Back in 2000, a state watchdog commission wagged its finger at the Irvine Ranch Water District, branding it one of the richest special districts in California.

Back then, Irvine Ranch had reserves three times greater than its annual operating budget, the Little Hoover Commission tsk-tsked.

Can you say “howling in the wind”?

Irvine Ranch’s 2007 audit reveals that there was $1 billion tucked away in securities and investments. That’s more than 10 times its annual operating budget, and about nine times its capital projects budget.

The chart to the right shows Irvine Ranch’s $94.8 million operating budget; its $130 million capital projects budget; and investments of $1,004,031,822.

The Little Hoover Commission (all bark, no bite, unfortunately) recommended that:

• districts do a better job of publicly reporting their reserves;
• and that the Legislature appoint a panel to set guidelines for prudent savings levels.

Glad none of you held your breath waiting for that!

Irvine Ranch says that its investments are needed for vital infrastructure replacement. It has 500 active and planned projects with expenditures expected to total some $600 million over the next decade. Spokeswoman Beth Beeman continues: 

“IRWD’s cash and investment portfolio along with our bond financing mechanisms are specifically designed not only to support the new water and sewer infrastructure needs of the District, but also to fund costly replacement and refurbishment of infrastructure over time without dramatic, disproportionate increases in our rates and charges. To give some perspective on this, although we are perceived to be a relatively “new” water district from an infrastructure standpoint, this year we will spend approximately $15 million replacing worn out infrastructure. As our system continues to age (we were formed in 1961), these costs will increase dramatically. To plan for these expenses, we have a sophisticated infrastructure asset replacement model that forecasts infrastructure replacement intervals and future funding requirements. We then manage our current cash and investments to augment future rate and charge revenue to pay for these improvements. Without building-up some level of cash and investments (including our real estate) in advance, we estimate that our future rate increases would have to be unacceptably high to cover the estimated replacement and refurbishment expenses. It is like sending children to college; you don’t start trying to save money for those huge expenses the summer before they go off to school. Under this financial planning model, we are confident our ratepayers can continue to expect among the lowest rates in charges in the county, now and in the future.”

Beeman also sent along this version of The Watchdog’s chart, along with this further explainer:

“Your chart includes assets attributable to the JPA (joint powers authority, a sort of local government consortium) that are not available to the District.

“The total amount of investments held by IRWD is $178 million that are dedicated to our replacement capital projects. This $178 million is better compared to the multi-year IRWD capital improvement program which includes more than 500 active and planned projects with expected expenditures totaling more than $603 million over the next 10 years.”

(The Watchdog is keeping her chart, though, because auditors Mayer Hoffman McCann P.C., an independent CPA firm, reported investments as $1 billion, and if it works for them, it works for us.)

Posted in: Money • Public works • Special districts |

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