Oxnard Council approves wastewater rate increase; Starr initiates recall of 4 council members

By George Miller
 
After many months of fighting over wastewater  rates, capital budgets, infrastructure fees, debt, the rate-setting process itself and more, the Oxnard City Council approved  a sharply downscaled rate proposal, over strong objections of some residents/business owners and approval of others.

Oxnard Wastewater Treatment Plant

 
Assistant City Manager Ruth Osuna, who shepherded the the Prop 218 rate-setting process and Alex Bugsby, outside consultant who did much of the analysis, advising and writing, presented the rate increase proposal (see meeting agenda documents below).
Moving Oxnard Forward activist Aaron Starr threatened to initiate recall proceedings for any Council Member who voted for the increase and made good on the threat at the end of the meeting, presenting four recall petitions with the requisite signatures claimed.
 
 Council agenda item:
SUBJECT: Public Hearing Regarding and First Reading of Ordinance for Wastewater Rate Increase (30/45/60)
RECOMMENDATION: That City Council:
1. Holds a public hearing to receive public testimony and consider all protests concerning the adoption of an ordinance establishing wastewater user fees and charges;
2. Finds that, according to the CEQA exemption listed in 14 CCR section 15273, CEQA does not apply because this ordinance establishes rates, which the Council finds are for the purposes of: meeting operating expenses, including employee wage rates and fringe benefits; purchasing or leasing supplies, equipment, or materials; meeting financial reserve needs and requirements; and obtaining funds for capital projects, necessary to maintain wastewater service within existing service areas; and
3. Approves the introduction and first reading by title only and waive further reading of an ordinance establishing new wastewater system user fees and charges.
Legislative Body: CC Contact: Ruth Osuna Phone: 805-385-7478

Meeting video: http://oxnard.granicus.com/MetaViewer.php?view_id=93&event_id=42156&meta_id=170783

Basically, staff downsized and the Council-appointed resident Utility Rate Advisory Panel accepted, a downsized version of last year’s council-voted increases, keeping the March, 2016 35% increase, but reducing the others to 5.25% increases yearly, for the next five years. It appears that some business rate increases are greater. To accomplish this, the capital improvement plan was pushed out, but still within the original 10 years window of $309 million. In addition, the infrastructure fee was cut and financial/investment policies to prudently manage debt were disregarded. Staff and Council believe that this is an acceptable trade off to help play catch-up for greatly deferred maintenance, capital spending and vastly depleted reserves. It appears that much greater increases would be needed after that to support the large capital plan.

Councilman Bert Perello holds up a toilet seat to emphasize importance of keeping critical wastewater system running, at 5-16-17 Oxnard City Council meeting.

The bottom line is that there will be steady increases in rates over the coming years. There was much back and forth about how that will impact residents and whether the model single family increase presented was truly representative of how it would impact people. The business rate increases look to be huge, but this was discussed only by a few business owners who showed up to complain.

Note-average single family residence bill was said to be $30.94 before the 35% increase in March, 2016.

 

Public comment

Nancy Pederson- Not comfortable with the way you came up with the numbers.

Charles Hamm- Local businessman. Opposed to increases. Thought URAP meetings were a sham- panel biased against Starr. Agenda stacked. City ran agenda, steered so that panel was more like a listening panel. No unanimous votes. City Mgr. Nyhoff spoke the first 35 minuets about practically nothing. Panel modified one of staff recommendations. Numbers didn’t justify cost. Grateful there was a URAP. Got to see how city was handling dept, and infrastructure use fee. Reccomendation- postpone infrastructure fees. Can only lawfully charge for actual costs- not divert to general fund.

Aaron Starr- Council members showed concern for impact, hope it will result in a rejection. Room was  filled with protesters. Went unheeded. Meetings scheduled, delayed, CANCELED.  Started initiative process, you sued us for wanting to circulate a petition. Got signatures in 16 days. Offered to work with you. No results, Won initiative with 72% with vote. Taxpayer funded lawsuit to overturn this. You are ignoring 35% increase in your increase estimate. We expect you to honor clear will of your employers, the voters.

Alicia Percell- Not all voted for last years’ rate increases. Many conversations since then. Moving Oxnard Forward not spending same amount to notify public of this meeting, this time, sincve they have already made their views clear in the past. You already know what public thinks (72% supported rollback). Not just about 75% increase. Leverage $30M annual revenue utility with $400MM in debt over next 10 years. Debt service alone will exceed total current revenue. Debt slaves for 30 years. Tonight’s proposed increase sets the stage for long term. There are options. You don’t have to adopt all of the proposed increase- lots of options from zero to 75% tonight. Not demanding 9%, just something reasonable.

Larry Stein- Submitted 9 questions yesterday. Ignoring “feeder stock” (recycled water) for GREAT program. This is a commodity which has value. GREAT water users not paying for feeder stock. Why 6% bond rates discussed? BBB are almost all 3.5%. Why do ratepayers have to subsidize other ratepayers. Demanded answers to questions.  Flynn refused, per city rules.  Got hot and heavy.

Pat Brown-  All the complaints, money has been spent, scaring people into thinking thy will have to spend $300/month more for water, wastewater and trash. For all the meetings we have had, all of the expense is just a shame. If we don’t get all of wastewater problems solved soon, renovating, preparing for future, town will have to close down. All of her other bills have gone up- less coverage for more money.  If they want their own well, they can go to Nevada somewhere and will have to figure out how to dispose of waste.

Vincent Inez-   Born and raised in Oxnard. Worked at Oxnard WW plant 36 years.  Biotowers, Inter-stage and clarifyers. Everything gets eaten up by the weather. Rebuilt Aurora interstage pump- used last parts available. It was so dilapidated, eaten up. I was praying for it not to break down. Biotower was in extra terrible shape. If that thing ever went …. broke in half- no more Ormond Beach.  Other cities much more expensive- we’ve done a great job. |Up to us to keep that plant in shape. Would be glad to pay double.

Al Velasquez- No one denies we need a rate increase. Need rate based on actual true cost of service. URAP did not establish these rates. It was city staff. Only Starr had a proposal, URAP just picked one option out of three. Staff said is only a couple of dollars a month. His own bill was $51.75 for wastewater. Went up to $69.86. Goes to $90.25 with other proposed increases.  That’s a 74% increase.  It’s NOT only $2. Plus (proposed) water increase of 14%. Bill was $94.35. at 5.25% for 5 years would be $137.27.

David Poulsen-  Small business owner in Oxnard. Last year’s  increase was $1000/month- wiped out my profit margin and you’re gonna do it to me again. Me and my employees may not be here. Per URAP- no major wastewater capital improvements in 30 years. Ratepayers expected to make up for all of this in 5 years. Would love to have capital improvements, but can we do something less? What about additional ratepayers coming in? We are like a family with a house which hasn’t been maintained in years, roof leaking, local businesses in trouble. Would love state of the art improvements, but have to feed our families. NOT good to have good water if you trash our economy.

Elva Lindsay- URAP member. Last speaker might have a slab leak. Strongly recommend rate increase. I wanted 10% increase. Signed Starr’s original petition. Don’t know what Starr’s agenda is- sour grapes because he didn’t make it to the council. (much audience booing- chastized by Flynn [the booing, not Lindsay’s dissing of Starr]).

Speaker (young, with beard)- Hard to support rate increase- not provided with enough info. Why did so much time go by without maintenance? Can we prosecute last City Mgr.?  Where did money go? How was borrowed Money spent? Will rates get rolled back after capital improvements done?  The 4 loans tracked by LIBOR- artificially depressed by fraudulent banking system. Any attempts to claw back funds from Royal Bank of Canada?  Brought up his concerns last time- seems like no one was listening. received propaganda instead.

Steve Nash- Spoke and wrote on this extensively. Someone disparaged efforts of CAG members.  Vote should be unanimous. One or more might take easy way out due to political fear/expediency. (Nash has commented on other Citizens Journal articles on this).

Kimberly Villaneuva- In respect for Measure M- people decided what they wanted. These numbers $2 seem small. But people in Colonia etc./ are deeply affected. Democratic system already voted against increase. Need reasonable increase.

Unidentified speaker- When you vote for something, will of the people should be respected. Measure M approved by 73%, but council took it upon themselves to overturn the will of the voters. Many are on lower/fixed income. Depending on whose numbers you believe, increases could be very large. Gets difficult for us with limited education to figure out what’s going on. You guys (Council) will have to pay the piper if you mess with the economy and people.

Barbara San- Everything has gone up. It’s not just the 5%, it’s every year. What have you done with the funds? Have you got a plan to fix it? What is your plan and when will it materialize?

Gabriel Teran- Freemont South neighborhood. City calculations estimate a certain increase- could be much higher for some. Need something simple to understand- informative.

Ed Castillo- He said he is repeating what he  has said before: Whether increase is 10-15-30%, Measure M a valid measure, People come here to enjoy freedom to vote. Hard to understand why council hasn’t honored that. You are ignoring the will of democracy, obtained by men and women in uniform who served our country. How can we respect your vote on anything if you do not honor the vote of the people? You will face an election. I will ask you why you want my vote if you can’t respect my vote.

Mayor Flynn- City Clerk will count the protest votes.

We didn’t see all that many. in the boxes. Se tally later in this report.

 

Council comments/questions

Madrigal- Want to see Stein’s questions answered. On question of population growth- can we revisit 5.25% increase and lower it if more customers are materializing? Before the 35% increase, what was typical SFR (Single Family Residence) bill? ($30.94). We must have the courage to do what we know is morally right. Understand that Measure M was the will of the people. But a spike might happen in future, with the bill passed to your children, grandchildren. He doesn’t want to have to explain in 20 years that he caused the problem.

Perello- Figures don’t lie, but liars can figure. I did not support rate increase last time., But bonds in jeopardy, potential bankruptcy. Is that the only thing at risk? Increase helps desirable credit rating. You paid the minimum and will keep banks in business with profits for decades (he was referring to keeping the rate increase down at the expense of more debt). Staff didn’t mention that we have to make sure bonds don’t get downgraded. Next step would be bankruptcy. What happens if city goes into bankruptcy? Need to build reserves. We’re stuck with what we have. Holds up toilet seat for photo op- I want to be able to use this. Why weren’t rates raised before? I expect to hold staff accountable- not very successful at that.

MacDonald- Will hold comments for deliberation.

Ramirez- Poulsen runs a laundromat. Naturally it’s gonna cost more. Asked Asst. City Mgr. Osuna to talk about rate assistance program.  City set aside $100,000 to help.

Osuna- Month ago, approved rate assistance program based on Ventura’s policy. Recommended initial amount of $100,000 to help 1000 families at $10/month.  Ramirez- people can volunteer donations. Need to set up systems to deal with this- software- won’t be ready by 7-1-17.

Ramirez- Some people want to roll back rates. Judge decided that city will win lawsuit. Preliminary injunctions not usually granted if judge doesn’t think it will win on merits or irreparable harm. Even opponents acknowledge increase needed. Appreciated URAP efforts. Have to do what’s right for city- not just what’s popular.I will try to do what is right.

Flynn- Thanks to public for coming out- wish you would every Tuesday. He was asked what’s #1 mistake city made? City should have incrementally raised rates. 300,000 bridges considered unsafe nationally. People incensed about gas tax- what happened to money intended for roads. Poor people can’t afford any increase. If conflict results in win/win, then it’s worth it.  Our rates are about in the middle. Fillmore is 2.5X greater. Raising rates not popular.  Tonight’s questions were same as before.  Now done the process twice- better this time. Bond markets won’t wait. Standard and Poors issued ultimatum.  Would have to come up with $20mm if downgraded a couple of notches. That would start the dominoes (toward bankruptcy).

 

City Cleark Michell Ascension- rate protest vote totals- Total is manifestly less than half the ratepayers- Raw number is 1092 protests counted (not validated, not checked for dups.). Number of parcels 37,042.  18522 would be 50%.

 

Council Deliberation

Perello- Madrigal and I asked for Madrigal’s questions to be answered.  Why did Ramirez and Flynn get questions answered, but not us?  Flynn- only said it had to be done in 5 minutes.

MacDonald-  This started March, 2016. As I have said, need rate increase, but how much and over what period of time? Cannot recover 30 years neglect in 5 years. We created ratepayers assistance of $10 month, while increases will be $7.50/month and this is just wastewater. He voted against all. Others elected later to defer water and trash increases.  Staff report did not present increases right. Ordinance 2901 replaced by this. I am not prepared to move ahead with this,  Not sure about the numbers. I’m not changing, for political or other reasons. This is onerous and burdensome., No disrespect intended., Maintenance numbers just seemed to disappear.

Madrigal- Wants answers to Larry Stein’s questions and population growth affect on rates.

Asst. City Mgr. Osuna response- Questions from Stein given yesterday- Don’t have answers for all.  Intend to discuss Wednesday 9 am. Will give answers to City Council after that. Re: Population growth- don’t have exact number in hand. What was SFR cost before increase- $30.94. Past increases varied.

Fischer:  Latest proposed rates (35% +  5.25% x 5 years) are smaller than 3/16/16 proposal. Ordinance 2901, which Measure M would rescind.  Trail now continued to November 2017.

Osuna- why 5.25% vs 8-10%? Reduced Capex quite a bit to $78 MM vs much higher number. Also, only put in for street maintenance. Also extended the financial policy goal one year.

Perello- Snatching defeat from the jaws of victory?  Was 883 families in ratepayer assistance program. Led to believe we are in deep you know what because of bondholder ability to recall the bonds. I have been told more than one story. Staff- City Mgr and Atty- need answers. Is bankruptcy next step? Are finance numbers credible? Will only support it if a half million dollars goes into a lockbox annually for emergencies? Insufficient reserves for “unscheduled” work. I want staff to answer question. Does this jeopardize ALL city bonds- domino effect?

Flynn asked City Mgr. Nyhoff (pic) to answer- Even with 35% increase. How long does that hold us?  Have brought in advisers multiple times already. It is still pending whether we win the lawsuit (challenging Measure M). I cannot have the measure violate bond covenants if the city can’t. BBB- rating would potentially trigger $3mm in swaps and lack revenue to pay bills. Default would mean General Fund would be tapped, so Std and Poors put General Fund on credit watch also.  Must keep the 35% increase to maintain financial stability. If this situation happens, it will cost significantly more. Phillip Curl of SouthWest (Financial Advisor) anticipates interest rates of 8-10% if downgraded.

Throop– Callable bonds if lawsuit does not go our way. May have to rebond. Bondholders do not want to be in second place behind swap. $20MM in liabilities/refinancing involved. Key that we get rates passed to avoid this. Also, Water fund is about down to zero.

Asst City Mgr.Nava- Regarding Perello proposal to set aside funds- likes. Prepared to do this.

Perello- I believe I need to support this, but only with the additional reserves. You cannot fool around with the banks. Pushed for whistleblower since June, 2013. Have to trust info you’re getting, Sometimes, people giving you info haven’t been given accurate info. City has been robbing Peter to pay Paul for far too long.

Flynn- Re: the will of the people: Initiative and referendum laws were put into effect. But, on occasion, voters laws are challenged, can be overruled. 1964- prop 14- said homeowner could discriminate on who they sold to- won overwhelmingly. Invalidated by CA Supreme Court ion 1966. Is 35%increase enough for bondholders?

Throop- =If we don’t follow through with a very good business plan, they will regard it as kicking the can down the road., The 35% was just a Band Aid.

Osuna- URAp looked at only 35% followed by zero. Couldn’t do any CIP (Capital Improvement Plans) or fulfill financial obligations or operations. Committee didn’t move forward for these reasons. Must do beyond 35% or will be in trouble.

Nava- we are currently in default for not meeting requirements.

Flynn asked Nancy Lindholm (Chamber of Commerce President) about her past URAP participation and how her mind was changed. Lindholm- this year’s recommendation is lower.  Plant condition worse, city finances worse (wastewater fund).  Flynn asked her if panel understood the difference between the options. Lindholm doesn’t think Prop 218 was a good law. Some advisers didn’t understand financial/technical issues. But so much info was provided by staff to help them. Staff kept a flipchart of questions and followed up with answers. Lindholm- Last thing C of C wants to do is support recommendations that increase business costs. But wastewater is a vital system.

Nyhoff- during the first round, could not rely on our financial numbers, which kept changing. In second round, we were much more confident of the numbers. Getting the 2 audits done was very important.

Flynn called up Aaron Starr- Flynn voted against rate increase. What do you think of 35% icrease, he asked him. Starr says he made proposal which included 35%, but deleted infrastructure fee, handled $11 million for other expenses. increase reserves, pay down debt $22mm. Lacked oppty to delve into CIP. Numbers were similar to last time except timing,. Was $309MM spending plan over 10 years. Debt went from $100 to $400MM over 10 years. Violated cash and debt policies- all just discarded. Some weren’t even presented to us. Weren’t given full story- misled. Some questions never answered.

Flynn- (to Starr) -you got concessions, resulting in lower rate- you succeeded somewhat- pushed capital improvements out further, Got panel to agree to an annual review. Staff did NOT present it to you (6-1 in favor). Council not really understanding capital improvement plan.  What about doing an annual Capital Plan review?  Would you work with the city over the next year? Keep roadways but sacrifice other fees.

Starr- Historically, we saw rates increased to do other projects never done- 2009, 2012. Just no credibility. I have l;earned that your policies aren’t binding, nice, but don’t have any teeth. Commitments made, but promises haven’t meant anything.

Flynn- Starr is saying “trust but verify.” If we have annual capital improvement review- ongoing, eliminate infrastructure use fee- how could we put “fangs’ in it?

Fischer- formation of another panel is not on tonight’s agenda. Subsequent meeting to address this. This is like a CAG. Perello’s proposed policy seems consistent with policy.

Osuna- Prepared to bring these back to you- annual review of finances and capital improvement projects completion status to be more accountable. Re: IUF- infrastructure use fee-do not implement anymore.

Flynn- options hold off for two years or eliminate IUF. URAP said defer 2 years.

Asst. City Mgr. Nava- Need bonafide capital improvement program for all funds for 5 years. Value of the project and benefits. Once approved, must use as a guide and figure out how to finance.

Flynn- Starr skeptical about it ever happening., How can we establish ad hoc review committee?

Osuna- How about using Utilities Task Force?

Flynn- add review subcommittee to it to accomplish this?

Perello- Made motion to approve action with +$500K/yr placed into lockbox fund for emergency/unscheduled projects.

Flynn- must finish discussion first. to Starr- will you support motion with modifications?

Starr- Cost of service study never included capital improvement project list and costs. Won’t agree to 75% rate increase- NO. But he didn’t suggest any alternatives. Freeze rates at 35%, eliminate infrastructure use fee.

Nyhoff goes along with it.

Perello, Ramirez made motion, second.

Ramirez- Not want to see headlines that Oxnard’s fiscal situation dire due to bond ratings dropped.  That is why we had to challenge Measure M in court. Peoples’ vote may not always be allowed to stand., Consequences when you don’t pay bills. Spent much resources, time and money trying to get this right. I support.

VOTE- 4-1 passed. MacDonald dissenting. This was the firtst reading. Final vote is next week.

 

Editor’s note: They never discussed capital plan options or financing options.

 

J. Information consent agenda:

Exceptions:

J-1- Utility delinquency fee_ All utilities now have the same delinquency fee, charged across the board for the entire bill. Contract customer penalties vary by contract. May not all be consistent now- need review.

J-3C- Open Gov software to allow city/;public to access, massage financial data Open Gov guy- how to protect city data, allow public to mine data. This allows far more accessibility/transparency. How will data be secured?

J-3 E Police purchase of 250 Sig Sauer P320 firearms $36,563.  PD Chief Whitney- more more weapons to replace old technology Berettas. (~$250 trade-in). Great deal. Holsters ($28K) not duty holsters- more expensive.

Public comments:

Larry Stein- Concerns about Info Consent in general. Was money already appropriated? Coming from money not being used for its intended purpose (surplus money). Or additional appropriations from general fund, such as unused headcount.

Flynn- how respond to Stein question.

Nyhoff- we have a consistent vacancy rate, included in budget process. Need budget amendment for addl. expenditures.

Al Velasquez- Usually $700 price for those guns. Holsters should sell fort $70- so why so much.

Aaron Starr-  Announced Sec 11020 elections code- recall petition served for 4 voting for wastewater rate increase- Flynn, Ramirez, Madrigal, Perello. Flynn says out of order, but papers were served to City Clerk in public.

Steve Nash- Appreciate Open Gov. software tool.

Dan Pinedo- Forfeiture funds- how much there?  He does not support recall- especially of Perello.

Perello- what is asset balance of forfeiture funds used? Police Chief Whitney thinks a bit under $200,000.

Vote on Consent Agenda- 5-0 approved.

Meeting adjourned by Flynn.

 

Starr initiates recall at Council meeting

Aaron Starr of activist group Moving Oxnard Forward vowed to start a recall process of any Oxnard City Council member who voted for the proposed wastewater rate increase of 5.25% per year for 5 years, in addition to the 35% increase already levied and upheld by a stay on the Measure M rate rollback approved by voters in November and initiated by him. He made good on this threat near the end of the 5-16-17 Council meeting when he served the petitions.

One of these petitions for recall was served to each of the Oxnard Council members who voted for the latest wastewater rate increase proposal at the 5-16-18 Oxnard City Council meeting. Photo: Councilman Bert Perello.

All council members except Bryan MacDonald voted for the increase. So, during the last agenda item (Consent Agenda), Starr announced the recall and served the signed petitions to Mayor ProTem Carmen Ramirez, Mayor Tim Flynn, Councilmen Oscar Madrigal and Bert Perello, over Mayor Flynn’s vehement objections that Starr was out of order for being off-topic.

At one point during the rate deliberations, earlier in the evening, Mayor Flynn tried to get Starr to buy in to the increase proposal if an annual capital plan review and complete elimination of the infrastructure fee subsidy to the General Fund were done. Starr demurred  on the grounds that there  was no guarantee that these would be done, that the 35% increase already done was more than adequate and that he had already submitted  a scenario proving this while he participated in the URAP (Utility Rate Advisory Panel) activities. Flynn told me later that he thought he had Starr in a corner and that it had exposed his real position. We agreed that Starr had been successful in negotiating the increases down substantially, obtaining some concessions and exposing many weaknesses in the city’s position, including being in gross violation of its own financial rules on debt coverage and financing of utilities.

We heard from City Attorney at the meeting that the Measure M trial had been continued from June until November.  Measure M was a voter initiative repealing the March, 2016 wastewater increases. The Ventura County Superior Court judge left the 35% increase already in effect in place, via a stay on the measure’s effectivity. The Council on its own agreed not to put the second annual increase in effect until the issues had been resolved. In the meantime, a new Prop. 218 rate-setting process has been completed, setting the stage for this meeting.

 


George Miller is Publisher of CitizensJournal.us and a “retired” operations management consultant residing in Oxnard


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2 Responses to Oxnard Council approves wastewater rate increase; Starr initiates recall of 4 council members

  1. Jack Villa May 18, 2017 at 12:56 pm

    CJ ask MOF who finances the organization and who is on their board. MOF website speaks of transparency and openness. Is this organization Oxnard resident based or special interest?

    Reply
  2. William Hicks May 17, 2017 at 11:45 am

    What’s wrong with a part-time City Council to help defray the cost of running a city. Whole State’s, Texas for instance, uses this method. If that works for Texas, why not The City of Oxnard? In fact, why not the State of California?
    i
    If kicking the problem down the road until it’s an “emergency,” is how elected officials choose to do business, then what are the citizens paying for? Self surviving methods of politicians are not what citizens should find acceptable. Maybe it’s time to think hard about the credentials of those that the Citizens of Oxnard, and California as a whole, put into office.

    Reply

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