TO: Board of Supervisors
FROM: Tracy A. Schulze, Auditor-Controller
REPORT BY: Tracy A. Schulze, Auditor-Controller
SUBJECT: Request to replace Los Carneros Water District biennial audit with a five-year audit
RECOMMENDATION
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Approve and authorize Los Carneros Water District to replace the District’s biennial audit requirement with a five-year audit requirement as allowed by Government Code Section 26909. (Fiscal Impact: None; Discretionary)
[Unanimous Vote Required]
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BACKGROUND
In accordance with Government Code Section 26909(b)(2), a special district may, by unanimous request of the governing board of the special district and with unanimous vote of the board of supervisors, replace the annual audit required by this section with an audit covering a five-year period if the special district’s annual revenues do not exceed an amount specified by the board of supervisors.
On December 10, 2024, the governing board of Los Carneros Water District (District) unanimously approved, and is now requesting unanimous Board of Supervisor approval, to replace District’s biennial audit with a five-year audit so long as the annual revenues do not exceed $500,000.
The District was established in 1977 under the provisions of Division 13 of the California Water Code Sec 34000-38501. The District was organized to provide reclaimed water services to the unincorporated community of Carneros in southwest Napa County. The basic operation of the District, and subsequent financing of the construction project to install a recycled water pipeline, are financed by direct assessments of the landowners within the assessment district formed by District. The construction of the pipeline was completed in June 2016.
Current operations of the District involve approximately five governing board meetings per year, insurance, legal costs, accounting and auditing fees and community outreach, for a maximum annual cost of $20,000 per year. The financing component of the District brings in approximately $450,000 in assessment revenues plus interest to pay both the operating costs and the annual debt service payments which are set to be completed by September 2027, which could then conclude the assessments.
Due to the reduced operating activity by the District, its board of directors unanimously requests to eliminate the cost of a biennial audit (approximately $3,500 every two years) and invoke Government Code section 26909(b)(2), to provide for additional savings for the landowners. The Napa County Auditor-Controller performs all fiscal oversight, along with a governing board designated District Fiscal Officer, and concurs with this recommendation. Since inception of the District, there have been no audit findings and the District has a transparent reporting model and tight internal controls over its fiscal operations.
Requested Action: Approve and authorize Los Carneros Water District to replace the District’s biennial audit requirement with a five-year audit requirement.
FISCAL & STRATEGIC PLAN IMPACT
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Is there a Fiscal Impact? |
No |
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Is it Mandatory or Discretionary? |
Discretionary |
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Discretionary Justification: |
Economic benefit for the landowners under the current assessment with the reduction of Professional Service costs over the remainder of the life of the District |
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Is the general fund affected? |
No |
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Future fiscal impact: |
Savings in Professional Service Costs for the District |
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Consequences if not approved: |
The District would continue having an biennial audit performed at a minimum cost of $3,500 every two years. |
ENVIRONMENTAL IMPACT
ENVIRONMENTAL DETERMINATION: The proposed action is not a project as defined by 14 California
Code of Regulations 15378 (State CEQA Guidelines) and therefore CEQA is not applicable.