Audit Of South Orange County Wastewater Authority Ok'd

ORANGE COUNTY, CA – The nonpartisan State Auditor's Office was given the green light Wednesday by a legislative committee to go over the financial records of the South Orange County Wastewater Authority following questions raised by area city officials about how the agency is spending its money.

Sen. Patricia Bates, the Republican minority leader from Laguna Niguel, and Assemblyman Bill Brough, R-Dana Point, pushed for the audit and received unanimous support from the Joint Legislative Audit Committee.

"We thank the Joint Legislative Audit Committee for its bipartisan support of our request to ensure that Orange County taxpayer dollars are spent properly," the two lawmakers said in a joint statement. "An independent audit will help explain inconsistencies in SOCWA's financial records and provide greater transparency to the public. We look forward to reviewing the audit when completed and working with SOCWA and stakeholders to address any issues that may be identified."

SOCWA is a joint powers authority that includes 10 Orange County water agencies representing about 500,000 businesses and residents. The water agencies fund the authority, which provides wastewater services to the southern portion of the county.

The authority "embraces the audit," SOCWA spokesman Steve Greyshock said.

"As Senator Bates stated at the meeting, she believes it will vindicate that our financials are solid," he said. "It's definitely a good thing."

The audit, however, will cost the state about $270,000 and about 2,200 hours of staff time, Greyshock said. "And that's on top of what it will cost our staff. That's our one disappointment."

Laguna Hills Mayor Don Sedgwick recently penned a commentary in the Orange County Register detailing complaints from city officials about SOCWA's record-keeping and how the agency responds to public records requests. Sedgwick said he was concerned about how the management of the budget could affect water rates.

Sedgwick said the Moulton Niguel Water District has sought to buy its way out of a longtime contract for a wastewater treatment facility in Laguna Niguel that turned out not to be needed.

The water district, he argued, "has no incentive to improve facilities past the term of a contract, which it will not renew. Taxpayers do not need to see their rates from the Moulton Niguel Water District rise in order to pay for a facility that they are not using."

When the water district officials sought public records on capital improvement project spending, they were "met with unbelievable reluctance," according to Sedgwick.

"When asked to provide invoices prior to July 1, 2014, the agency's controller said the records were unavailable for public inspection because a former employee had deleted the financial documents," Sedgwick wrote.

"The past two annual audits have been submitted late to the relevant monitoring agencies, with one in violation of state law," he added. "SOCWA received a qualified opinion because auditors uncovered that bookkeeping was not compliant with generally accepted accounting principles. Even worse was SOCWA's response. Instead of addressing the concerns, SOCWA has shunned public scrutiny and refused to comply with multiple public records requests for key budget materials -- documents requested by its own members."

SOCWA's spokesman said the agency has no problem with negotiating an exit for the water district. He accused the water district, however, of refusing to pay its bills and said it is now being sued.

"Yes, we're fine with them negotiating an exit, but we're not OK with them not paying their bills," Greyshock said.

The water district stopped paying its bills a year ago, according to Greyshock.

"They refused to pay the bills for a facility that is critical to protecting beaches, coastlines and canyons in south Orange County," Greyshock said. "You don't start a negotiation by withholding payment for stuff that's already owed."

• ALSO SEE: O.C. Tax Preparer Gets 21 Months In Jail For Tax Fraud, $1.1M In Phony Returns

--City News Service/Morguefile image