IEUA advances regional sewage contract audit following court victory

IEUA advances regional sewage contract audit following court victoryThe Inland Empire Utilities Agency is auditing seven member agencies to validate $142.3 million in capacity fees and $91 million in annual sewer charges, bolstered by a recent legal judgment affirming its contract enforcement rights.

A May 2026 court judgment validated IEUA's claim that its regional sewage contract expired after 50 years, clearing the way for strict enforcement of the agreement and Ordinance No. 114.

The ongoing audit targets the calculation and collection of Capital Capacity Reimbursement Account (CCRA) connection fees and monthly sewer service charges across seven Sewage Collection Agencies.

As of May 2026, the CCRA balance stands at $142.37 million, with IEUA planning two additional capital calls in July and January to fund regional infrastructure.

The agency is also initiating a Capital Projects Closeout Audit to tighten financial controls and asset reporting on major infrastructure builds.

The Inland Empire Utilities Agency (IEUA) is nearing completion of a comprehensive audit of its regional sewage service contracts, a process recently strengthened by a favorable court ruling. During a June 8 Audit Committee meeting, agency staff confirmed a May 21 judgment validating IEUA's claim that its regional contract expired 50 years after initiation. The ruling establishes the agency's clear authority to enforce the contract and Ordinance No. 114 against its member agencies. No appeal has been filed to date. The ongoing compliance review targets seven Sewage Collection Agencies (SCAs) to evaluate the accuracy and consistency of how connection fees and monthly sewer service charges are calculated, collected, and reported. The financial stakes are significant: as of May 2026, the Capital Capacity Reimbursement Account (CCRA) balance—which holds connection fees retained by the SCAs—stood at $142.37 million. Meanwhile, monthly sewer service charges remitted directly to IEUA totaled $91.06 million for the 2024/25 fiscal year. Manager of Internal Audit Teresa Velarde noted that the audit is reviewing planning documents and recalculating connection fees to ensure accurate coding of residential and commercial properties. The review is currently 95% complete for the Cucamonga Valley Water District, with other agencies like the City of Chino and City of Ontario at earlier stages. The audit also aims to resolve 31 outstanding audit recommendations dating back to a 2015 review. IEUA relies on these funds to finance major regional infrastructure. The agency has already executed two capital calls in the current fiscal year to draw down CCRA funds held by member agencies and plans to execute two more in July and January. Committee members questioned whether the policy allowing member agencies to retain these connection fees and earn interest on them should be revisited, noting the practice was established over a half-century ago. Looking ahead, the Audit Committee also approved the Fiscal Year 2026/27 Annual Audit Plan, which introduces a Capital Projects Closeout Audit. This new review will assess whether major infrastructure projects are completed on time and on budget, and ensure that constructed assets are accurately transferred to the agency's financial records. Committee members emphasized the importance of monitoring how large new developments, such as a recently discussed stadium, will impact regional flows and operations at facilities like Regional Water Recycling Plant 5 (RP-5).