Metropolitan Water District Director's Letter to Fullerton City Council

You are probably all aware of the series of events that have taken place during the first 2 weeks of April. The month started off with the snowpack report for April 1st. The snowpack in the state of CA is at the lowest in recorded history. Governor Brown attended a snow measurement station in the Sierra's. After witnessing the measurement he ordered a mandatory cutback of 25% on urban water use.

 

The MWD had been analyzing our water supply and the possibilities of an allocation for the last few months. It was agreed upon and agendized for discussion at our April committee and board meetings. Governor Brown beat us to the punch with his April 1 announcement.

 

The MWD was very successful at moving water to the San Luis Reservoir during the large December storms. The discussions in February and March were centered around a Level 2 allocation, but as March went by it became clear that the snowpack was going to be very low. The snowpack measurement combined with Governor Brown's mandatory reduction caused the MWD to rethink it's allocation level. The allocation debate at the water planning and stewardship committee meeting on April 13th had varying opinions. The discussion was centered around a Level 3 or Level 4 allocation. A Level 3 being a 15% cut, and a Level 4 being a 20% cut in water use by MWD customers. The arguments for either level of allocation had merit. In the end, it was agreed to go with a Level 3 allocation with a monthly review that potentially could bring a revote to change the allocation.  

 

The MWD's water supply situation is not completely finished for this year. We may face some shortfalls in our water transfer program. The MWD contracted for a 100,000 acre feet of water from the rice farms north of the delta. We were informed on Friday April 10th, that the transfers were being halted by the state. That transfer is uncertain. Our fallowing program with the Palo Verde irrigation district will be utilized fully this year, but our stored water in Lake Mead has a slight chance of not being released if Lake Mead's level falls into emergency status. This condition seems unlikely, but nonetheless there is a small chance. These scenarios could trigger a deeper allocation.

 

I discussed the Level 3 allocation with our water manager Dave Schickling. His opinion is that we can meet a Level 3 allocation without penalty from the MWD. The penalty is over $1,400 per acre foot. It goes without saying that we should make every effort to conserve water over the next 9 months. Governor Brown's order for a 25% reduction will be tougher to attain, but if we can reach that level, or near it, the MWD's Level 3 allocation will not be an issue.

 

I have attached General Manager Kightlinger's letter to the state water resource control board. This letter outlines the MWD's position and provides a proposed framework for the mandatory cutbacks. I have also attached a letter to Governor Brown from Chairman Record. These letters were crafted through discussions in various committees, and they are enlightening about past water conditions, conservation, and our current situation. They are well worth reading.

 

On Tuesday April 14th, the board of directors voted to support a Level 3 allocation. I voted in support of the Level 3 allocation. I have also attached the summary report for April. There are 2 other items worth noting. We appropriated 41 million dollars to rehabilitate the filters at the Weymouth treatment plant. These filters are almost 80 years old. The new filters are an enhanced design that is compatible with the new ozone equipment being installed at the Weymouth plant. The other item of interest took place in communication and legislation committee. This action authorized the general manager to express support for SB 385 (Hueso, D-San Diego) primary drinking water standards: Hexavalent Chromium. This bill sets attainable standards for the presence of Hexavalent in our water supply.

 

As always if you have any questions, give me a call.

[redacted]

Pete Beard

WATER RATE INCREASE - Just say NO!

This week I received a notice from the City of Fullerton that they would like to raise water rates...AGAIN!  

The proposed rates are specifically for pass-through costs from Metropolitan Water District, Orange County Water District, Southern California Edison, and the City of Anaheim (we purchase electricity from Anaheim for Fullerton's wells in Anaheim).  

We know MWD (the agency that gave each employee a $6,000 bonus) recently raised rates to help cover salaries and pensions as well as some infrastructure needs.  We are required to purchase about 30% of all water from MWD.  The OCWD charges us a pumping tax that is significantly less than MWD but those rates keep creeping up. 

And those pesky electric bills keep going up as well.  

Let's recap a few important changes to your rates:

In 2012, a post-recall Council directed staff to refund about $7.4 million: http://www.ocregister.com/articles/city-374846-water-bills.html 

In 2013, a new council majority (Chaffee, Flory, & Fitgerald) voted to redirect staff to only refund about $3.3 million and concocted a new scheme to keep the rest and continue their slightly smaller skimming operation: http://www.ocregister.com/articles/customers-522970-water-city.html  & http://www.orangejuiceblog.com/2013/03/fullerton-water-heist/

Now, the City will charge you more and as a direct result skim more, and claim it in the name of pass-through costs.

Fill out your protest form that was attached on your bill.  If you didn't get the notice for any reason, fill out this form and send it in immediately.  Share with all of your neighbors, employers, friends, and family in Fullerton!

(Click image to view/print)

MWD Holds On To Surplus Revenue

A message from MWD Director Thomas S. Babcock for the City of Fullerton:

The discussion today with a 3 hour Board of Directors board meeting (usually it has not gone over 1/2 hour). The Board majority approved the distribution of the $75M excess surplus after restoring the reserves to be distributed equally into 3 areas; repair and maintenance (PAYGO); OPEB ($575M underfunded retiree health benefits) and a water transfer fund to allow a restricted fund to purchase water as needed should MET need to purchase water to restore reserves as necessary.An alternative option to this distribution was to refund to the agencies $28M allocated on water purchases to reduce the budgeted 5% increase for 2014 to 3%. With the selection of "Option 1", this option was not considered.  However, a separate motion was made which I seconded to refund the 28% while agreeing to fund the 3 areas in Option 1.  While there were votes for this motion, it failed 75% to 25% based on the agencies assessed value weighted distribution voting. Had this passed, Fullerton would have received a refund of 2014 water purchases for approximately $150,000.It is generally believed that with the current drought condition, MET will sell more water than budgeted for in the 2014 budget and again have a surplus of funds this time next year when the 2015/2016 two year budget is considered.  With the financial reserves at their maximums, I am reasonably sure we will have this agency refund discussion again next year.Another item that was approved was a "freeze" in the ad valorem property tax rate for one year at the .0035% in an effort to stabilize the fixed portion of agency revenues. This is allowed under the Administrative code of the Metropolitan Act.  The current rate represents  a tax of approximately $10.50 for a $300,000 property. The tax would have dropped approximately $0.60 for the same $300,000 had this action not been taken and will result in a $4M increase in Metropolitan's fixed income sources.We had quite a few speakers addressing these 2 items for and against during today's meeting.  There was also a rather lively discussion among Directors.I felt these items were important enough to provide a summary in addition to my report which I will provide at the end of the month. Thomas S. BabcockDirector to the Metropolitan Water Districtfor the City of Fullerton

Results from Study of 10% Water Tax Released

The City of Fullerton has released the findings of a study that looked at transfers of funds from the Water Fund to the General Fund.  In simple terms, this is the City's justification for skimming water revenue and using it for non-water related activities.

The study focused on the last three (3) years because legal counsel identified a three-year window of liability.

Here is the City's internal memo (click image to read):

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The memo notes that over the last three years water ratepayers have overpaid $2.5-million. 

If you can accept the premise* of the report then the next logical question is what to do with the over payment.  This question will be the focus of the Water Rate Ad Hoc Committee over then next several weeks.

*The bulk of the $5-million that the City would like to retain is being justified as rent for the water system's use of City-owned properties and is payable to the City's General Fund.

This latest study of the franchise fee will be the topic of conversation at Monday's Water Rate Ad Hoc Committee meeting at the Main Branch Library at 6PM.  

Why does MWD continue to raise rates?

Drought-like conditions? Out of control employee costs?  Corruption?

The answer could be YES to all.

Your Fullerton City Council is about to approve passing the bill for these along to you, Fullerton water consumers.

Lending to the tails of MWD corruption, the Surf City Voice is offers further revelations into MWD's chairman, Jack Foley whose continued lack of ownership over his failure to disclose his income as well as his wife's income for consulting with water districts and related groups becomes public. 

It makes ratepayers like me very suspicious of "pass-through" rate hikes that are unsubstantiated by the City's own MWD and OCWD representatives.

With a recall election looming, I wonder what it will take to wake up Fullerton voters?

MWD Ethics Office A Complete Failure

Last year I wrote about Metropolitan Water District's $571,400 Ethics Office. 

We are now learning just how big of a colossal failure the Ethics Office is. 

The Surf City Voice is reporting that MWD Chairman Col. John V. Foley (ret.) didn't think he needed to disclose his wife's income from her consulting business Statement of Economic Interests or “700” form.  If she was consulting on something unrelated to water, maybe that wouldn't matter.  But Mrs. Foley was consulting directly and indirectly with MWD and member agencies.  That's a big conflict of interest.

Surf City Voice is reporting about $280,000 in unreported income.

If the number one man in charge of MWD doesn't recognize the need to report his wife's income, its time to find a new chairman and scrap the Ethics Office.   For Pete's sake, even Linda Ackerman, another MWD director, reports her husband's income.  Hubby Dick Ackerman is an attorney for Nossaman LLP which consults to MWD. 

The Surf City Voice wrote quite an amazing expose on the incestuous relationships of the water agencies and their many directors. 

In short, Orange County's water is dirty.  Very dirty.  And another $571,400 down the toilet. 

How much more has MWD tossed away for feel-good programs that line the pockets of friends and family?  How many more back-room deals have taken place?

OC Watchdog Bites Down On Fullerton's Illegal Water Tax

OC Register's Teri Sforza wrote this for the OC Watchdog today...

Way back in 1968, when there were still lots of orange trees in Orange County, the city of Fullerton tacked a 2 percent charge onto folks’ water bills to cover the cost of providing that water.

In 1970, the city hiked that charge to 10 percent – and there it has remained for 41 years.
This charge is “in lieu of franchise fees” — what a private company would pay the city for the exclusive privilege of providing water — and in lieu of property taxes, which many special districts collect to help provide water service.

That 10 percent fee generated about $2.5 million for Fullerton last year — and more than $27 million since 1997, according to city figures.

TROUBLE?
“We believe the fee and revenue transfers are illegal,” says a letter from the Howard Jarvis Taxpayers Association, which arrived over the holidays in City Manager Joe Felz’s mailbox.
“If a private company provided water service to the residents of Fullerton, the City could charge the private company a negotiated franchise fee for occupying public rights of way with its pipelines,” say the Howard Jarvis folks. “That is not the case in Fullerton, however, as the City operates its own municipal water utility.  The rates the City may charge are governed by the California Constitution, which limits rates to just the amount required to provide service, and prohibits transferring rate revenue for use elsewhere.

Read the rest of the story here...

Tonight is the Water Rate Study Session at the Fullerton Public Library's Main Branch at 4:30 PM.  Arrive early and expect standing-room only.

Fullerton's Water Rep to Step Down



Jim Blake



Amid Fullerton’s water rate debacle the City’s representative on the Metropolitan Water District of Southern California announced Tuesday that he is stepping down.  After representing the City of Fullerton for 24 years on the MWD Board of Directors, Jim Blake says he is done.

It is rumored that Fullerton’s retired city manager Chris Meyer is looking to be appointed as Blake’s replacement but that will require a majority vote by the Fullerton City Council.   Since City Council Members Bankhead and Jones appointed Meyer as City Manager in 2002, there is little doubt that they wouldn't give him the MWD nod as well.



However, with Fullerton’s water rates under scrutiny and an illegal tax being batted about City Hall for justification, you have to wonder how much of the water mess can be attributed to Meyer- not to mention the rest of the City’s countless woes.

Chris Meyer

An appointment of Meyer to the MWD Board might bring further outcry to City Hall, something the new Mayor might wish to avoid. Since August the Council members have been cussed at, cursed at, sworn up and down, and yelled at.  They are now being held accountable for their general lack of leadership by a campaign to recall three members, Mayor Pro Tem Pat McKinley, and members Don Bankhead and F. Dick Jones. 

Many believe that the appointment should be filled by a current council member so that they can be held responsible by Fullerton voters for their actions on the Board.  Currently, Blake is answerable only to the Fullerton City Council. 

If the appointment is to be held by a non-council member, then the process should be open to ALL candidates equally like any other council appointment to a commission or committee.  

Whoever is appointed will be tasked with a massive budgetary shortfall that rivals Sacramento’s.  The appointee will be asked for double-digit rate hikes and even more spending.  They need to know the water industry and even more about public policy and long-term investment solutions.  They need to know Fullerton and not just through the myopic eyes of service clubs.

Fullerton deserves an accountable and credible representative on the Metropolitan Water District of Southern California.