RESPONSE TO THE

SANTA BARBARA COUNTY 1998-1999

GRAND JURY REPORT

FROM

THE LOS ALAMOS COMMUNITY SERVICES DISTRICT

 

FINDING # 1:

The revenue generated by the LACSD is not sufficient to meet financial obligations

of the District.

 

RESPONSE TO THE

SANTA BARBARA COUNTY 1998-1999

GRAND JURY REPORT

FROM

THE LOS ALAMOS COMMUNITY SERVICES DISTRICT

 

FINDING # 1:

The revenue generated by the LACSD is not sufficient to meet financial obligations

of the District.

 

RECOMMENDATION # 1:

Board members should undertake a thorough analysis of expenditures with a view

toward reducing costs. At the same time consideration should be given to increasing water, sewer and connection fees.

 

LACSD RESPONSE FINDING # 1:

The LACSD disagrees with the finding. The LACSD has met and will continue to

meet its financial obligations. The LACSD acknowledges that there is always room for improvement and will take the Grand Jury's recommendations under advisement.

 

LACSD RESPONSE RECOMMENDATION # 1:

The recommendation requires further analysis.

 

The Board has to date and will continue to review the expenditures with a view

toward reducing costs. The Board is giving serious consideration based on the

Grand Jury's recommendation to increase water, sewer and capital improvement fees. However, increasing of rates has to be justified and legal. Justifying an increase in water and sewer rates will require a closer look at the District's fiscal year budget regarding operating expenses versus operating revenues. Future capital improvement projects with respect to buildout, should be weighed against current capital improvement fees, to determine if an increase in these fees is warranted.

 

The Board and Staff are currently working with the District C.P.A. and the District Engineer in re-analyzing the standard accounting depreciation period that the district operates under. We have come to the conclusion that the life expectancy for the sewer system is well beyond thirty years and we are in the process of changing to a seventy five year accounting depreciation period, resulting in a positive financial impact. This would reduce the amount of depreciation considerably, that is currently asked to be set aside. The money to fund depreciation comes from operating revenues and not capital improvement fees. Depreciation funds are to be set aside in an account, to ensure that major system components can be repaired or replaced when the time comes.

 

 

Once the standard accounting depreciation period for the sewer system only, has been adjusted by the Board from a thirty to seventy five year life expectancy, the Board can then evaluate whether or not the increase of rates is warranted. This will be accomplished by June 30, 1999.

 

FINDING # 2:

There is no general manager at the district to manage all routine operations and provide guidance to the board. Board members may not always be experienced or prepared to oversee all aspects of running a special services district.

 

RECOMMENDATION # 2:

The district should explore options for sharing administrative services with neigh- boring districts or for being annexed by a larger nearby district with greater re-

sources.

 

LACSD FINDING RESPONSE # 2:

The LACSD disagrees wholly with the finding and the recommendation will not

be implemented, because it is not warranted.

 

LACSD RESPONSE RECOMMENDATION # 2:

We have consulted with legal counsel and the District is not required to have a general manager. The community services district law requires that a general manager and a secretary be appointed by the board at its first meeting, or as soon thereafter as practicable. It further provides that a board member may not serve in either office, but that the general manager may also be the secretary and that the secretary may act as treasurer. (SS61240 & 61241 Government Code)

 

It seems that the legislature believed that a new district needed a general manager to get started, but might not need one later since it does not require that the

district continue to have a general manager, and provides that the general manager

shall serve at the pleasure of the board. Consequently, it is concluded that the district must have a general manager for some period at the beginning of its existence, but that it may later decide that a general manager is no longer needed

and have none.

 

When, Thomas F. Stone, General Counsel, was first associated with the district, it

had no general manager. Later, when the sewer system was being planned and constructed, the district retained Ron Larsen, the manager of the Santa Ynez

Community Services District, as a part-time general manager for the district. Once

the sewer system was completed, the board determined that there was no longer a

need for a general manager, and terminated Larsen's contract. This was appropriate under the law.

 

 

FINDING # 3:

Insufficient funds are being set aside for capital improvements and deferred

maintenance.

 

RECOMMENDATION # 3:

The board should augment the existing capital account by a required contribution

schedule to address future maintenance needs, capital expenditures and other

long-term financial obligations.

 

LACSD RESPONSE FINDING # 3:

The LACSD disagrees with the finding. It is the position of the LACSD and our accountant that the action described in "LACSD Response Recommendation #3" is addressing this issue and that the District has taken steps previously to address this issue. These steps were initiated before the time of the writing of the Grand Jury's report.

 

LACSD RESPONSE RECOMMENDATION # 3:

The recommendation requires further analysis.

 

The Board and Staff are currently working with the District C.P.A. and the District Engineer in re-analyzing the standard accounting depreciation period that the district operates under. We have come to the conclusion that the life expectancy for the sewer system is well beyond thirty years and we are in the process of changing to a seventy five year accounting depreciation period, resulting in a positive financial impact. This would reduce the amount of depreciation considerably, that is currently asked to be set aside. Funding for depreciation comes from operating revenues and not capital improvement fees. They are to be set aside in an account, but earmarked specifically for depreciation.

 

Once the standard accounting depreciation period for the sewer system only, has been adjusted by the Board from a thirty to seventy five year life expectancy, the Board can then evaluate whether or not the increase of rates is warranted. This will be accomplished by June 30, 1999.

 

 

gryresp

 

BARBARA COUNTY 1998-1999

GRAND JURY REPORT

FROM

THE LOS ALAMOS COMMUNITY SERVICES DISTRICT