its report 14 (filed with the Clerk of the Court). Additionally, in the case of a report containing findings and recommendations pertaining to a department or agency headed by an elected REPORT County official (e.g. District Attorney, Sheriff, etc.), such elected official shall comment 15 on the findings and recommendations pertaining to the matters under that elected official’s control to the Presiding Judge with an information copy sent to REPORT the Board of Supervisors. 16 2014-2015 Orange County Grand Jury REPORT Joint Powers Authorities: Issues of Viability, Control, Transparency, and Solvency 1 REPORT Furthermore, California Penal Code section 933.05, subdivisions (a), (b), and (c), 2 provides as follows, the manner in which such comment(s) are to be made: (a) As to each Grand Jury finding, the responding person or entity shall indicate one of REPORT the following: 3 (1) The respondent agrees with the finding REPORT (2) The respondent disagrees wholly or partially with the finding, in which case 4 the response shall specify the portion of the finding that is disputed and shall include an explanation of the reasons therefore. REPORT 5 (b) As to each Grand Jury recommendation, the responding person or entity shall report one of the following actions: REPORT (1) The recommendation has been implemented, with a summary regarding the 6 implemented action. REPORT (2) The recommendation has not yet been implemented, but will be implemented 7 in the future, with a time frame for implementation. (3) The recommendation requires further analysis, with an explanation and the REPORT scope and parameters of an analysis or study, and a time frame for the matter to be 8 prepared for discussion by the officer or head of the agency or department being investigated or reviewed, including the governing body of the public agency when REPORT applicable. This time frame shall not exceed six months from the date of publication of 9 the Grand Jury report. (4) The recommendation will not be implemented because it is not warranted or REPORT is not reasonable, with an explanation therefore. 10 (c) If a finding or recommendation of the Grand Jury addresses budgetary or personnel REPORT matters of a county agency or department headed by an elected officer, both the 11 agency or department head and the Board of Supervisors shall respond if requested by the Grand Jury, but the response of the Board of Supervisors shall address only those REPORT budgetary /or personnel matters over which it has some decision making authority. The 12 response of the elected agency or department head shall address all aspects of the findings or recommendations affecting his or her agency or department. REPORT Comments to the Presiding Judge of the Superior Court in compliance with Penal 13 Code section 933.05 and Penal Code 933(c) are required from the respondents listed in the following two Response Matrices (one for cities and County and one for Joint REPORT Powers Authorities): 14 REPORT 15 REPORT 16 2014-2015 Orange County Grand Jury REPORT 1 Joint Powers Authorities: Issues of Viability, Control, Transparency, and Solvency REPORT Matrix 1 REQUIRED RESPONDENTS (Cities & County) 2 Required Respondents Findings Recommendations REPORT F F F F F F F F F F R R R R R R R R 3 1 2 3 4 5 6 7 8 9 1 1 2 3 4 5 6 7 8 0 City of Anaheim REPORT 1 X X X X Mayor & City Council 4 City of Brea Mayor & 2 X X City Council REPORT City of Buena Park 5 3 X X X X Mayor & City Council City of Costa Mesa 4 X X REPORT Mayor & City Council 6 City of Fullerton 5 X X X X Mayor & City Council REPORT City of Fountain 7 6 Valley Mayor & City X X Council City of Garden REPORT 7 Grove Mayor & City X X X X 8 Council City of Huntington REPORT 8 Beach Mayor & City X X 9 Council City of La Habra 9 X X REPORT Mayor & City Council 10 City of Lake Forest 10 X X Mayor & City Council REPORT City of Mission Viejo 11 X X 11 Mayor & City Council City of San REPORT 12 Clemente Mayor & X X 12 City Council City of San Juan 13 Capistrano Mayor & X X REPORT City Council 13 City of Santa Ana 14 X X Mayor & City Council REPORT City of Seal Beach 14 15 X X Mayor & City Council City of Stanton 16 X X X X REPORT Mayor & City Council 15 City of Tustin Mayor 17 X X X X & City Council REPORT 16 2014-2015 Orange County Grand Jury REPORT Joint Powers Authorities: Issues of Viability, Control, Transparency, and Solvency 1 REPORT Required Respondents Findings Recommendations 2 F F F F F F F F F F R R R R R R R R 1 2 3 4 5 6 7 8 9 1 1 2 3 4 5 6 7 8 REPORT 0 3 City of Westminster 18 X X X X Mayor & City Council REPORT City of Yorba Linda 19 X X 4 Mayor & City Council Orange County 20 X X REPORT Auditor-Controller 5 Matrix 2 REQUIRED RESPONDENTS (Joint Powers Authorities) REPORT 6 Required Respondents Findings Recommendations F F F F F F F F F F R R R R R R R R REPORT 1 2 3 4 5 6 7 8 9 1 1 2 3 4 5 6 7 8 7 0 1 Anaheim Community X X X Center Authority REPORT 2 Anaheim Housing and 8 X X X Public Improve. Auth. Anaheim Public X X X X X X X REPORT Financing Authority 9 4 Big Independent Cities X X X Excess Pool 5 Bonita Canyon Public REPORT X X X Facilities Fin. Auth. 10 6 Brea Community X X X Benefits Financing Auth. REPORT 7 Brea Public Financing X X X X X 11 Authority 8 Buena Park Public Financing Authority X X X X X X X REPORT 9 California Insurance Pool 12 X X X Authority 10 Capistrano Unified Public REPORT X X X X X X X Financing Auth. 13 11 Central Net Operations X X X X X Authority REPORT 12 City of Brea Midbury X X X X X X 14 Assessment Auth. City of Fullerton Public X X X X X X X Financing Auth. REPORT 14 City of San Clemente 15 X X X X X X X Public Fin. Auth. Coastal Animal Services REPORT X X X X X Authority 16 2014-2015 Orange County Grand Jury REPORT 1 Joint Powers Authorities: Issues of Viability, Control, Transparency, and Solvency REPORT 2 Required Respondents Findings Recommendations F F F F F F F F F F R R R R R R R R REPORT 1 2 3 4 5 6 7 8 9 1 1 2 3 4 5 6 7 8 3 0 16 Coastal District X X X Financing Authority REPORT 17 Co-Op- Org. Develop. Employee Selec.Proced. X X X 18 Costa Mesa Public X X X X X REPORT Finance Authority 5 19 Countywide Public X X X X X X X X Finance Authority 20 Fountain Valley REPORT X X X X X X X Financing Authority 6 21 Fullerton Arboretum X X X Authority REPORT 22 Fullerton Library Building X X X X X X X 7 Authority 23 Fullerton School District X X X X X REPORT Financing Auth. 8 24 Garden Grove Public X X X X X X X X X Financing Authority 25 Huntington Beach Public REPORT X X X X X Financing Auth. 9 26 Independent Cities Risk X X X X X Management Auth. REPORT 27 Integrated Law and X X X X X 10 Justice Agency for OC 28 Irvine Child Care Project X X X X X REPORT 29 Irvine Unified School 11 X X X District Financing Auth. Joint Powers Employee REPORT Benefit Authority X X X 12 31 La Habra Civic X X X X X X X Improvement Authority REPORT 32 Metro Cities Fire X X X X X 13 Authority 33 Mission Viejo Commu. X X X X X X X Devel. Fin. Auth. REPORT 34 National Water Research 14 X X X X X Institute 35 Newport-Mesa United X X X X X X X REPORT School Fin. Auth. 15 36 North Net Joint Powers X X X X X Training Agree. REPORT 16 2014-2015 Orange County Grand Jury REPORT Joint Powers Authorities: Issues of Viability, Control, Transparency, and Solvency 1 REPORT Required Respondents Findings Recommendations 2 F F F F F F F F F F R R R R R R R R 1 2 3 4 5 6 7 8 9 1 1 2 3 4 5 6 7 8 REPORT 0 3 37 Northern OC Self- Funded Workers X X X Comp..Auth. REPORT 38 Northern OC Lia. & 4 X X X Property Self-Insu.Auth. Orange County Cities X X X REPORT Airport Authority 5 40 Orange County Civic X X X X X Center Authority REPORT 41 Orange County Council X X X X X of Governments 6 42 Orange County Fire X X X X X Authority REPORT 43 Orange County Fringe X X X 7 Benefits Agreement 44 Orange County Public X X X Financing Authority REPORT 45 Orange County-City X X X 8 Hazardous Matl. Auth. Orange Uni. School X X X X X Distr. Public Fin. Auth. REPORT 47 Public Cable Television 9 X X X Authority 48 Rancho Canada X X X X X Financing Authority REPORT 49 Rancho Santa Margarita 10 X X X X X Public Fin. Auth 50 Saddleback Valley X X X REPORT Unified Sch. Fin. Auth. San Joaquin Trans. X X X X X Corridor Agency 52 San Juan Basin Authority X X X REPORT 53 Santa Ana Financing 12 X X X X X X X Authority 54 Santa Ana River Flood X X X Protection Agency REPORT 55 Santa Margarita-Dana 13 X X X Point Authority 56 Santiago Aqueduct X X X REPORT Commission 57 School Employers 14 X X X Association of California 58 Seal Beach Public X X X X X X X REPORT Financing Authority 15 59 South Coast Water X X X District Financing Auth. South Orange County X X X REPORT Public Financing Auth. 16 2014-2015 Orange County Grand Jury REPORT 1 Joint Powers Authorities: Issues of Viability, Control, Transparency, and Solvency REPORT 2 Required Respondents Findings Recommendations F F F F F F F F F F R R R R R R R R REPORT 1 2 3 4 5 6 7 8 9 1 1 2 3 4 5 6 7 8 3 0 61 South Orange County X X X Wastewater Auth. REPORT 62 Southern Orange County X X X 4 Prop/Lia. Self Insu. Stanton Public Financing X X X X X X X X X Authority REPORT 64 The Foothill Trans. X X X X X 5 Corridor Agency 65 Trabuco Canyon Public X X X Financing Authority REPORT 66 Tustin Public Financing 6 X X X X X X X X X Authority 67 Tustin Unified School X X X X X District Fin. Auth. REPORT 68 West Cities Commun. X X X X X Cntr. Joint Powers Auth. Western Orange County X X X REPORT Self-Funded Comp 70 Westminster Public 8 X X X X X X X X X Finance Authority 71 Yorba Linda Public X X X X X X X REPORT Finance Authority 9 REPORT 10 REPORT 11 REPORT 12 REPORT 13 REPORT 14 REPORT 15 REPORT 16 2014-2015 Orange County Grand Jury REPORT Joint Powers Authorities: Issues of Viability, Control, Transparency, and Solvency 1 REPORT REFERENCES 2 Cypher, T. & Grinnell, C. (2007). Governments Working Together: A Citizen’s Guide to Joint Powers Agreements. California State Legislature, Senate Local REPORT Government Committee Report. State of California Constitution. Article XVI. Section 18. “Debt”. REPORT State of California Government Code Section 6500. Joint Exercise of Powers Act 4 State of California Senate Bill No. 282. (2001). Chapter 288, Amended Section REPORT 12463.1 [Government Code]. REPORT 6 REPORT 7 REPORT 8 REPORT 9 REPORT 10 REPORT 11 REPORT 12 REPORT 13 REPORT 14 REPORT 15 REPORT 16 2014-2015 Orange County Grand Jury
Agency Responses 1
Government agencies' official responses to this report's findings and recommendations. Click on a response to see the structured breakdown.