Blog note: this article references a grand jury report.
After a discussion that went on for several hours, the Georgetown Divide Public Utility District board voted to freeze water rates for up to a year and directed staff to look into the cost of doing a forensic audit with the goal of reducing rates.
A subject that touched on multiple topics and complaints at Tuesday’s meeting, General Manager Steve Palmer began by discussing the road the district took in raising rates and why freezing rates would be a bad idea.
One of those steps included holding nine public meetings related to conducting a new cost of service study — a process deemed necessary to ensure sufficient operating revenue as well as funds to replace the district’s aging infrastructure, 60 percent of which is at least 40 years old.
A second consideration pertained to new legal requirements that made the last cost of service study, conducted in 2008, obsolete. Palmer also noted the 2016/2017 report by the El Dorado County Grand Jury which criticized the district, saying its low rates were contributing to multiple problems including insufficient revenue to either operate efficiently or fund needed capital improvements.
A third factor Palmer discussed is the need for additional revenue to meet new mandates from the state.
GDPUD had planned to raise rates by 5 percent for treated water and 10 percent for irrigation water this year. Projecting forward, a rate freeze would reduce revenues by $210,000 in 2019 and $2.2 million over the next five years if the rate freeze is kept in place.
Assessing the long-term impact of not raising rates sufficiently, Palmer said it would cut into reserves, reduce the amount of money needed to operate and maintain the water system and comply with state mandates, increase the chance of having to consolidate with another system, raise the possibility of receivership for the district and invite further grand jury scrutiny.
Rick Gillespie, who head’s GDPUD’s finance committee, also commented on the proposed rate freeze, saying that Palmer gave the same presentation to his committee and they voted 2-1 not to freeze rates with the deciding factor being the projected decline in revenue against the rising cost of replacing the district’s aging infrastructure.
Board members also weighed in, with newly elected Director Cindy Garcia saying the community responded to the recent rate increases by voting out two board members who supported the increases. She, along with the other newly elected board member Director Mike Saunders, advocated for freezing rates and looking at what the district can do to lower its rates.
Others on the board took the opposing view with board President Dane Wadle worrying about not having enough revenue to operate with if rates are frozen. There are political consequences for kicking the can down the road, he said, noting that putting off tough decisions just puts a bigger burden on future board members.
Agreeing with Wadle was Director Dave Halpin who suggested it would be useful to have the finance committee analyze the impact on revenue if rates are reduced.
Infrastructure and lawsuits
With part of the reason for the rate increases due to the need to maintain and replace the district’s aging infrastructure, Operations Manager Darrell Creeks was asked about its condition. Noting that everything in the system is old and held together “with duct tape and bailing wire,” Creeks advised on the value of having a capital improvement plan and money to put it into effect.
Complicating the issue further is a lawsuit against GDPUD that challenges the cost of service study. Brought by the Georgetown Divide Taxpayers Association, district Counsel Barbara Brenner said a hearing date is scheduled for mid-April to argue the case. If the court rules the rates are deemed invalid, Brenner said the district would have to go back to its old rates until the issue is resolved.
Because of uncertainty surrounding the lawsuit, Halpin advised deferring action on the suggested rate freeze until April. Agreeing with Halpin was Director Dave Souza who said trying to change things in the middle of a lawsuit is a bad idea, calling it “a red flag to a grand jury.” Souza went on to say that while the rate study was honest and legal, the lawsuit would help answer a lot of questions.
However members of the audience objected, saying the court’s decision could be appealed, drawing out the issue for years.
Steve Proe, a frequent critic of the district, then weighed in asserting that the public didn’t have faith in the numbers used in the cost of service study and if rates go up too much, people will use less irrigation water which will increase the risk of Georgetown becoming another Paradise. He maintained a forensic audit would answer questions as to the reliability of the numbers used in the study.
Audience members also questioned how the assets in the community were valued since that figured into estimates of how much additional revenue was needed to replace them. Palmer said he and Creeks, who has worked at the district for 25 years, were the ones who listed and valued the district’s assets.
With Garcia maintaining that a freeze would give temporary relief to all water users, the board ultimately voted to freeze rates for up to a year. They also directed Palmer and the finance committee to determine the time and cost needed to do a forensic audit and to bring back recommendations for possible rate adjustments.
Voting for that motion were Halpin, Souza, Saunders and Garcia. Voting no was Wadle.
In other actions, Palmer announced that the CABY project was complete. The staff continue to work on a loan application to the state. The money will be used to replace GDPUD’s aging water meters. A public workshop on zone fees is scheduled for Jan. 16. Palmer also said he wants to hire a public outreach consultant to help with newsletters and other media outlets. In addition, he noted the district website has been updated, making it easier to access information.
Creeks went on to report that Stumpy Meadows is 80 percent full.
Consulting Engineer George Sanders reported on December activity at the soon-to-be completed new water treatment plant at Auburn Lake Trails. He noted that more electrical work is being done in the filter building and fire sprinklers are being installed. Workers are also installing an electrical system for the sludge drying beds. Exterior lighting has been installed on site and access roads paved.
To date the district has received $8.6 million of its $10 million loan from the state with the plant expected to be operational by March.
The board also voted to close out five assessment districts and Saunders was selected to be the district’s nominee to serve on the El Dorado County Local Agency Formation Commission.
January 11, 2019
Mountain Democrat
Dawn Hodson
No comments:
Post a Comment