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Nevada Irrigation District 2008 Final Audit
Are NID Rates Really High Enough?
Published on May 4, 2009 - 11:47:18 AM
By: Susan Snider, YubaNet
GRASS VALLEY, Calif. May 4, 2009 - At NID's April 22 meeting, directors heard details of the district's final audit for 2008. Depending on one's perspective, the news was both good and bad. Director of Audit for Boler & Associates Felix Pon advised the board - to much laughter from all present - that there was no evidence of fraud based on his assessment of NID's financial statements. This was some of the good news.
He did observe, however, that NID relies heavily on property tax revenues to keep the district financially afloat - and that it may not be charging its customers enough in rates. "Currently, there is $25 million committed to projects underway," Pon reminded the board. "The district will need to plan more carefully for future projects so it won't spend all its unrestricted reserve funds," Pon warned.
NID's reserves hover around $84 million. Of that figure, roughly $58 million falls under the category of "Unrestricted Net Assets." The category title is misleading, because nearly all of these assets are reserve funds for specifically designated or restricted uses, such as dam failure, maintenance, and hydro relicensing. Individual reserve funds for treated water and raw water system expansion represented over half of the district's unrestricted assets at roughly $34 million as of January 1, 2009.
But with current rates covering less than 45 percent of what it costs the district to service its raw water customers - and roughly 58 percent of the cost of service to treated water customers - the district will need to dig deep into its reserves this year to remain operating. Add to this lower-than-expected tax revenues due to a sagging real estate market and NID's reserves could face serious shortfalls in the near future. According to NID's Finance Manager Marie Owens, the district will likely need to start borrowing money by 2010 or 2011 to fund ongoing and future projects.
More on the Subject of Reserves
To understand how NID balances its budget, one needs to visit, for instance, the newly-renamed "Operating, Repair/Replacement and Rate Stabilization Reserve" fund. This reserve, according to NID, "may be used along with rate increases to fund anticipated deficits in the operations and maintenance portion of the water division." Finance Manager Owens says that roughly $1,925,000 out of approximately $11 million in property tax revenues will be put into this account to also fund major non-recurring repairs and replacement of existing facilities. "These funds can be used for raw water or treated water projects," Owens says. "It's whoever comes first, but these are usually small projects."
But perhaps most importantly, this fund provides rate stability to the district's customers through subsidies. NID serves 18,500 treated water connections. However, a majority of the water supplied by the district goes to its 6000 raw water users. Even more significant, a mere 129 irrigation customers receive 40 percent of the district's total raw water deliveries. This is according to Division V Director Nick Wilcox.
And most of these customers are in Placer County.
Yet the majority of property tax revenues - which go to subsidize rates - come from Nevada County. And since raw water rates fall shorter in covering the cost of service to this category of customer, NID must subsidize its irrigation customers more than its treated water users.
This bothers Division I Director Nancy Weber who has asked repeatedly for exact numbers on where property tax dollars go among NID's various reserve funds. "I want to know how we are subsidizing raw water," Weber told YubaNet. "I want to know what percentage of property taxes goes to raw water users and what percentage goes to treated."
Board Vacancy for Division IV Placer County
While the district has known for several months that Director R. Paul Williams would be retiring in April, formal announcement of the vacancy appeared April 23 on NID's website: http://www.nid.dst.ca.us/documents/general/notice-of-vacancy.pdf
With nearly two years remaining in the current term, NID board members will likely appoint a replacement. The term officially ends in December 2010.
Interested parties are encouraged to submit letters of interest and resumes to Lisa Francis Tassone at NID's offices in Grass Valley no later than May 19. Eligible applicants must live within NID's district and specifically within Division IV. According to the notice, the board of directors is considering filling the vacancy at its May 27 meeting.
The next regularly scheduled NID board meeting will be held May 13 at 9 a.m. at the NID Business Center in Grass Valley. The public is encouraged to attend.
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