Encinitas Taxpayers Association to Oppose SDWD Rate Hike

Will Also Seek Board Seats for Non-councilmembers

ENCINITAS—In anticipation of a decision by the San Dieguito Water District (SDWD) to raise water rates, the Encinitas Taxpayers Association (ETA) is launching a grassroots campaign to defeat those rate hikes. As part of that effort, the ETA is also organizing an initiative to open up the SDWD board to non-councilmembers.

“It’s never a good time to increase water rates, but doing so in the midst of the worse economic downturn in at least a generation is particularly bad timing,” said Joe Sheffo, president of the ETA. “That aside, the rate hikes would be a bit more palatable if the body making that decision included independent ratepayers, not just councilmembers. We hope to address both issues through this effort.”

Earlier this month, SDWD announced that it would be raising water rates at least 13%. The action is said to be necessary because of the increased costs of water generally and the need for substantial upgrades to the district's treatment plant, which it jointly owns with Santa Fe Irrigation District. Under Prop 218, however, ratepayers can undo rate hikes if 50% of them disapprove.

Under current law, the district’s board consists of the five members of the Encinitas City Council. This is contrary to many water districts, which are made up of at least some independent members. The district serves Leucadia, Old Encinitas, Cardiff and parts of New Encinitas.

The ETA’s concerns about transparency at the SDWD stem from questionable financial transactions between it and the city that raise serious questions about the management practices of both. These transactions are believed to include various real estate deals, bond offerings, internal billing practices, and personnel assignments.

“The SDWD has operated in a budgetary black hole that makes transparency nearly impossible for a regular citizen,” said Kevin Cummins, vice president of the ETA. “Despite that opaqueness, we have been able to piece together many areas where the SDWD is vulnerable to misuse by the City. This is the right time to open up the district to independent oversight.”

Those living in parts of the city served by SDWD should expect visits from ETA members and others over the next few weeks. Ratepayers will be asked to complete and submit a postcard that will then be presented to the board at its Feb 24 meeting at City Hall.

Founded in 1986, the Encinitas Taxpayers Association is a grassroots organization dedicated to ensuring transparency and accountability from the city of Encinitas and its councilmembers,

Process and Schedule

In January 2010, the City of Encinitas initiated the two-year Comprehensive General Plan Update Planning Process.

Engaging the community is a critical part of this project and opportunities to participate will be ongoing. In March 2010, the City will hold Community-Specific Workshops in the five communities of New Encinitas, Old Encinitas, Cardiff-by-the-Sea, Olivenhain, and Leucadia. Community-Wide Workshops will be held in May and October 2010, and in March and July 2011.

The Outreach Program will define all of the outreach opportunities (check back for details).

We are updating the General Plan to reflect the ideas of everyone in Encinitas. The workshops will give residents a forum to voice questions, ideas and concerns and to learn more about what is happening with the Plan Update.

For more information go here.

In December we approached Mayor Dalager and Water Board President Houlihan in the hopes of having them address some of the concerns and possible misconceptions the public has about the SDWD and the City of Encinitas. Mayor Dalager never responded.

President Houlihan shared her knowledge and thoughts on Monday (Jan. 25). She is not in favor of an independent board of directors for the SDWD and not interested in making a citizen’s review commission part of the rate increase process. Houihan saw no reason to change the current arrangement, however she could not offer any reasons against an independent Board of Directors.

Houlihan addressed the questions sincerely and to her fullest ability. Here is what she told us:

Staff
One of the three finance staff that was recently transferred to the SDWD from the City was already being paid 90% out of the SDWD. This staff member was a receptionist.

Public Works Yard
The SDWD pays the city for use of the new public works yard, but only for maintenance and cleaning costs. It was not clear how those costs are apportioned.

The cost to the SDWD for moving into the new public works yard was apportioned and approved by the Council. Houlihan said she based her vote for the approved apportionment on the fact that consultants had written a report that supported the vote. Herb Patterson, explained that he had corresponded extensively with the City regarding the report. He believes the report does not satisfy the requirements of Prop 218 and probably overestimates the SDWD’s share of the cost for the new public works yard (more on this will be posted by Saturday).

Patterson also stated that he had not been able to find documents that explicitly describe what is being called the City’s “perpetual use rights” to the public works yard. Houlihan did not know about this particular detail, but expressed interest in helping the public obtain the details of the agreement between the City and the SDWD.

Bonding
Houlihan was adamant that the SDWD is not involved in bonding for city projects and was clear to state that the SDWD is a separate legal entity from the City (but run by the same elected officials). However, it is unclear how the little known Encinitas Public Finance Authority (EPFA) fits in. The EPFA is used by the Council to issue municipal bonds for public projects. Houlihan did not mention that the EPFA does have a history of ties to both the city and the water district.

Although Houlihan made a clear statement that the SDWD was not on the hook for city bonds, that statement was later hedged a little by saying the bonds for the golf course were unusual.

She made another key statement that the SDWD does not pay into the EPFA, the paper entity that issues millions of dollars in bonds. This is important because ETA members have long standing concerns that the SDWD is involved in this bonding authority.

Houlihan said she would ask staff to present the ETA with a flowchart of the liabilities from all the bonds and the different legal entities. As of Jan 28, we have not received the flowchart. If the relationships are as portrayed by Houlihan, it should not take the finance staff long to produce the document. It is important to get that documentation out to the public because we have one ETA member, Gerry Sodomka, who has publicly addressed this issue many times over the last few years.

He spoke four times before the council in 2006 challenging the city on the issue of the SDWD being involved with bonding for city projects. Sodomka reports to the ETA that he was never told he was incorrect. The City Manger or any of the Council could have corrected him during those public meetings. The City’s bond consultant, Mark Northcross, was involved in the city meetings and he did not correct him. When former mayor Christie Guerin publicly asked the City’s finance staff whom had repayment responsibility, a clear response was not given.

There has not been a clear sign that the SDWD wasn't responsible until Monday night, when President Houlihan addressed the issue directly.

It will be good to get this particular issue straightened out.

To receive notification that the city has presented the ETA documentation on the bonding responsibilities, sign up for Encinitas Taxpayers email advisories.

The City of Encinitas Uses Certificates of Participation and lease-revenue bonds. They are expensive way to finance things, so why do it?

Answer: Because our elected officials don't think the voters would agree with them.

This review of how the State used Lease-Revenue bonds should explain things.

Last week's prison deal brought cheers and plaudits from virtually all political corners in California. The Legislature, threatened by a federal court takeover of the state's prison system, averted the crisis -- it is hoped -- by enacting a comprehensive bill to deal with prison overcrowding and other corrections issues. Governor Schwarzenegger hailed the agreement as another example of how California can work in a post-partisan world.

But like most political decisions made under duress, there are legitimate questions as to whether the deal reflects good public policy -- or whether it was even legal.

To recap; California has a huge and growing prison population. Those who are politically conservative were not about to let convicted felons out early. Those on the left -- who would prefer more leniency for those who are incarcerated -- were pushing for programs dealing with rehabilitation as well as a new sentencing commission. But political compromise in California is difficult and often the only way to reach that compromise is with lots of taxpayer dollars to appease both sides. It is amazing what a soothing effect buckets of taxpayer cash can have on the adversaries in a political dispute.

That is what happened here. The tough on crime Republicans got their extra beds -- 53,000 of them -- and the Democrats got their rehabilitation programs designed to reduce recidivism.

The centerpiece of the agreement was a bond proposal in the amount of $6.1 billion. That is a huge amount of indebtedness, especially considering that voters just approved the massive infrastructure proposal last fall in the amount of $42 billion.

Which brings us to the number one question posed by taxpayers: Why were these bonds not put to voters for approval?

The short answer - which is really no answer at all -- is that, as "lease revenue" bonds, they are exempt from voter approval.

There is no debate that lease revenue bonds, and their questionable cousins "certificates of participation," are instruments of indebtedness. However, because their repayment is -- in theory -- not guaranteed by the state's general fund, they are not considered "general obligation bonds" which, if the amount is over $300,000, are required by the California Constitution to be voter approved. Last time we checked, $6.1 billion is a bigger number than 300,000.

In any event, there are instances at both the state and local level where lease revenue bonds make sense. Specifically, if the improvement being financed by the indebtedness itself generates revenue, an argument can be made that voter approval should not be required because the source of the repayment does not put taxpayers at risk. The clearest example of the legitimate use of lease revenue bonds is a public parking garage. Parking garages generate revenue and that revenue can be used to repay the bond holders. Some publicly financed sports facilities, and their appurtenant retail and other business properties, might also be candidates for lease revenue financing.

Read more »

ETA Encinitas City Staff Quietly get Pay Raises in 2010
That is probably why there were audible, but restrained, cheers from staff when the council gave them 4 years of unconditional raises. It should be sobering to the taxpayer that staff actually cheered the council's unanimous decision.

UT SD Teachers to Looking at a Pay Cut
Teachers and other San Diego school employees could take pay cuts next year of up to 8 percent to help offset a projected $93 million deficit, under a proposal presented to labor groups this week.

UT Pay Raise OKed for SANDAG
The agency’s executive director, Gary Gallegos, makes $240,000 a year and will get $10,000 raises for the next five years under a deal approved 14-5 despite concerns among some board members about the timing.

Council Member Stocks voted for Gallegos' raise.

City Could Make Some 'Private' E-mails Public
OPEN GOVERNMENT -- "With iPhones and Blackberries becoming must-have accessories, San Jose is poised to approve a ground-breaking disclosure policy that would ensure elected leaders don't use those personal devices to skirt public-records laws," reports John Woolfolk in the San Jose Mercury News.

The public often believes our City Attorney's job is to make sure the city follows the law. That is not how our City Attorney operates. Our City Attorney is not elected. He was hired by the City Council. His client is the City Council. He is "just the piano player" playing the music the City Council majority gives him.

When the city staff violate the municipal code or violate open government laws the City Attorney can not be expected to react.

Here is an email sent to the City Council today:

Mr. Sabine [City Attorney],
This email is acknowledgment and documentation of two phone messages I received from you regarding the Formal Complaint I filed on December 16, 2009 against Park and Recreation Director Chris Hazeltine.

In your message on January 11, 2010 at 6:02pm you made the following statements:

"Let me tell you just what my thinking is to summarize"
"As a City Attorney I take direction from the City Council"
"So, if the Council wants, you know, me, to investigate anybody then they would direct me to do so."
"So I think the first step for you would be going to the Council in whatever form you desire"
"I looked at it pretty closely and thought about it and think that's whats appropriate"

In your message on January 13, 2010 at 4:56pm you made the following statements:

"I will reiterate that the City Attorney takes direction from the Council"
"And it's the Council that you have to convince um to direct the City Attorney to take any action um regarding any kind of investigation
"I've look at it carefully and thought about it and that's a, that's the case"

As I mentioned before I have strong supporting evidence that Mr. Hazeltine has violated City polices in a number of areas.

It can only be concluded by your statements and past emails that the City of Encinitas is not obligated to track complaints and has no policy to process and investigate complaints against City employees.

I'm sorry but there seems to be something fundamentally wrong the City ignoring complaints against City employees. It would appear that this lack of a Complaint Tracking System would only open the City of Encinitas to liability, the very thing your position is responsible for, protecting the City.

Thank you for your attention

Steve Meiche

Meiche's complaint can be found here.

Sabine's title would be more appropriate if it were Council's Attorney.

Council Member Barth attended and gave an overview of the agencies in charge of our drinking water. Mayor Dalager never responded to our requests to speak.

Barth told the ETA:

The SDWD gets around a third of its water from local sources (Lake Hodges).

Barth explained that there were many reasons the SDWD would require greater expenditures. Earthquake retrofitting of infrastructure, a spike in needed maintenance, and increased charges from government agencies that sell us imported water.

Tangentially, Barth suggested that the SDWD might dramatically increase its water self-sufficiency by pumping reclaimed water back to Hodges.

Barth also weighed in on the governance structure of the San Dieguito Water District. Currently, the City Council serves as the SDWD Directors. Because the City and the SDWD often enter into agreements and the council represents both sides, she wants the SDWD governing board to have representatives that are independent from the Council. She suspects the Council might agree to adding two independently elected directors.

The City cannot raise taxes without a vote of the people. The SDWD can raise rates with a vote of City Council Members.

The San Dieguito Water District (SDWD) sent out notices last week indicating that "...an average single family household will see an increase of approximately $9.88 per month (19.9%)..." The notice points out that ratepayers can reduce their bills by reducing consumption.

The North County Times reported:

The San Diego Water Authority is raising their rates on the water retailers.

"However, the local district's treatment plant, which it jointly owns with Santa Fe Irrigation District, now needs some substantial repairs, Watts said, adding that those costs would be reflected in the water bills." The repairs are deferred maintenance and earthquake retrofiring.

Mark Osterkamp, a third-generation farmer, grows wheat and other crops near Brawley, in Imperial County. Osterkamp and many other desert-area farmers are paid to leave some of their land idle so water can be diverted to cities such as San Diego. Read the Press Enterprise article

Part of the cost being transmitted to the SDWD customers are payments to Imperial Valley farmers. A few years ago, the San Diego Water Authority made a deal with regional farmers. From the UT: As part of the pact, the Imperial Irrigation District is idling land and selling a portion of its unused supply to the San Diego County Water Authority. The deal reduces the region's local food production capacity. There was little, if any real opportunity for the Encinitas public to weigh in on the deal. Indeed, few in Encinitas realize that it happened.

The SDWD is a member of the San Diego Water Authority. The SDWD is run by the Encinitas City Council. The council rarely takes a position on regional water policy.

The Planning and Conservation League writes:

STILL NO THERE THERE: REVISED BUSINESS PLAN FOR HIGH SPEED RAIL SLAMMED BY LEGISLATIVE ANALYST'S OFFICE

On Monday afternoon, the Assembly Transportation Committee held an informational hearing to review the California High Speed Rail Authority's recently revised Business Plan for a multi-billion dollar train network stretching from San Diego to San Francisco. The hearing was packed with elected officials and residents who are increasingly worried about the Authority's ability to manage this complex project.

What they heard didn't calm anyone's nerves.

The Legislative Analyst's Office (LAO) presented a scathing review of the business plan that questioned the legality of the Authority's approach. Their analysis highlighted the Authority's inadequate and incomplete discussion of risk associated with ridership and funding and its uninformative implementation timeline. Here are a few excerpts from the LAO's analysis:

The plan contains no discussion of the authority's plans or processes to (1) identify potential threats or (2) manage, respond, and mitigate those threats. The plan only states that the authority "believes it is aware of all existing threats and is taking the appropriate steps to prevent or mitigate those threats." (p. 4)

Ridership Risk. The plan addresses the risk of incorrectly forecasted ridership with one sentence, stating the risk "would be mitigated by policies that continue to draw people to reside in California and encourage high-speed rail as an alternative mode of transportation." (p. 6)

Funding Risks. To avoid the risk of failing to win credit approval from investors, the Authority's strategy is "to clearly communicate the project and obtain up-to-date feedback." (p. 6)

Overall Market Risk. To mitigate the risk that financial markets shut down and stop lending, the Authority "has to continually monitor the market and develop strong back-up strategies such as project segmentation." (p. 6)

Government Funding Risk. The Authority plans to avoid the risk that governments are not able to follow through on their commitments "by carefully assessing how each government funding source affects the build-out of each segment." (p. 6)

The LAO's critique of the Authority's risk analysis is particularly telling because it demonstrates that the Authority is still focused on promoting the project instead of creating the solid foundation to get it built. We're hopeful that increased legislative oversight can help guide the Authority toward a real path for moving forward.

Here, for example, is what the California Public Employees' Retirement System, better known as CalPERS, told its retired members early in the fall of 2008, when it had lost more than $70 billion on its investments so far that year, more than one-fourth of the previous $260 billion value of all its investments:

"It is important for you to know that the current credit crisis does not directly affect your retirement benefits, which are securely protected by law, or our ability to pay benefits."

Translation: Not to worry; the taxpayers will have to bail us out.

In fact, retired public employees from the 2,000-odd cities and counties that contribute to the plan have not seen a nickel's reduction in their stipends. CalPERS paid out $10.88 billion in retirement benefits in 2008, plus an estimated $5.7 billion in health benefits.

Must Read the Whole Column at the North County Times

The North County Times recently reported that their paper was going to shrink. As the newspapers pull back on frequency and depth of coverage, organizations that help the community network will become increasingly important for voters to remain knowledgeably participants in local government.

Unfortunately, most local organizations' missions are focused on a particular cause. The future may find that organizations like the ETA may be called upon to play a more active role to fill in the gaps.

From yesterday's state of the state address:

Now, another priority relating to the budget is pension reform.

The cost for state employee pensions is up 2,000 percent in the last ten years, while revenues have only increased by 24 percent.

The pension fund will not have enough money to cover this amount, so the state — that means the taxpayer — has to come up with the money.

This is money that is taken away from important government services.

To watch and read the whole address go to the Gov's website.

Pulled from Calpension Reform
Steven Greenhut’s appearance on C-SPAN’s BookTV is now available for viewing online — click here. He talked about his new book Plunder!: How Public Employee Unions Are Raiding Treasuries, Controlling Our Lives and Bankrupting the Nation on December 10, 2009 at a book signing event at Barnes & Noble Booksellers in Orange, California.

He takes a critical look at government workers and the unions that represent them. He argues that public employees receive salaries, pensions, benefits, and a level of job security that far outpace workers in the private sector, and that they have become a huge drain on local, state and federal coffers.

A former member of the Orange County Register’s editorial board, Steve is the director of the Pacific Research Institute’s Investigative Journalism Center and News Bureau in Sacramento. He is also the author of Abuse of Power: How the Government Misuses Eminent Domain.

The streaming video runs approximately 50 minutes. During his talk Steve makes reference to CFFR’s president Marcia Fritz and the organization’s pension reform ballot initiatives, and CFFR vice president Jack Dean makes a brief cameo appearance near the end of the question and answer session.

ETA NOTE: So far the SEIU does not have a response on their website.

CSPAN Bernanke Speech
The Fed chief is talking about raising interest rates. Is local government ready?

UCAN Lower Rates For Energy Hogs
According to the Union-Tribune, under the proposal, an inland SDG&E customer using 500 kilowatt-hours would see their monthly bills go up $2.66 to about $75.41; a neighbor using twice as much power would see a decrease of $4 to about $230, but still would have a bill more than three times as expensive.

Read UCAN's Analysis