BY MICHAEL CEREMELLO,
FORMER VICE MAYOR, COUNCILMAN CITY OF DIXON
An interesting development in the ongoing waste water battles between the State of California unelected bureaucrats and the cities being forced to do unnecessary and costly projects saw the chickens come home to roost on Tuesday at the Joe Serna center in Sacramento. The Division of Financial Assistance, otherwise known as the State Revolving Fund decision making body of the Central Valley Region Water Quality Control Board, heard testimony from some of the five members of Crescent City staff and a member of the council who were present and a lone advocate from the Crescent City taxpayers group.
Those representing the city, who flew to the meeting and were put up on the ratepayers’ dime, countered the Board’s offer to reduce the interest rate on the their 2008 SRF fund loan to 0 percent from 2.4% by asking the Board to tailor the payment schedule so they could pay less initially, $1,100,000 in 2015, to a final amount of $1,697,662 starting in 2021 until the loan is paid off. The city sent in a partial payment this year saying neither the sewer enterprise fund nor the general fund had the resources to make the payment with interest. According to the Board’s staff report, the State will forgo $522,284 in interest payments resulting in a loss of revenue to the fund of $15,470,347.
The resolution before the Board was to reduce the interest rate to zero and to allow the deputy director to modify yearly payments so long as the cumulative payments result in full recovery of all principal on the financing agreement. The discussion from the Board focused on what would happen if proposed rate increases could not be implemented. An unidentified staff member sitting next to main presenter Chris Stevens told one board member he would rather not say (publicly) what additional options they can find. One of the board members suggested “grants” which other cities have been told “no longer exist”.
Linda Sutter, the secretary of the Crescent City – Del Norte County Taxpayers Association, spoke to the board about her city’s lack of frugality exemplified by the fact she drove to the meeting while city staff took the more costly approach. Sutter also pointed out the basis for making the loan was incorrect because there are not 7000 rate paying citizens in Crescent City because half the population are incarcerated in the Pelican Bay prison. She also stated the taxpayer groups across California are in communication, specifically mentioning the city of Dixon’s treatment by this Board last August.
The attitude of the State Board is that they don’t care if the rate payers object; they expect their city governors to find a way around it. In fact, the staff report provides an example of the extent to which cities blame their citizens rather than listen to them.
In a letter dated January 31, 2014, the City formally requested a modification to its agreement. The letter explained that the City has had to deal with multiple rate rollback initiatives, referenda to stop rate increases, and litigation to stop the rollbacks. The five rate increases that were planned when the financing agreement was approved were deferred, but eventually implemented by the City.
According to our sources, this project was to cost between $20 and $30 million in 2006 and the city received confirmation for a $25 million loan. After the city received only one bid for $37.7 million in 2007, they went back to the Board asking for additional loan money. There are documents showing many other additional potential contractors who declined to bid as being “too far” away. Many within the taxpayer group feel this contract was given inappropriately and illegally. Why the loan amount was increased to where it stands now at $43 million remains unexplained.
The city of Dixon is in a slightly different scenario. While they have a loan approved for $28.5 million, the Board has not released any funds at this point and stated they would not unless rates held up. The Dixon Chapter of the Solano County Taxpayers Association filed 1788 signatures on petitions to rescind the recent sewer rate increaseon November 12th. After these signatures are verified for validity, the city council has two choices according to State Election codes: to place it on the ballot or rescind their ordinance.
Another similarity between the two cities is that Crescent City’s public works director, Eric Wier, told the board they would need another $36 million for a “phase 2”. Dixon essentially is setting themselves up to do the same as their project, activated sludge, does not remove the constituents of concern to the State Water Board and a “membrane bio-reactor” such as was funded in Crescent City will probably be forced on the city by the board or an even more complete tertiary treatment system.
The real bottom line to this story is the bureaucrats who approved the loan relied on consultants who provided false figures of the true rate paying population which proves that old adage “statistics can be made to lie”. Caught between a rock and a hard place, these unelected SRF officials either have to put up millions of tax payer dollars or reject the egregious demands of their out of control mother agency which push communities toward bankruptcy.
It appears the story is far from over for either Crescent City or Dixon. Rather than looking for less costly solutions, it appears Crescent City’s council would rather face bankruptcy than admit their dereliction of duty to their citizens. That’s what happens when your city governors look at their citizens as only cash cows to be milked.