Each year when the District’s Board of Trustees (“Board”) approves a budget for the forthcoming year¹, it adopts² an updated Central Service Cost Allocation Plan³ pursuant to Board Policy 18.1.0 which we are told is designed to distribute “the cost of services provided by the General Fund”⁴ to the District’s various departments or divisions. The Board traditionally approves, “under a non-consent item that is separately agendized⁵, a resolution⁶ allegedly consistent with NRS 354.613(1)(c)⁷, which according to IVGID staff and past Boards allocates an “equitable distribution of general, overhead, administrative and similar costs (assigned by staff to the)…District’s General Fund⁸…amongst the District’s various enterprise funds/sub-funds⁹…in conformity with…Nevada Revised Statute Section(s) 354.107(1)¹⁰ and 354.613(1)(c)¹¹” For a history of how and when the District transitioned to a formal Central Services Cost Allocation Plan, the reader is directed to our “Are IVGID’s Central Service Cost Transfers What They Tell Us” discussion.

How This Allocation is Physically Collected: There is no physical collection. Rather, distribution is entirely virtual. In other words, allocated costs are identified as expenditures under the enterprise funds from which funds are transferred as revenue to the General Fund. Which is pretty simple when one maintains a single “operating bank account used for daily and normal operating activities”¹² in which the District deposits all operational revenues and makes all operational expenditures.

How The Public is Assured The District’s Central Services Costs Are Equitably Allocated: To assure the Board and the public that the District’s Central Services Cost Allocation Plan complies with the requirements of NAC 354.865 to 354.867, inclusive, NAC 354.8668(8) instructs it

“Must include an attestation, signed by the chief financial officer of the local government (at issue) or his or her designee, that the central service cost allocation plan complies with the provisions of NAC 354.865 to 354.867, inclusive.”

Conclusion: So now the reader knows how the District’s Central Services Cost Allocation Plan is annually adopted, its mechanics, and how its allocations are distributed.

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Additional Costs Which Will Actually Be Included in Future Central Services Cost Allocation Plans: after fiscal year 2024-25. For decades, revenues and expenses associated with the District’s parks and athletic fields have been assigned to its “Parks” Fund¹³, a sub-fund of the District’s Community Services Fund. For fiscal year 2023-24 the Board decided to transfer “Parks'” meager revenues and out-of-control expenses to the District’s General Fund. The reason being that the District’s parks are “public” facilities available to the general public as a whole, and without assessment of user fees. There was this belief (one in which we agree) that facilities and services provided to the general public should be paid from general revenues (such as taxes) rather than assessing local parcels/dwelling units for the alleged “availability” to access and use the same. But this meant there would now be a shortage of approximately $1.2 million in the District’s General Fund¹⁴. So how did staff propose covering this shortfall? Their “preferred means (wa)s to (create) budget capacity in (the) General Fund” by disingenuously increasing the amount of central services cost transfers. The alleged justification being “adding Information Technology to (the District’s) Central Services Overhead Allocation Plan.”¹⁵ Accordingly, at the Board’s April 5, 2023 meeting¹⁶ staff revealed where additional General Fund revenues were destined to come from in light of the fact financial reporting of Parks maintenance and capital costs were destined to be transferred from a sub-fund under the Community Services Fund, to the General Fund:

“Information Technology (I/T) [will be]…added to costs being allocated to operating departments through the Central Services Cost Allocation Plan.”

And what did these additional costs actually translate into? Instead of $1,887,589¹¹ worth of central services costs to be allocated, we were told that $3,046,198¹⁷ would be required. Actually, for 2024-25, central services cost transfers totaled a whopping $3,742,044¹⁸. Up over 98%!

But our examination of all “so called” Central Services Cost Allocation Plans the District has adopted in at least the last five (5) years, if not before, reveals that this attestation is missing. Thus this omission means that the District has never adopted a Central Services Cost Allocation Plan which complies with the provisions of NAC 354.865 to 354.867, inclusive. And if it hasn’t, NRS 354.626(1) instructs that the District’s transfers from its enterprise funds¹⁹ are unlawful²⁰!

Where have the revenues in the District’s Utility Fund come from so transfers can be made therefrom to the General Fund? Since the water²¹ and sewer²² services all local parcels must pay/guaranty are assigned to the District’s Utility Fund, central services transfers from that fund are paid by the water and sewer rates and charges local parcel owners pay/guaranty.

Where have the revenues in the District’s Community Services Fund come from so transfers can be made therefrom to the General Fund? Returning to the 2022-23 Budget, schedule B-12 at page 10 instructs that if Recreation Facility Fee (“RFF”) revenue is deducted from the remainder of revenues budgeted to the Community Services Fund, the District budgeted $12,763,932 of recreation but for the beaches revenue. But on schedule B-13 at page 11 we see that the District has budgeted to spend $15,966,799 on expenses assigned by staff to this fund. That’s a deficiency of $3,202,867. Therefore, essentially all of it ($3,386,376) comes from the RFF²³.

Where have the revenues in the District’s Beach Fund come from so transfers can be made therefrom to the General Fund? Again returning to the 2022-23 Budget, schedule B-14 at page 12 instructs that if Beach Facility Fee (“BFF”) revenue is deducted from the remainder of revenues budgeted to the Beach Fund, the District budgeted $840,040 of beach revenues. But on the same page we see that the District has budgeted to spend $1,700,422 on expenses assigned by staff to this fund. That’s a deficiency of $860,382 and $648,974 of the deficiency (75.43%) is paid from the BFF¹³. The remainder is paid from a portion of the Beach Fund’s excess balance created by previous years’ excessive BFFs.

Therefore the simple answer to the question of where the money comes from to pay for the District’s asserted central services costs, is local parcel/dwelling unit owners!

1. See NRS 354.598 which instructs that all local governments, specifically including [see NRS 354.474(1)(a)] general improvement districts (GIDs), “shall adopt a final budget” [see NRS 354.598(2)].
2. See NAC 354.8668(7)(a).
3. See NAC 354.8654 which “identifies, accumulates, allocates or develops billing rates for the allocation of the cost(s) of services and property provided by the local government on a centralized basis to its departments, agencies and enterprise funds.”
4. By way of example, see page 157 of the 2019-20 Budget.
5. See ¶I(a) at page 030 of the packet of materials prepared by staff in anticipation of the Board’s May 26, 2022 meeting (“the 5/26/2022 Board packet”).
6. An example of that resolution (at least for fiscal year 2022-23) appears at pages 396-397 of the packet of materials prepared by staff in anticipation of the Board’s June 29, 2022 meeting (“the 6/29/2022 Board packet“).
7. Which instructs that “except as otherwise provided in this section…for a cost allocation for employees, equipment or other resources related to the purpose of the enterprise fund…the governing body of a local government may…only…transfer money from an enterprise fund, money collected from fees imposed for the purpose for which an enterprise fund was created, or any income or interest earned on money in an enterprise fund” if its Plan complies with the requirements of NAC 354.8654, 354.8668 and 354.867.
8. See NAC 354.8668(5)(a) which mandates these costs adhere to this requirement.
9. See pages 43-44 of the 5/26/2022 Board packet.
10. Which instructs that “the Committee on Local Government Finance (“CLGF”)…adopt…regulations as are necessary for the administration of this chapter.”
11. For an example of the allocated central services costs the Board approved for 2022-23, the reader is directed to page 045 of the 5/26/2022 Board packet.
12. Which is exactly what the District does (see page 21 of that RubinBrown August 2024 Forensic Due Diligence Accounting Services Review).
13. For fiscal year 2022-23 the reader can examine staff’s financial reporting of this sub-fund at pages 160-163 of the 5/26/2022 Board packet.”
14. See pages 150-151 of the packet of materials prepared by staff in anticipation of the Board’s February 22, 2023 meeting (“the 2/22/2023 Board packet“).
15. See page 150 of the 2/22/2023 Board packet.
16. See page 23 of the packet of materials prepared by staff in anticipation of the Board’s April 5, 2023 meeting (“the 4/5/2023 Board packet“).
17. See page 31 of the 4/5/2023 Board packet.
18. See that Supplemental Item G.3.B. made a part of the Board’s May 31, 2024 meeting (“the 5/31/2024 Board packet”).
19. See NRS 354.613(1) which instructs “except as otherwise provided in this section (and here no exceptions apply), the governing body of a local government may (not)…loan (n)or transfer money from an enterprise fund.
20. NRS 354.626(1) instructs that “no governing body (n)or member thereof, officer, office, department or agency may, during any fiscal year, expend (n)or contract to expend any money (n)or incur any liability, (n)or enter into any contract which by its terms involves the expenditure of money, in excess of the amounts appropriated for that function, other than bond repayments, medium-term obligation repayments and any other long-term contract expressly authorized by law. (And) any officer or employee of a local government who willfully violates NRS 354.470 to 354.626, inclusive, is guilty of a misdemeanor.”
21. The District has adopted a water Ordinance No. 4. According to ¶14.01, “no person shall construct, extend, or connect to any Public Water System without first obtaining a written permit from (the) District and paying all fees and connection charges and furnishing bonds as required.” And according to ¶9.06, “all charges, fees and amounts due and payable shall be billed to the owner of the premises, whether or not the owner is also the occupant.”
22. The District has adopted a sewer Ordinance No. 2. According to ¶3.03, “it shall be unlawful for any person to connect to, construct or install or provide, maintain or use any other means of wastewater disposal from any building in the District except by connection to (the District’s) public sewer.” And according to ¶14.05, “all charges, fees and amounts due and payable shall be billed to the owner of the premises, whether or not the owner is also the occupant.”
23. See our “What Are IVGID’s Recreation and Beach Facility Fees” web page.