has provided great value to the County in terms of acceleration of transportation infrastructure, development and*

R1

Inadequate Board Oversight Finding: RCA Board Members often have a limited understanding of the very complex requirements and obligations of this conservation agency. They need more measurable information on the long term trends of the RCA. Many elected Board Members do not remain on this Board for more than a few years, and so institutional memory of the Board is often limited. Only the Executive Board appears to make decisions about setting the agenda. Recommendation: The RCA Executive Board needs to ensure that all Board Members are adequately trained in the mission and operational mechanisms of The Plan. Board Members must fully understand their essential role as primary policy makers of the RCA. The Executive Board should develop timely evaluations of the performance of The Plan, and report on the progress of RCA in meeting its goals to the Board. They need to ensure that information about the long-term trends of this agency is understood by all Board Members. RESPONSE Finding - Wholly Disagree: The current average tenure for Board Members is four years, and the 2018 average tenure was six years. New Board Members attend a comprehensive orientation and participate in monthly Board meetings. Many Board Members also participate in RCA committee meetings as well. Board Members also frequently interact with staff and request information. RCA Bylaws provide that any member of the Board may request an item be placed on an agenda, which is not unlike the laws and policies for creating agendas at any of the RCA's 18 member cities or the Board of Supervisors. Recommendation Has Been Implemented: For many years, it has long been the policy and the practice for the RCA Board to receive an update from the RCA Executive Director at every monthly Board meeting as to the number of acres in the reserve, including how many acres have been acquired since the last meeting, as well as what potential lands are currently being discussed for potential acquisition. These presentations, coupled with related Board materials and reports, detail the long-term trends and performance of the MSHCP. The RCA Board is aware the agency has until 2029 to meet its acquisition 3 obligations and has been actively exploring various strategies for meeting this commitment.

R2

Board Lack of Awareness of Financial Pitfalls Finding: The RCA Board has not acknowledged its inability to meet the current time table for acquisition of habitat conservation lands. The current rate of land acquisition has slowed to the point where it is unlikely to expect that it will meet The Plan's goal of completion of habitat land reserve within the remaining ten years of the 25 year plan. Recommendation: The Executive Board needs to direct the RCA staff to provide members of the Board with actionable information about the long term trends in income and land reserve. This will illuminate the concern about progress toward the land acquisition goal of The Plan. RESPONSE Finding - Wholly Disagree: The RCA Board receives an update from the RCA Executive Director at every monthly Board Meeting as to the number of acres in the reserve, including how many acres have been acquired since the last meeting. As such, the Board is kept informed and is fully aware that 61,514 acres – or more than 40% – of the required reserve has been acquired during 60% of the acquisition phase. Like all public agencies, the RCA is impacted by economic cycles, including the Recession that struck just four years after the RCA was formed and lingered over Riverside County. Significant progress has been made in the wake of this severe economic downturn. Recommendation Has Been Implemented: As noted above, the RCA Board receives an update from the RCA Executive Director at every monthly Board Meeting as to progress being made on the MSHCP, as well as related reports and materials outlining the MSHCP's status and financial outlook. The RCA Board is aware the agency has until 2029 to meet its acquisition obligations and has been actively exploring various strategies for meeting this commitment. Strategies include, but not limited to, the new federal legislation that would provide funding and savings opportunities to the RCA, namely HR2956, which was introduced during the current Congressional session by Congressman Ken Calvert (CA- 42) and cosponsored by Rep. Mark Takano (CA-41) and Rep. Pete Aguilar (CA-31). A companion Senate bill is expected soon. The RCA and its lobbyists have also been involved in pursuing loan opportunities for habitat conservation as part of the pending "America's Transportation Infrastructure Act," which seeks to provide $287 billion over five years for surface transportation programs.

R3

Over $1 Billion Will Be Needed Within the Next Ten Years Finding: Even with the RCA's recent estimate of land acquisition costs at $13,000 per acre, the necessary land acquisition costs to complete The Plan are expected to be a staggering 4 $1.0 to $1.5 billion dollars. This represents a significant financial risk to the County. Recommendation: The Executive Board urgently needs to work with the RCA staff to identify all options anticipated in the 2017 Nexus report regarding the revision of the scheduled mitigation fees. In addition to other funding mechanisms, including loans and alliances with other federal agencies, the Board should explore other options to meet the overwhelming costs of future land acquisition. The Executive Board should make recommendations, provide justification for proposed mitigation rate increases and present other tax options to the entire Board for review and confirmation. Tax options are described in the 2008 Rand report. The Board should convene the Funding Coordination Committee, which is described in The Plan, Volume 1, Section 6.6.2.D, and meet with the wildlife agencies to address these common funding concerns. All agencies, including the wildlife agencies, need to improve collections to meet their land acquisition goals. RESPONSE Finding – Wholly Disagree: The MSCHP estimated the average price per acre would be $13,100. However, the average purchase price of land has been substantially lower at approximately $8,500 per acre, and that has remained constant. It is estimated that $770 million will be needed to acquire the remaining local obligation acreage, or about half of the sum that the Grand Jury Report estimates, according to the draft Nexus Study Update. Concerning risk to the County, the obligations of the County are limited to those set forth in the MSHCP, Permits, JPA and Implementing Agreement. Nothing in the agreements is to be construed to require the obligation, appropriation, or expenditure of any money from the County or cities. (See Section 22 of the Joint Exercise of Powers Agreement and Section 27.11 of the Implementing Agreement.) The Grand Jury Report overlooks that the permits held by the RCA have mitigated risks to the county and to date has saved taxpayers more than $500 million by accelerating the construction of over $5 billion in major freeway and road improvements across Western Riverside County by two to five years. These include nearly one dozen railroad/grade separations in Riverside, Corona and other communities, as well as more than 30 critical road projects such as the SR-91/I-15 Freeway improvements, the Clinton Keith extension, the Newport Road Interchange, the I-215 widening, and the SR 60 Freeway truck lanes now being built. Similarly, the MSHCP managed by the RCA has streamlined the construction of new businesses and neighborhoods across Western Riverside County and has helped create more than 70,000 jobs. Recommendation Has Been Implemented: The Draft Nexus Study Update estimates that average price per acre will increase to $13,500. The Nexus Study Update will be presented to the RCA Board in coming weeks and will outline potential changes to 5 scheduled mitigation fees. As noted above, the financial position of RCA is presented to the Board on a quarterly basis, and RCA staff meets regularly with wildlife agencies to address funding and a wide range of conservation and habitat issues. In addition, other funding mechanisms, including grants and the funding opportunities through aforementioned federal legislation introduced by Congressman Ken Calvert (CA- 42) and cosponsored by Rep. Mark Takano (CA-41) and Rep. Pete Aguilar (CA-31) are also being explored by the Board to meet the land acquisition commitment. RCA has and continues to explore possible revenue raising options, including those as recommended by RAND. The RCA is in the process of convening the Funding Coordination Committee.

R4

Endowment Fund is Underfunded Finding: The Plan calls for an endowment fund of $70,000,000 to support future monitoring and maintenance of habitat lands. At this time, the fund is severely underfunded currently at about $5,800,000. The failure to build this reserve fund, the interest income of which would fund habitat maintenance activities in perpetuity, could obligate the participating cities to carry these costs after completion of the land acquisition requirement. Recommendation: The Executive Board should require the RCA staff to propose options for building the endowment fund to the level of $70,000,000 to support habitat monitoring and maintenance for the remaining 50 years of The Plan. The RCA management staff needs to clearly report on the level of the underfunded endowment reserves for future protection of the MSHCP lands in conjunction with the quarterly budget reports. While it is possible to delay the accumulation of an endowment fund for future habitat monitoring and maintenance, doing so would reduce the time needed to reach the land acquisition goal. It would be a risky option since recent fee collections have been so low. The entire Board needs to be aware of the status of resources needed to complete the acquisition of the land reserve and the endowment to support the maintenance of the future expansive land reserve. They should review proposals to seek nonprofit funding to build up the endowment. RESPONSE Finding – Agree in Part: The MSHCP funding plan anticipated that all excess revenues over expenditures annually would transfer to the endowment fund without any consideration to restrictions of certain types of funding. When funds are available, RCA sets aside money in the endowment fund. In addition, donor endowments are sometimes received for land donations. Concerning the potential for participating cities to have to carry monitoring and maintenance costs, the obligations of the participating cities and the County are limited to those set forth in the MSHCP, Permits, JPA and Implementing Agreement. Nothing in the agreements is to be construed to require the obligation, appropriation, or expenditure of any money from the County or cities. (See Section 22 of the Joint Exercise of Powers Agreement and Section 27.11 of the Implementing Agreement.) Recommendation Has Been Implemented: As noted above, the Board is apprised monthly regarding the status of the MSHCP, and financial reports are presented on a quarterly basis. Additionally, the draft Nexus Study Update outlining mitigation fee changes will be presented to the Board in coming months. Other new, potential federal funding sources as noted above are also pending that may create opportunities for increasing the endowment fund. The lands required for the Wildlife Refuge will be managed by the federal government, which will reduce management costs and the amount of the required endowment.

R5

Efficiencies of Outside Contractors vs. In-House Staff Finding: RCA outsources many costly contracts to outside parties for legal services, plan implementation, real property services, and other professional services. These costs drain the limited general funds, used to build up the endowment and other services. RCA contracts with an outside company to act as a middle-man for projects that are negotiated between developers and RCA staff. The outside company agents explain the MSHCP process, provide interpretation and deliver a completed packet of documents for the RCA joint project reviews. Recommendation: RCA management staff should review the use of internal staffing versus the use of many costly outside contractors. More biological assessment and land acquisition activities could be brought in-house. Trained in-house staff could handle more basic biological assessment and land acquisition duties. Many fees paid to outside contractors could be reduced by efficient use of internal staffing. RESPONSE Finding - Wholly Disagree: By contracting some specialized tasks to outside parties, the RCA maintains cost efficiencies that save the agency annual salaries, benefits, and pension costs, as well as office space and equipment costs. Hiring additional staff would incur substantial additional costs as it would necessitate significant increases to the RCA office space, equipment and maintenance costs, as well as the need for fleet vehicles. Recommendation Has Been Implemented: The RCA has analyzed its outside contracts and determined that without these outside contracts, the agency would need 37 additional employees, such as in-house attorneys with specialties in environmental law, property law and the Brown Act to a real estate services team, to land management crews and monitoring crews. For example, RCA uses an outside contractor to support Joint Project Reviews. Replacing that contractor with in-house staff would nearly double RCA's cost for those tasks alone. Outside contracting allows RCA to pay for only the services it needs at a fraction of the cost of full-time employees. This allows the RCA to avoid incurring substantial long-term pension liabilities and creates flexibility during financial downturns that impact acquisition activities.

R6

Insufficient Financial Commitment for Maintenance & Security of Habitat Reserve Finding: The Plan Land Management budget does not provide sufficient park rangers for increased land patrol and maintenance responsibilities of the expanding habitat reserve. The maintenance and security of the current accumulated 400,000 acres of conservation land is suffering from damages caused by fires and floods, as well as off-highway vehicles (OHV), and homeless encampments. This damage will only increase in the future. Recommendation: Shift resources to add more contract land management park rangers. Coordinate with County Sheriff and Code Enforcement Departments to assist park rangers in controlling on-going [sic] damage to the habitat reserve from trespassers, mountain bikes and excess motor sport vehicles, as well as homeless encampments. Seek available grants from California Off-Highway Motor Vehicle Registration for management of OHV recreation and security. Use funds for posting signage and limiting vehicle access into the preserve and for repairs on the expanded acreage of protected lands. RESPONSE Finding - Wholly Disagree: This finding is factually incorrect as the RCA is not responsible for managing 400,000 acres. RCA currently successfully manages approximately 62,000 acres. It also makes broad assumptions regarding OHV and homeless issues that are not substantiated. Recommendation Has Been Implemented: In recent years, the level of recreation occurring on RCA reserve lands has greatly increased, particularly mountain biking. The RCA is working with outside entities and the Riverside County Regional Park and Open- Space District to help facilitate more effective patrol options for RCA Rangers. RCA Rangers have and continue to work with Riverside County Off-Highway Vehicle Enforcement and local Code Enforcement offices to address trespassing, off-highway vehicles, and homeless encampments. They also work with the California Department of Fish and Wildlife Wardens to address poaching and 1600 violations. Efforts to empower the RCA Rangers to issue citations are currently underway to help reduce OHV and mountain biking infractions. Fires and floods cannot be predicted and may occur on conservation lands. RCA is proactive in its efforts to protect and minimize damage caused by fires and floods. RCA performs weed abatement, especially along roadways and point source ignition areas, several times a year. Further, the RCA already uses funds for posting of signs and to limit vehicle, mountain biking and hiking access into areas of the reserve, and for conservation activities on protected lands. The Grand Jury Report erroneously recommended seeking grants through the California Off-Highway Motor Vehicle Registration Grants program; however, such grants are not available to the RCA. This program is only available to eligible agencies and organizations that develop, maintain, and operate OHV recreation areas. The RCA does not conduct these activities. The use of off-highway vehicles is prohibited on RCA conservation land. However, staff will continue to explore other grant funds that RCA may be eligible for.

R7

Legislative Solutions for Funding Are Far From Certain Finding: RCA continues to spend over $200,000 annually, of its own limited, local general funds for two K-Street lobbyists. Their proposals repeatedly seek funding resources through legislative alternatives. These approaches have indeterminate and un- measureable [sic] outcomes. Recommendation: Review the effectiveness and over-reliance [sic] on K-Street lobbyists as a source of needed future fundings. Consider integration of RCA habitat lobbying with other County lobbying efforts. RESPONSE Finding - Wholly Disagree: RCA's lobbyists in Washington, D.C., have helped the RCA secure more than $25 million in funding, providing a very healthy return on investment for their services. In 2011, the U.S. Fish and Wildlife Service determined that the RCA was no longer eligible to receive Section 6 Endangered Species Act grant funding to acquire reserve lands. RCA's lobbyists worked out a solution which resulted in the RCA receiving Section 6 and Wildlife Conservation Board grant funding. RCA's lobbyists have also been instrumental in efforts to establish a federal Wildlife Refuge, which stands to deliver tens of millions of dollars in additional funding for the MSHCP reserve. The return on investment for RCA's lobbyists has been substantial, and additional funding/return is anticipated. Recommendation Has Been Implemented: As noted in the preceding paragraphs, lobbyists retained by the RCA have demonstrated a substantial return on investment, topping $25 million for the agency. Current initiatives being pursued by our lobbyists are expected to generate tens of millions of dollars in additional grant and loan opportunities for the RCA. Integrating RCA's lobbying efforts with general lobbying efforts by the County dilutes the focus and effectiveness of such efforts, and overlooks the specialized expertise and institutional knowledge needed to efficiently advocate for conservation and species habitat issues. Lack of Public Understanding

R8

Finding: RCA is an obscure agency. The taxpaying, voting public is not aware of its valuable contributions to the conservation of the environment or to the development of public infrastructure in the County. Recommendation: RCA should improve outreach efforts to the general taxpaying, voting public. Provide public education about the RCA's conservation mission and build a public constituency of those who may be asked to approve future funding mechanisms to support its goals. Create public understanding of the importance of this conservation plan in reducing delays in the development of public infrastructure projects and the value of protecting the habitat for endangered species. RESPONSE Finding - Agree Partially: Recognizing the need to increase public awareness of the MSHCP, the RCA Board of Directors approved a public outreach program which includes e-newsletters, a redesigned website, new reserve signage, a new brochure, social media outreach, an educational component and media relations, in September 2018. These materials and activities have been completed and implemented, or are in the process of being implemented. Recommendation Has Been Implemented: As discussed in the preceding paragraph, the RCA Board of Directors in 2018 approved a public outreach program including e- newsletters, a redesigned website, new reserve signage, a new brochure, social media outreach, an educational component and media relations. This is expected to increase visibility to a wide swath of the public, including voting taxpayers.

R9

More Useful Annual Reports Finding: The information in the Annual Reports meet the minimal requirement set out in The Plan, but do not discuss financial issues of concern or proposed remedies and actions. They do not provide comment on whether the income receipts and the rate of the land acquisition are sufficient for the RCA to meet its goal of acquiring sufficient habitat lands to assemble the reserve within 25 years. Recommendation: The Annual Report should serve as a benchmark to be used for evaluating compliance with The Plan requirements and goals. The report should provide graphic description of the RCA's progress towards The Plan conservation goals. It should identify significant issues in The Plan implementation and proposed remedies for concerns which may delay implementation. Copies of the Annual Report should be made available to the public and presented at an open workshop where they may comment. RESPONSE Finding - Wholly Disagree: At nearly 450 pages, the Annual Report and its attached

R10

Consolidation of Duplicate Bureaucracy Finding: RCA is a free-standing JPA. The other two habitat conservation agencies in the County, HCA and CVCC, are not free-standing and are subject to a higher level of public visibility along with managerial and financial oversight provided by the existing multi-city management structure. Recommendation: The consolidation of RCA within an existing multi-city management structure would provide: