Oxnard Measure M Wastewater Trial Fails to Finish on Schedule- next hearing 2-23-18

By George Miller

Friday, January 5, 2018 was supposed to be the last day of the City of Oxnard vs. Aaron Starr civil lawsuit challenging the legality of the Measure M voter initiative rescinding the 2016 88% wastewater rate increase. This has dragged on for a year. Judge Rocky Baio slapped an injunction on Measure M until the case was resolved in a trial, which didn’t even begin until late December. Recent Citizens Journal trial articles covered the 12/29/17 and 1/4/18 court sessions (see links below).

Both sides stated their cases and called witnesses, delivering many hours of mind-numbing accounting numbers, bond coverage rules and more, but did not reconcile their different presentations, especially revenue, expense and bond covenant/reserve numbers to his satisfaction by Friday.

Foreground, L-R: Plaintiff’s Counsel Barbara Whately, City Attorney Stephen Fischer; background: defendant’s counsel Chad Morgan in court in the January session for Oxnard vs Aaron Starr case on legality of Measure M wastewater rate rollback. Photo: George Miller/Citizenship

 

The City insists that Measure M is illegal because it would remove the funding needed for it to run a best practices wastewater facility and would violate reserve and bond coverage rules.

However, Starr insists that Measure M is legal, that it protects ratepayers from overpaying, clears the way for new rate studies (the 2017 rate adjustment actually LOWERED scheduled increases), allows the wastewater facility to operate satisfactorily, as well as meets all reserve and bond coverage requirements. He further provided evidence that the City’s numbers were inaccurate and misleading.  For example, ex-City Manager Gregg Nyhoff expressed high confidence that projected revenue of only $23 million was accurate. The real number (or what they finally said was the real number) was about $30 million. Multiple inaccuracies of other numbers and errors in calculation methodology further cast doubt on the credibility of the City’s case, according to the Starr team’s testimony, counsel statements and exhibits presented,

 

Recall signatures verified

Meanwhile, during the trial, he Ventura County Registrar Mark Lunn certified the Starr-initiated recall petition signatures to potentially recall Mayor Flynn, Mayor ProTem Carmen Ramirez, along with Councilmen Oscar Madrigal and Bert Perello. Ramirez and Perello were at the trial. Wastewater rate increases were the #1 driving issue behind the recall.  The special election will likely take place around April, in spite of City delaying tactics.

Mayor Pro-Tem Carmen Ramirez, Assistant City Manager Ruth Osuna (recently removed) and City Attorney Stephen Fischer have been there every day. One of the latter’s staff Attorneys,  Shiri Klima, was there part of the time, seated next to Outside Counsel Holly Whatley.

When I asked Mayor Pro-Tem Carmen Ramirez her opinion of how the proceedings were going, she would only say “winning,” with a big smile. She told us it would be inappropriate to comment further until a verdict is reached. However, she did agree that the case would drag on longer with potential multiple briefs and oral arguments, running perhaps another 90 days.  I saw Councilman Bert Perello and Treasurer Phil Molina there several times.  CFO Jim Throop was there testifying twice and hovered outside the courtroom on Friday on the chance that he might be needed again.  He spent the better part of a day on the stand on 1/29/18. Interim Utilities Director Ng Thien testified on 1/4/17, as did a consultant and Former Utilities Director Dan Rydberg, who left the City’s employ in July, 2016.

1/5/18 Session

So far we have heard no arguments on the legality of Measure M, which appears to have statutory and case law supporting it. The City claims it is illegal because it would prevent them from satisfactorily running the wastewater facility due to a lack of funds to support operations, needed capital projects and debt service. We were told by Starr’s team that is because items of law will be handled in the briefs (see schedule near the end of this article) and facts are handled in the testimony to date.

Aaron Starr had strenuously objected to terms of a new bond letter of credit at a December Council meeting. It stated that any decrease in rates would create a bond default. As far as he and the public knew, that would go into effect on 1/1/18 and $16MM in refunding and $3MM penalties could potentially be invoked in a default under its terms.  When the letter of credit came up in the  Friday court session, plaintiff’s Counsel Whately quickly interjected that City external advisor Curls had negotiated improved terms, to the evident surprise of Aaron Starr, Alicia Percell and Starr’s Counsel Chad Morgan. Starr later told me that the memo confirming that was dated 12-18-17, yet it only came to light at this 1-5-18 session.

Judge Rocky Baio stated that he was being reassigned to criminal cases, but will stay on to wrap this one up. However, he will no longer be handling the related challenges suit by Starr to Oxnard’s levying of “infrastructure fees” on the City’s utilities to bolster the General Fund, allegedly for expenses impacting the General Fund but caused by Utility activities. This will result in some loss of continuity, as Judge Baio had gained much relevant knowledge on this case.

 

Upcoming case schedule

Judge and both counsels agreed to this case schedule going forward:

2-2-18- Closing briefs

2-14-18- Rebuttal/replies

2/23-18- Simultaneous replies/oral arguments

The judge could then have up to 90 days to make a ruling or it might even be necessary to have another round of briefs

 

Official comments

We wrote and called CFO Jim Throop for clarification on helping to reconcile the differences between the City and Starr’s numbers. He ignored our requests, not just “no commented.” Mayor Flynn still insists the City’s numbers are correct and seems to feel  that Starr is doing the City a great disservice with the Measure M rate rollback and fighting lawsuits. He told me that Starr wants a zero increase, yet Starr said he was negotiating in the 20% range. However, an elected official, Treasurer Phil Molina, released this:

​If you look at the WasteWater (WW) ​Enterprise on page 33 of the City’s Comprehensive Annual Financial Report (CAFR)​, you will see the ​Profit & Loss Statement (​P&L​)​. Note that with only 6 months of the rate increases included in these financial reports,​ the WW enterprise generated $11 million operating​ profits and net profits of $6,679,723​ after paying the ​interest portion of the debt service. The Judge ​handling the Measurer M case ​will understand that the rates established by the city are in fact too high if in only 6 months the increases already reverse the negative position of that enterprise​, but only​ if the CAFR is admitted in evidence.​
 

I don’t know if the CAFR was intentionally held up until after ‘all evidence’ was presented in court, but if so, someone in​ the city’s finance department should have known for some time these final numbers. Such information isn’t developed in an instant.

​Unfortunately by not providing Council with early information that could have given them the chance to reduce the rate increases, they put elected officials squarely in a recall position needlessly, unless I’m giving them too much credit.
 
But why….I don’t understand the why.
 
Phillip Molina

 

Commentary by Larry Stein, acountant, self-appointed Oxnard ‘Watchdog” and close runner-up in 1016 Treasurer election:

I only attended the trial on two days, the day the city made it’s opening statement and the final day. The city made the point of the case very clearly when it made its opening statement, “Are the rates set by Measure M sufficient to support the operations and debt service of the Waste Water Fund?”

 
I do not know what facts came out and what facts were prevented from coming out. The city did not allow the CAFR (Comprehensive Annual Financial Report), the audited analysis of the city financial condition, to be entered into the court record.
 
I do not know if the rates set by Measure M are sufficient to cover the cash flow of the Waste Water Fund. It did come out that millions of dollars were swept into the General Fund from all the Enterprise Funds and Mr. Starr was successful in stopping the practice.
 
The court was not interested in the relationship between the Water Fund and the Waste Water Fund. The city downplayed the role. A portion of the output of the Waste Water Fund is necessary for the GREAT Program to operate, The GREAT Program is a subset of the Water Fund. I believe that the attorney for Mr. Starr was able yo make the point that some of the Capital Improvement Projects (CIP) of the Waste Water Fund was solely for the benefit of the GREAT Program.
 
At this point in time the GREAT Program has the capacity to only receive 1/3 of the Waste Water facilities (7,000 acre feet). The demand for GREAT Water (non potable water) is less than 7,000 annual acre feet.  If the storage wells are built and the GREAT Program was allowed to expand, the the full output of the waste water facility could be used by the GREAT Program.
 
What was not discussed was that the Water Fund was not paying the Waste Water Fund for the output of the Waste Water Facilities. Analysis was not received by the court showing what the financial condition of the Waste Water Fund would be if the Measure M rates were put into affect, the cash that was swept by the General Fund was restored back to the Waste Water Fund and the Waste Water Fund was paid for the output that goes to the GREAT Program.
 
Mr. Throop joined the city in the Fall of 2016. He was the 4th CFO for the city in 3 years. 2016 had at least 3 CFOs in 2016 prior to Mr. Throop’s arrival.
 
Another issue that the court will have to ponder is preponderance of evidence Mr. Starr or the city has to provide to prove their case. Since the city is suing to halt the affect of Measure M, I imagine the city has to provide the preponderance of evidence that Measure M rates are insufficient. The issue of city’s credibility  was brought into question. After deliberation, the court felt that had both sides brought in witnesses to support issue of the city’s credibility, the issue of credibility would still remain unresolved, so the city’s credibility issue will not be discussed.
 
Respectfully submitted,
 
Lawrence Paul Stein
———————–
Meanwhile, the recall election qualified. 14 candidates qualified last Friday. A debate is scheduled for 3-15-18 ….

Oxnard Special Recall Election Candidate Debate- 3-15-18

Oxnard Special Recall Election Candidate Debate- 3-15-18Event Announcement BOXING THEME DEBATE- RECEPTION- CANDIDATE BOOTHS- ELECTION INTEGRITY- LOCAL DIGNITARIES- VIDEO ARCADE-FOOD-DRINK- 5:00- 8:30 pm March 15, 2018 An unprecedented stand-alone Oxnard Council recall election will be held on 5-1-18. We are “cueing” you in that the ad-hoc “Oxnard Revelations Association” is sponsoring and running an all-comers candidates’ debate on March 15, 2018, 5 pm at The Corner Pocket […]

 

We understand that another debate is to be held on 3-8-18, sponsored by the Chamber of Commerce. Details will follow when received.

 
Some previous articles:

Oxnard Measure M trial nears conclusion

Oxnard Measure M trial nears conclusion  By William Westmiller & Deborah Baber-Savalla Aaron Starr and Oxnard City may complete their arguments tomorrow. After nearly two years of legal proceedings, the “Trial of Measure M” (City of Oxnard vs. Aaron Starr) could be concluded tomorrow, according to defense attorney Chad Morgan. The dispute over wastewater treatment rates will be in the […]

Busy day in court for City of Oxnard vs. Aaron Starr Measure M wastewater case

Busy day in court for City of Oxnard vs. Aaron Starr Measure M wastewater caseBy George Miller   Starr and City fight it out on the numbers, alleged harm to the city and Measure M financial justification On Friday, December 29, 2017, the City of Oxnard did battle vs local manufacturing financial officer, activist and Council recall initiator Aaron Starr. in Ventura County Superior Court, with Judge Rocky Baio presiding. […]

Standard & Poors downgrades Oxnard (again) | Citizens Journal …

citizensjournal.us/standard-poors-downgrades-oxnard/

Sep 29, 2017 – He also handed out this written statement summarizing his points highlighted from the report, which were NOT Measure M or recall-oriented: 1. …. the Aaron Starr Lawsuits Against Oxnard forMeasure M (35% wastewater rate increase rescission) and utility Infrastructure Use Fees If Starr wins ~ 1) The rating …

Aaron Starr Serves Oxnard with a Prop. 218 lawsuit … – Citizens Journal

citizensjournal.us/aaron-starr-serves-oxnard-with-a-prop-218-lawsuit-cupcakes/

Apr 5, 2017 – Editor’s note: At your service! Aaron Starr has Oxnard served with lawsuit and residents served with cupcakes simultaneously. He says that the City has violated statutes and multiple legal precedents making it settled law that a city may not charge utility “infrastructure fees.” Aaron Starr of Moving Oxnard …

Aaron Starr wins another round against Oxnard utility rate increase …

citizensjournal.us/aaron-starr-wins-another-round-against-oxnard-utility-increase/

Apr 15, 2016 – There are actually two cases: Oxnard vs Starr, to stop the initiative (Case 479-696) andStarr v Oxnard to compel the City to provide the title and summary to get the petition underway. An outside attorney for the City, Holly Whatley*, said there are legal precedents that a ballot initiative cannot deprive a city of …

Oxnard staff proposes 6 Wastewater rate increase … – Citizens Journal

citizensjournal.us/oxnard-staff-proposes-6-wastewater-rate-increase-scenarios/

Feb 14, 2017 – Assistant City Manager Ruth Osuna released 6 proposed wastewater increase scenarios to the Utility Ratepayers Advisory Panel (URAP) on Monday 2-13-17. The City (City management, Public Works and Finance) has been working on these since last fall, but the rate-setting process went into high gear …

Oxnard Council to consider wastewater rate … – Citizens Journal

citizensjournal.us/oxanrd-council-to-consider-wastewater-rate-increase-at-3-7-17-mee…

Mar 3, 2017 – SUBJECT: Proposed Wastewater Rate Increase (30/30/45) RECOMMENDATION: 1. Approve the City wastewater rate structure for a five-year period (July 2017-2022); 2. Authorize staff to proceed with the Proposition 218 public notification process; and 3. Set a public hearing on the wastewater rate …

Judge granted Oxnard stay on wastewater rate … – Citizens Journal

citizensjournal.us/judge-granted-oxnard-stay-on-utility-rate-increase-while-city-worki…

Jan 9, 2017 – At a hearing on 12-16-16, Ventura County Superior Court Judge Rocky Baio opined that he was inclined to grant a stay on implementation of Measure M, initiated by local financial executive and head of “Moving Oxnard Forward” Aaron Starr. It passed with a 72% vote and mandated rolling back the 35% …

Voters approve repealing Oxnard’s wastewater rate hike – KEYT

www.keyt.com/news/voters-approve-repealing-oxnards-wastewater…/165694105

Nov 16, 2016 – In a previous statement the city said it is suing Starr because the repeal would put “wastewater rates too low, and forces the city to violate its contractual obligations.” The City of Oxnard‘s city manager Greg Nyhoff released the following statement on the passing of Measure M Wednesday afternoon:.

Court ruling on Measure M is small victory for Oxnard

www.vcstar.com/story/news/local/…/oxnard/2016/…measure-m…oxnard/95355974/

Dec 13, 2016 – A judge granted the city a temporary stay on Measure M, meaning wastewater rates will increase in January. … Court ruling on Measure M is small victory for Oxnard. Wendy Leung … Baio on Tuesday said his role is to weigh the harm that could be caused to the city or to Starr and rate payers. He said in …

Court ruling on Measure M is small victory for … – Ventura County Star

www.vcstar.com/story/news/local/communities/oxnard/…measure-m…/95355974/

 

Dec 13, 2016 – The trial will determine the legality of Measure M. City Manager Greg Nyhoff said the judge’s decision was what he had hoped. “I understand where the rate payers are coming from but our facilities are in a dire situation,” Nyhoff said. “I appreciate the judge’s ruling.” Starr said Baio made a judgment call and …

Wastewater rate struggle: will it be rendered … – Citizens Journal

citizensjournal.us/wastewater-rate-struggle-will-it-be-rendered-obsolete-by-new-techn…

Apr 13, 2016 – So why put $675,000,000 today in a totally centralized Oxnard wastewater treatment facility that might be outlawed well before 2040? The complete article is attached. Also notice the university engineering professors are saying cracked pipes, pipe replacement, facilities deterioration, and dumping …

Oxnard moves to block voter initiative to roll back wastewater rate …

citizensjournal.us/oxnard-moves-to-block-voter-initiative-to-roll-back-wastewater-rate…

Mar 24, 2016 – City’s press release explaining their attempt to keep initiative off ballot and including City’s attempt (3-23-16 request for declaratory relief) to tie up Aaron Starr of Moving Oxnard Forward ballot initiative to rescind wastewater rate increase of 69% over several years. – Aaron Starr response to this City ploy.

Oxnard sues Aaron Starr, the man who wants to repeal sewer rate …

archive.vcstar.com/…/oxnard/oxnard-sues-aaron-starr-the-man-who-wants-to-repeal-s…

Mar 23, 2016 – Oxnard has filed a lawsuit against Aaron Starr, the man who seeks to repeal the city’s sewer rate hike at the ballot box. … In the city’s news release announcing the lawsuit, Interim CityAttorney Stephen Fischer called Starr’s proposed initiative “illegal” because it would set wastewater rates too low and would …

Wastewater Rate Rollback Initiative Title and … – Citizens Journal

citizensjournal.us/oxnard-caves…starr…rate…/wastewater-rate-rollback-initiative-title-a…

Oxnard caves on Starr utility rate initiative ballot statement. Wastewater Rate Rollback Initiative Title and Summary. | Back to Post | Next Image » · Donate to support Real News in Ventura County · 

Resident anger over Oxnard maneuver to shut down … – Citizens Journal

citizensjournal.us/resident-anger-over-oxnard-maneuver-to-shut-down-ballot-initiativ…

Mar 30, 2016 – Resident anger over Oxnard maneuver to shut down ballot initiative for wastewater ratehike rescinding. Banksters … Starr claims much of the planned work is unnecessary, premature orinefficiently planned/conducted and the increases are excessive at 88% … I’m not aware of any attempt to serve me yet.

Oxnard Utility Ratepayer Advisory Panel meets on … – Citizens Journal

citizensjournal.us/oxnard-utility-ratepayer-advisory-panel-task-force-meets-clashes-wi…

Jan 29, 2017 – Oxnard Utility Ratepayer Advisory Panel meets on Wastewater, clashes with staff … It culminated in the passage of the Measure M rate rollback, and a pitched legal battle between the City and Aaron Starr of Moving Oxnard Forward. All this occurred … Much has still not been provided or is even complete.

Oxnard Signature Drive to Repeal City’s Wastewater … – Citizens Journal

citizensjournal.us/oxnard-signature-drive-to-repeal-citys-wastewater-rate-increase-off-…

Apr 30, 2016 – order arial,sans-serif; font-size: 12pt;”>Scores of Oxnard city residents began lining up at 8 am to add their signatures and help circulate petitions to place an initiative on the November ballot that, if passed, would repeal the recent wastewater rate increase. After the Oxnard City Council and City Attorney’s …

Oxnard wastewater rate battle: what are the REAL … – Citizens Journal

citizensjournal.us/oxnard-wastewater-rate-battle-what-are-the-real-costs-what-should-t…

Apr 12, 2016 – By George Miller. Background. Oxnard recently approved a 88% increase in wastewater rates over a four year period. There has been much controversy over this. Some believe that the increase is unjustified and that the City’s accounting system is so bad that they don’t even know what it really costs.

 

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


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