Incorporate Olympic Valley: State Controller Review Shows The Incorporation Is Financially Viable

Incorporate Olympic Valley board members had plenty to smile about tonight.
Incorporate Olympic Valley board members had plenty to smile about at last night’s IOV monthly meeting.

The numbers have been crunched and the news is looking very good if you are in favor of local control and self determination. At last night’s IOV monthly community meeting, the numbers are showing that the new town of Olympic Valley is most certainly financially viable.

It’s been a long three years of “David vs Goliath” battle over the incorporation of Olympic Valley. The opponents to the movement have continued to throw up obstacles thorough the process. The most recent obstacle was the release of the draft Comprehensive Fiscal Analysis. The study, produced by RSG, was released by the Placer County Local Agency Formation Committee (LAFCO) in July – and it surprised many by coming to a conclusion that the incorporation may not be fiscally viable.

Fortunately, the LAFCO guidelines allows for CFA documents to be reviewed by the State Controller’s office. That review was requested in August, at a cost of $125,000, which was funded fully by Incorporate Olympic Valley. After a 45 day extensive audit, the State Controller’s Office (SCO) released their findings last week. IOV had requested that the SCO review 31 different issues with the draft CFA, claiming it was flawed. When the work was done, SCO sided favorably with IOV on 18 of 31 of the issues. Unfortunately, the state report did not include inputing RSG’s errors into the CFA with correct numbers and an assessment of viability.

Over the last week, IOV’s muncipal finance expert and former city manager, Tom Sinclair, has been crunching the numbers and the new town is looking to be very prosperous. Over a 10 year period, the new town of Olympic Valley has the capability of generating a reserve fund in excess of $15 million – without the addition of any new taxes. That’s a far different story that the millions of dollars in losses projected by RSG, in their draft CFA,, due to the 18 separate errors made in their draft CFA.

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A quick graph that summarizes income versus expenditures, resulting in a large reserve built over 10 years for Olympic Valley.

IOV officials sent a letter to LAFCO Executive Officer Kris Berry requesting that RSG make the necessary adjustment to the 18 items noted as erroneous by the State Controller’s office in their review. IOV Chairperson Fred Ilfeld offered a quick synopsis of some of the most important changes at the meeting:

The Draft CFA should include Olympic Valley’s proportionate share of the cost of North Lake Tahoe regional marketing, transportation and infrastructure improvement services in the calculation of property tax revenue to be transferred to the Town. This adjustment would bring $12 million of additional revenue to OV over ten years, and also result in $7 million dollars in additional expenses. The net gain is $5 million over 10 years. (Issue #2)

The Draft CFA should use future residential development sales values and resulting assessed values as reported by the Village at Squaw Valley developer. Numbers recently released by the Squaw Valley Public Services District show that the CFA grossly understates the future assessed values in OV. The adjusted expected assessment values increase revenues by $2.7 million over 10 years. (Issue #6)

The Draft CFA should use existing law enforcement levels of service, adjusted by an annual CPI factor as the basis for Town law enforcement costs. RSG suggests much more law enforcement for OV than what is currently being provided by Placer County. Following the SCO recommendation, approximately $2.7 million less can be spent on law enforcement over 10 years. (Issue #15)

The Draft CFA should match future (personnel) service levels with existing service levels. The “cost allocation for O/H and Admin” factor should be deleted from the Community Development Department expenditures. RSG suggested nearly 3 times more staffing than what is currently offered by the County. Following the SCO recommendation, approximately $1.7 million can be saved over 10 years. (Issue #16)

The conclusions drawn by the State Controllers Office are quite different that the conclusion reached by Andy Wirth regarding the draft CFA in August.

There aren’t enough pencils and erasers in the world to make the numbers work.” — Andy Wirth, Squaw Valley CEO, following the initial release of the draft Comprehensive Fiscal Analysis

It’s clear that Incorporate Olympic Valley Officials have done their homework in making sure that in following the State Controllers Office guidelines, the town of Olympic Valley will be financially viable. The full details of the their findings are detailed in their letter to LAFCO this week. We applaud their diligence.

In contrast, Squaw Valley CEO Andy Wirth, and incorporation opponents Save Olympic Valley, used the State Controllers Office report to quickly claim victory in the battle over incorporation. Less than one day after the SCO report was released, an article appeared in Rocklin Today declaring that SCO had shown that incorporation was not financially feasible. Andy Wirth attempted to “dumb it down” for readers:

“IOV proponents requested and paid for the review because they argued that the CFA was deeply flawed. We now know their belief was incorrect because the State Controller validated most of the work performed by RSG Consulting.” Andy Wirth, Squaw Valley CEO, in Rocklin Today

It appears that Wirth didn’t spend enough time on his homework.

The Next Steps

Incorporate Olympic Valley officials are unsure of how long it may take to get the draft CFA updated with the new numbers. IOV consultant Steve Hoch suggested that “we’re entering uncharted territory.” While other agencies have utilized the State Controller review process, it appears that few, if any, have resulted in such substantiative changes to a CFA document. The required revenue neutrality negotiations with Placer county cannot begin until the CFA is corrected.

Placer County LAFCO, at the insistence of opponents, have requireded that Incorporate Olympic Valley pay the cost for a full Environmental Impact Report (EIR),as part of the  incorporation process. It does seem odd that a townincorporation will require a full EIR, even though not a shovel of earth will be turned, nor a stream diverted, or a tree removed. It just seems to be another financial hurdle putin place by those opposed to the incorporation.

The total cost of the EIR plus retaining experts is expected to reach over $200,000. That’s unfortunate, as IOV just paid nearly the same amount for the CFA from RSG ($85K) and the review of the flawed CFA by the SCO ($125K). While they have had some very generous donations over the last three years, the fundraising needs to really kick into high gear now. IOV Chair Fred Ilfeld noted that “it’s time for the community to step forward with their checkbooks.”

“An investment of $250,00 today will bring back millions of dollars directly to the community over the next 10 years – money that would otherwise be lost to Placer County.” – Tuck Wilson, Squaw Valley homeowner

IOV Boardmember Lisa Cardin noted that the Poulsen and Cushing families faced equally great hurdles when it came to making their dreams come to reality in the valley.

“We owe it to our forefathers to protect what they started. The $250,000 we need now is just a drop in the bucket compared to the $750,000 already spent by Squaw Valley to stop the incorporation.” – Lisa Cardin, IOV boardmember

We encourage you to consider supporting the effort to incorporate the town of Olympic Valley. We’ve seen time and time again that we cannot leave the future of Lake Tahoe to KSL Capital and Placer County.  We believe that we need local people to be in control over what the future of the region looks like. More information about donating or volunteering time to the Incorporate Olympic Valley movement can be found at the IOV website.

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