JBWD Water Availability Standby Charge Audit Report

The Joshua Basin Water District (the “District”) engaged NBS, a consulting firm specialized in sources of municipal revenue, to conduct a review of the District’s Water Availability Standby Charge (the “Standby Charge”). The report referenced in this post provides details of the findings and recommendations regarding the Standby Charge, as well as a plan of action to address identified areas of need.

NBS reviewed formation documents, prior Standby Charge calculations, prior and current San Bernardino County Land Use Services Zoning (“County Zoning”) maps, San Bernardino County Secured Roll Data, District Pressure Zone maps, the California Constitution and Statutes, and recent judicial rulings. Additionally, NBS discussed the District’s internal processes and procedures with staff and the District’s legal counsel. Following the review described above, NBS identified areas that require attention. The findings and recommendations fall within two general categories: 1) Boundary and Levy Audit Findings, and 2) Rate Table and County Land Use Services Zoning Designations. Within each category are sub-items that NBS recommends to be addressed to ensure administrative compliance with current law and to ensure the Standby Charge is in alignment with best industry practices.

Within the two general categories of findings and recommendations, the audit process revealed discrepancies in the following areas:

• Some parcels were not levied inside the District boundary
• Acreage values
• District zone designations
• Rate table minimums
• County zone designations
• Calculation methods

The report was discussed at the regular meeting of the Board of Directors on Wednesday, August 5, 2020.  Below is a summary of the Board meeting minutes:

"Assistant General Manager Susan Greer gave the staff report and reported that District had contracted for a parcel audit more than a year ago. The purpose of a parcel audit is to ensure that the District is charging standbys in accordance with our own policies, which were established in 1997. With over 12,500 individual parcels in the District and multiple standby billing components for each one, including acreages, District Zone, and County Land Use Zone, it was a significant effort.  While the audit showed discrepancies with some paying too much, others too little, the auditor noted that such discrepancies are expected and that the accuracy of the district’s standby charges was above average. In the next four to six weeks, the more than 200 property owners eligible for a refund will receive a postcard from the district with instructions on how to claim their refund which will be paid with interest.

[In regards to the more than 200 property owners eligible for a refund,] General Manager Mark Ban gave the staff report and reported with the
current technology changes, since the inception of the standby fees established in 1997, time now allows for a streamlined and more accurate determination of the multiple standby billing criteria applicable for each of the nearly 13,000 parcels in the District.  Staff recommends the Board of Directors consider authorizing the following refunds of standby fees:

1. Refund three (3) years of applicable standby fees totaling approximately $14,682.51 per year utilizing a claim submittal process.
2. Pay interest on the refunds at the same rate received by the District on our investments.
3. Authorize the General Manager to enter into a contract with a consultant to process standby refunds."

Important:  The refund of the Water Availability Standby Charge applies to Fiscal Years 2016/17, 2017/18, and 2018/19.