Report 2014-119 All Recommendation Responses

Report 2014-119: City of Indio: Although the City Complied With the Mello-Roos Act in Forming and Managing Community Facilities District No. 2004-3, It Should Do More to Address Inequities (Release Date: December 2014)

Recommendation #1 To: Indio, City of

The city of Indio should shift a share of the water facilities cost borne by Area 1 to Area 2 residents in proportion to the benefits Area 2 residents receive from the facilities. To do so, it should impose through its Indio Water Authority a water fee on Area 2 residents and use the related revenues to reduce the bond debt of Area 1.

Annual Follow-Up Agency Response From December 2021

The recommendation from the State Auditor was to impose—through the City of Indio Water Authority— a water fee on Area 2 residents and use the related revenue to reduce the bond debt of Area 1. Audit Report 2014-119 further elaborates that such a fee should be enacted "once Area 2 is substantially built, residents have moved in, and the area is receiving significant benefit from the water system." At this seven-year reporting interval, Area 2 has not been substantially built in that 475 of the planned 839 residences (57%) have been constructed and certified for occupancy. Therefore, implementation of the State's recommendation is not feasible at this time. Assuming development continues at a pace of 65 homes per year, the annual average, Area 2 will be substantially (95 percent) developed in the year 2026.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Annual Follow-Up Agency Response From December 2020

The recommendation from the State Auditor was to impose (through the City of Indio Water Authority) a water fee on Area 2 residents and use the related revenues to reduce the bond debt of Area 1. Audit Report 2014-119 further elaborates that such a fee should be enacted "once Area 2 is substantially built, residents have moved in, and the area is receiving significant benefit from the water system." At this six-year reporting interval, Area 2 has not been substantially built in that only 417 of the potential 839 lots (49%) have been constructed and certified for occupancy. Therefore, implementation of the recommendation is not feasible at this time. Assuming development continues at a pace of 70 homes per year, Area 2 will be 74 percent developed in the year 2024.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From December 2019

The recommendation from the State Auditor was to impose (through the City of Indio Water Authority) a water fee on Area 2 residents and use the related revenues to reduce the bond debt of Area 1. Audit Report 2014-119 further elaborates that such a fee should be enacted "once Area 2 is substantially built, residents have moved in, and the area is receiving significant benefit from the water system." At this fifth-year reporting interval, Area 2 has not been substantially built in that only 353 of the potential 839 lots (42%) have been constructed and certified for occupancy. Therefore, implementation of the recommendation is not feasible at this time. Assuming development continues at a pace of 70 homes per year, Area 2 will be 80 percent developed in the year 2024.

California State Auditor's Assessment of Annual Follow-Up Status: Not Currently Feasible

Because of the slow build out of Area 2, the city cannot currently implement the recommendation.

Annual Follow-Up Agency Response From December 2018

The recommendation from the State Auditor was to impose (through the City of Indio Water Authority) a water fee on Area 2 residents and use the related revenues to reduce the bond debt of Area 1. Audit Report 2014-119 further elaborates that such a fee should be enacted "once Area 2 is substantially built, residents have moved in, and the area is receiving significant benefit from the water system." At this fourth-year reporting interval, Area 2 has not been substantially built in that only 282 of the potential 839 lots (34%) have been constructed. Therefore, implementation of the recommendation is not feasible at this time. Assuming development continues at a pace of 70 homes per year, Area 2 will be 80 percent developed in the year 2024.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From December 2017

The recommendation from the State Auditor was to impose (through the City of Indio Water Authority) a water fee on Area 2 residents and use the related revenues to reduce the bond debt of Area 1. Audit Report 2014-119 further elaborates that such a fee should be enacted "once Area 2 is substantially built, residents have moved in, and the area is receiving significant benefit from the water system." At this third-year reporting interval, Area 2 has not been substantially built in that only 209 of the potential 839 lots (25%) have been constructed. Therefore, implementation of the recommendation is not feasible at this time. This year there was a tract map adjustment, requested by the developer and approved by the city, increasing the number of buildable lots from 824 to 839. The City continues to monitor the development. Assuming development continues at a pace of 70 homes per year, Area 2 will be 80 percent developed in the year 2024.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From December 2016

The recommendation from the State Auditor was to impose (through the City of Indio Water Authority) a water fee on Area 2 residents and use the related revenues to reduce the bond debt of Area 1. Audit Report 20014-119 further elaborates that such a fee should be enacted "once Area 2 is substantially built, residents have moved in, and the area is receiving significant benefit from the water system." At this two-year reporting interval, Area 2 has not been substantially built in that only 140 of the potential 824 lots (17%) have been constructed. Therefore, implementation of the recommendation is not feasible at this time. The City continues to monitor the development. Assuming development continues at a pace of 70 homes per year, Area 2 will be 80 percent developed in the year 2024.

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented

1-Year Agency Response

The recommendation from the State Auditor was to impose (through the City of Indio Water Authority) a water fee on Area 2 residents and use the related revenues to reduce the bond debt of Area 1. Audit Report 20014-119, however, further elaborates that such fee should be enacted "once Area 2 is substantially built, residents have moved in, and the area is receiving significant benefit from the water system." At this one-year interval, Area 2 has not been substantially built in that only 80 of the potential 824 lots have been constructed. Therefore, implementation of the recommendation is not feasible at this time and the City continues to monitor the development.

California State Auditor's Assessment of 1-Year Status: Not Currently Feasible

We agree that for it to implement our recommendation the City of Indio will need to wait until more housing units are constructed in Area 2 and the area begins receiving significant benefit from the water system.

6-Month Agency Response

The recommendation from the State Auditor was to impose (through the City of Indio Water Authority) a water fee on Area 2 residents and use the related revenues to reduce the bond debt of Area 1. Audit Report 20014-119, however, further elaborates that such fee should be enacted "once Area 2 is substantially built, residents have moved in, and the area is receiving significant benefit from the water system." At this six-month interval, Area 2 has not been substantially built in that only 46 of the potential 824 lots have been constructed. Therefore, implementation of the recommendation is not feasible at this time and the City continues to monitor the development.

California State Auditor's Assessment of 6-Month Status: Not Currently Feasible

We agree that for it to implement our recommendation the City of Indio will need to wait until more housing units are constructed in Area 2 and the area begins receiving significant benefit from the water system.

60-Day Agency Response

The recommendation from the State Auditor was to impose (through the City of Indio Water Authority) a water fee on Area 2 residents and use the related revenues to reduce the bond debt of Area 1. Audit Report 20014-119, however, further elaborates that such fee should be enacted "once Area 2 is substantially built, residents have moved in, and the area is receiving significant benefit from the water system." At this 60-day interval, Area 2 has not been substantially built in that only 31 of the potential 824 lots have been constructed. Therefore, implementation of the recommendation is not feasible at this time and the City continues to monitor the development. Implementation will be feasible when the development is at least 2/3rds developed, which could be several years from now.

California State Auditor's Assessment of 60-Day Status: Pending

The city's response is appropriate. Implementation of the recommendation is not feasible at this time because Area 2 has not been substantially built. We will continue to monitor the build out of Area 2.

All Recommendations in 2014-119

Agency responses received are posted verbatim.