Lompico water system teetering on bankruptcy, Santa Cruz County grand jury report says

By SHANNA MCCORD
Posted: 06/01/2010 09:18:39 PM PDT
Updated: 06/01/2010 09:19:13 PM PDT

FELTON - The Lompico County Water District is drowning in a myriad of problems that could send the small Santa Cruz Mountains agency to bankruptcy and render its infrastructure unusable, according to a new report from the Santa Cruz County grand jury.

The district, which serves 1,500 people and was once considered among the best water agencies in the county, has fallen so far in debt that it can't cover the cost of daily operations, including employee salaries, bills from vendors and replacing dilapidated tanks and pipes, the report released Tuesday stated.

The district is unable to pay for even minor expenses such as chemicals for the system.

The report comes after the beleaguered district has gone through the wringer in recent months with the firing of its longtime general manager Michael Eggleston in March, and former secretary Marinda Frances Kelly being charged in May with stealing nearly $5,000 from the agency.

District leaders, acknowledging the troubles, have asked for the system to be taken over by the San Lorenzo Valley Water District, though details of such a deal have not been finalized.

The problems boil down to history of mismanagement, including a largely inexperienced and neglectful board, jurors said.

"It's a combination of the management and board not doing their due diligence to ask the right questions and follow the procedures," said juror Dick Perez of Santa Cruz. "Procedures were in place, they just weren't followed."

Water in Lompico is the most expensive in the county, however, the agency has operated at a deficit for the past five years, the report said. The average water bill, according to 2005 data in the report is $160 a month for a residential customer.

By the end of 2009, employee costs consumed 75 percent of the district's budget, with employee overtime "contributing significantly" to the problem.

About 60 percent of the pipes that feed residences need to be replaced and water tanks are leaking to the point that pumps from the wells are being overworked to keep up with the loss of water, jurors said.

One of the two largest leaking tanks needs a foundation and two other tanks need to be replaced or rebuilt - at an estimated cost of $2 million.

"That several boards of directors permitted this situation to exist is inexcusable," the report said. "Without strong and inquisitive boards, district management has had too much control, which has led to questionable hiring practices and accounting of district funds.

Lompico resident Chris Kilgus, a board member of six years, called the report "fair."

Kilgus, who was interviewed by the jurors, said there are several factors for the district's downward spiral.

Namely, he said, the cost of operating a small water system has grown prohibitive with salaries and benefits, state-mandated tests and expensive infrastruture needs.

"I take some of the brunt of the criticism, but I'm just an ordinary person trying to help," Kilgus, an electrical engineer, said. "I just don't know what to do when I'm working with a manager who'd feeding me erroneous information. I'd go down there every month and he'd (Eggleston) tell me everything's OK."

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