Squaw Valley, IOV both claim victory with CA Controller’s financial review
Visit placer.ca.gov/departments/lafco to view the state controller’s report, the fiscal analysis and several other documents related to proposed incorporation.
Visit incorporateolympicvalley.org to learn more about Incorporate Olympic Valley, its mission and analysis of the state controller’s report.
Visit saveolympicvalley.org to learn more about Save Olympic Valley, its mission and questions regarding incorporation.
OLYMPIC VALLEY, Calif. — While implications of the state’s probe of the proposed town of Olympic Valley’s finances are still being determined, proponents and opponents of incorporation are claiming the review supports each of their positions.
Last week, the California State Controller’s Office released a 125-page report on the latest financial document that analyzes the proposed town’s fiscal viability.
Upon the request of Incorporate Olympic Valley, the grassroots group spearheading the incorporation effort, the state reviewed 31 issues related to the draft Comprehensive Fiscal Analysis.
While the Controller’s Office provides input on each issue submitted for review, it does not issue a conclusion on whether the proposed town would be financially viable.
“The objective of our review is to report on the accuracy and reliability of the information, methodologies and documentation used in the draft CFA,” stated the review report’s cover letter.
Since the draft CFA’s release in May and its subsequent revision dated July 24, IOV has criticized the document, stating that several assumptions used in the analysis are flawed.
Areas the state examined included projected town revenues, staffing and service levels, and use of comparable cities, all at an estimated cost of $125,000, which IOV paid prior to the review.
Placer Local Agency Formation Commission Office is analyzing the report, along with RSG, the consultant firm that prepared the draft CFA, to understand the implications of each response, said Kristina Berry, Placer County LAFCO executive officer.
LAFCO hopes to obtain and release a clearer understanding by mid-November, she said.
“We need to crunch the numbers,” Berry said. “…We just don’t know what those end results are yet.”
Up until now, all versions of the draft CFA concluded that the proposed town “does not appear to be feasible at this time.”
On Tuesday, IOV issued a press release stating the state report confirms that the draft CFA contained many flaws, leading to incorrect conclusions.
“IOV is excited and energized by the feedback and perspective from the State Controller’s Office, who validated the majority of concerns raised in our request to have the draft CFA reviewed,” Fred Ilfeld, chair of the Incorporate OV Foundation, a financial arm of IOV, said in a statement. “The results clearly demonstrate that the proposed town of Olympic Valley is financially viable.”
According to a letter from IOV to LAFCO that breaks down its analysis of the state report, 18 of the 31 issues were supported. Areas impacted include service expenditures, select areas of revenue and transition year finances.
IOV analysis of the report was done in consultation with financial experts at Municipal Resource Group, according to the group.
“With the (state’s) reversals on key issues in the draft CFA, revised data and analysis reveals positive net revenue and growing general fund equity balances,” Tom Sinclair, principal consultant for Municipal Resource Group, said in a statement. “The bottom line demonstrating financial viability is unequivocal.”
Meanwhile, Squaw Valley issued a news release on Oct. 29, stating the complete opposite — that the state’s review confirms that the draft fiscal study was not deeply flawed.
“This is yet another independent entity confirming that the proposed town of Olympic Valley is not financially feasible,” Andy Wirth, president and CEO of Squaw Valley Ski Holdings LLC, who also speaks on behalf of the group Save Olympic Valley, said in a statement.
SOV is a coalition of valley residents, business owners, property owners and workers that is critical of incorporation.
When asked what in the report led to the conclusion incorporation remains infeasible, Matthew Newman, co-founder of Blue Sky Consulting, a consultant for Squaw Valley Ski Holdings, said: “The State Controller’s Office review largely upholds the key assumptions and findings of the CFA, which found that the new town would face very substantial operating deficits during the period following incorporation.
“ … In order for the town to be financially feasible, the Controller’s review would have needed to recommend very substantial changes to multiple aspects of the CFA, including significantly revised estimates of revenues, expenditure levels, staffing requirements and/or development projections. Instead, the Controller’s review largely upheld the key findings and assumptions of the CFA.”
Viable or not?
The proposed town’s true fiscal viability won’t be known until revenue neutrality negotiations — alimony-like discussions — with Placer County and IOV are completed, Berry said.
“Until that occurs, we can’t say definitively if (it’s) viable or not viable,” she said.
The draft CFA projected revenue neutrality payment from the proposed town to Placer County ranging between $2.38 million to $1.09 million annually based on scenarios.
“It should be noted that the amount, duration and terms of any revenue neutrality payments are all subject to negotiation between the county and the incorporation representatives,” the revised CFA states. “The final payment amounts may vary from the above estimates.”
In its Aug. 19 request for a State Controller’s Office review, IOV stated the draft CFA should not speculate on the amounts of revenue neutrality payments.
To that topic, the state issued the following response: “The SCO expresses no opinion on revenue neutrality; however, the SCO concludes that the draft CFA must address revenue neutrality and identify any impacts. Revenue neutrality payments should not be presented until negotiations have taken place after the completion of the draft CFA.”
Revenue neutrality negotiations have yet to take place.