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Evidence of Management Override: EDHCSD Board Vote on CFD 2019-01

Executive Summary:

This page contains video evidence and statutory context regarding a documented Management Override of Internal Controls by the Board of Directors of the El Dorado Hills Community Services District (EDHCSD).

On April 9, 2026, the EDHCSD Board of Directors voted 3-2 to reject a proposal to enforce the District’s internal financial controls regarding Community Facilities District (CFD) 2019-01. By dismissing this agenda item, the Board majority actively chose to continue to violate District Policy #6120, allowing a private developer to retain a special tax exemption on undeveloped land while shifting the financial burden of municipal infrastructure onto the public.

This video serves as formal evidence of intentional noncompliance by a governing body, triggering mandatory reporting and evaluation obligations under Generally Accepted Government Auditing Standards (GAGAS / Yellow Book).

Forensic Timestamp Guide:

To assist auditors and regulatory agencies in reviewing this evidence, please refer to the following critical timestamps:

  • [00:30]: Admission of Developer Control over Tax Policy The Board President argues against enforcing the District’s tax equity policy, citing the District’s “weak negotiating position.” She verbally acknowledges that the developer must agree to the CFD terms, effectively admitting that internal financial controls are subordinated to the demands of a private developer.

  • [03:00]: Refusal to Commission an Engineer’s Report Director Ferry requests that an Engineer’s Report be commissioned to quantify the exact tax burden and benefit for the developer’s undeveloped land. The Board majority refuses to authorize the creation of this financial data.

  • [03:40]: The 3-2 Vote to Override Internal Controls The Board’s President calls for a vote to dismiss the agenda item. The motion to dismiss passes 3-2 (Mattock, Hannaman, Martinelli) vote to continue to violate the Board Policy.   This roll call vote serves as the official, documented Management Override of Policy #6120 (Adopted 1998).

Regulatory and Audit Implications

This documented policy override has severe implications for currently pending municipal matters:

  1. Independent Financial Audit (Nigro & Nigro PC): Under AU-C Section 240 and the Yellow Book, external auditors are required to evaluate the risk of management override of controls. This video is public evidence that the governing body intentionally bypassed its own tax equity policies. A “clean” audit opinion cannot be issued without resolving this documented noncompliance.

  2. LAFCO Comprehensive Fiscal Analysis (CFA): The El Dorado Local Agency Formation Commission (LAFCO) is currently utilizing EDHCSD’s audited financials to evaluate cityhood. LAFCO must be aware that the baseline financial data relies on a CFD tax structure that the Board actively maintains in violation of its own internal financial policies.