County continues to slog through CSA mess
Although the county is months away from finding out the financial impact the 30 county service areas, there are indications the public works department has not handled the overall management well.
“The county is not being fiscally responsible,” said Janelle Cox, the acting public works director. “In a lot of cases, we are not even charging fees. They are using CSA reserves to pay for annual costs.”
The 30 CSAs have accounts set up with the county to provide services to each area above and beyond what other unincorporated areas of the county receive. Examples of services include road maintenance, streetlight and sewer. The service areas are supposed to be financed through supplemental property tax payments.
Stonegate resident Patricia Mauerman said that this process has only been brought to light because of a big problem.
“I think the whole thing has been put under the table because it hasn’t been a problem and now that it has become a problem, everyone is scurrying to get this fixed,” Mauerman said. “The county is so far behind. The [Proposition] 218 process is something we need to go through, we don’t have an option. The county hasn’t really been doing their job. Public works has really dropped the ball and unfortunately, we are having to pay for it. It has really hurt Stonegate’s reputation.”
Proposition 218 allowed creation of special tax districts. The process calls for monitoring and regular adjustments to ensure funds cover the cost of services. “This is a process that needs to occur on a yearly or an as-needed basis,” Cox said.
The county is unable to increase fees for services due to Proposition 218, without approval by a majority of those within each service area. The only way that the costs for the CSAs can be raised is through what the county is calling a Proposition 218 process. “The rates haven’t been reviewed over the years,” County Administrative Officer Susan Thompson said. “We probably should have done a 218 process earlier. We need to bring everyone back up to speed because every year we continue to provide services.”
Hollister resident Marty Richman, who follows local government closely, said it is past time that the county got around to straightening it out.
“It shows a need for a continuing review of long-term programs,” Richman said. “They tend to wait much too long and things get out of date.”
County auditor Joe Paul Gonzalez said that the county should know in four to six months how much loss has been accrued in regards to CSAs over the last several years.
“We are currently in the process of figuring out if there has been a loss due to CSA management,” said Gonzalez.
The county has enlisted the help of NBS, a Temecula-based government finance firm, to set up community meetings with the CSAs, assist them in reviewing finances and set the new rates for the service areas.
“10 CSAs are in the red or will be in the next year. The existing fees do not have a cost of living inflator and cannot support the cost of the extended services being provided. Furthermore, the statutes governing CSAs were completely revised effective Jan. 1, 2009, requiring the existing fees grandfathered at inadequate levels or replacement fees enacted,” said Pablo Perez, a director with NBS who is working as a consultant on the process.
Perez said that to either lower or raise the rates, an extensive amount of public input is necessary. The first step in the process is to assess the costs associated with each CSA, which will take several meetings resulting in a fee report for each CSA. Once complete, the county will hold a board meeting to preliminarily approve the reports and corresponding fees. The county will be sending informational mailers to property owners within the various CSAs and hold community outreach meetings on Feb. 9 and March 2 to receive feedback and explain the Proposition 218 approval processes, the services being provided, and the anticipated replacement fees.
CSA residents will have 45 days to protest the replacement fees in writing and at the public hearing to be held on May 5. If 50 percent plus one of the written protests are received from the residents in the service area, the replacement fees will be defeated at the public hearing. Otherwise, a ballot, as required by law, will be mailed to property owners in each CSA after the public hearing. Ballots will be counted in June and replacement fees approved if a majority of the ballots received are in favor of the replacement fees.
If replacement fees are not approved, the county will have no other option but to grandfather the existing fees at inadequate levels or be forced to consider reducing or eliminating services.
All of the CSAs will be going through the Prop. 218 process to assess the costs associated with services. Although each one will be covered by the county and NBS, the majority of the current concern is centered on Stonegate and water issues.
Stonegate Homeowners Association president Mike Randall said that they are holding meetings to assess where that CSA is at with operating costs for their water issues.
“We’re still getting to the bottom, it’s a process of getting information, of which are still doing that portion,” Randle said. “The operating costs are going to keep going up. There is still a lot of maintenance to be done. There aren’t sufficient reserve funds for maintenance and breakdowns in infrastructure.”
When asked who or what he thought was to blame for Stonegate’s water issues, Randle pointed to former public works director, Jerry Lo.
“The man was an idiot,” he said. Randle added that vital information from the San Benito Water District about water cutbacks was never given to Stonegate and thanks to his refusal to address the issue; the cost of a new pipeline project will cost homeowners in the development of nearly 100 luxury homes in the range of $850,000 to $1.4 million.
However, this project should have been addressed many years ago and Randle, who has been the president of the association for about four years, has been trying to get a Prop. 218 process started for a majority of that time.
“I can’t speak for the other CSAs and in the four years that I’ve been on the board, but we have been trying to get them to do a Prop. 218 process,” Randle said. “Most Stonegate residents are having to deal with a mistake from 20 years ago.”
The county established CSA statutes in 1958 to provide services to the housing groups of five or more in unincorporated areas in the county. Some CSAs, like Stonegate and Rancho Larios, have extensive services like utilities, water treatment and road maintenance, costing them $252 and $175 per month for 2008-09, respectively. Other CSAs, like Comstock, only pay for road and storm drainage services. Residents in that service area only pay $7 per month. These charges are assessed on the resident’s county property tax bill.
The last time CSA fees were increased was in 2005-06 due to a state proposition that required county officials to assess their fees.
Supervisor Anthony Botelho, who represents the Rancho Larios, Hollister Estates and Union Heights developments, said all three of them have been active in communicating with the county and him about the 218 process and is confident about each one approving a fee increase.
“I honestly believe that if they have a complete understanding of the services provided, I don’t see any reason why they wouldn’t approve the rates,” Botelho said. “The cost breakdown is important to understand. It’s not cheap, but everyone will go away from this understanding the cost breakdown.”
Botelho said he wanted to stress the fact that the county is not trying to run the CSAs for any sort of profit but rather so that the CSAs receive the services they need. For example, he said, “Rancho Larios is clearly in the red due to circumstances and happenings with the sewer.”
CSAs, such as Rancho Larios, are currently running in the red. Thompson said that the county had to lend them funds. “That is an anomaly,” she said.
The county “doesn’t normally provide the same level of service to the greater county residents,” said Thompson. “This process is to inform folks that live in the CSAs to remind them of the services provided. It simply lays out a set of steps to fully inform the rate payer about the costs.”
NBS is analyzing the costs associated with running the CSAs and is looking to either lower or raise rates so that these areas can avoid going into the red financially. In a couple of cases, NBS is looking at the potential for dissolving some of the CSAs in the county.
If some of the CSAs were to be dissolved, Assistant County Administrative Officer Rich Inman said, “we’d treat them like any other residence in the unincorporated parts of the county.” They would still have services but not to the extent they received in the past.
“There were 10 CSAs that are in the red or will be in the next year. The fees they had cannot support their services,” NBS’s Perez said.
When asked who he thought was at fault for the mismanagement of the CSAs, Botelho said, “I think public works, who has been in charge of managing CSAs, has felt it is a secondary type of obligation. Representing my constituents, if you’re paying extra, there is a certain level of attention that should be given.”
Cox said that management of CSAs has always been under the care of public works and that this process has taken quite some time to come out. In September 2008, former public works director Jerry Lo was fired from his position with the county and while Cox said it was due to a “culmination of a couple of different things,” the timing of his firing seems suspect.
A ballot, as required by law, will be sent to property owners in the CSAs in March. The ballots will are due back to the county on or before May 9. Prior to that, a public hearing will be held on May 5 to answer questions about raised or lowered fees and then residents will have the opportunity protest the fees.
The county is working with NBS to establish various meeting times and dates for all the necessary public meetings to discuss fees and changes. All community meetings are currently schedule to be held at the Board of Supervisors Chambers, 481 Fourth Street in Hollister. For more information on these meetings, you can contact Pablo Perez with NBS at 1-800-676-7516 or Janelle Cox with the county at 637-4170.
Community Outreach Meetings – Feb. 9 and March 2 – 7-10 p.m.
Public meeting for Stonegate – Feb. 10 – 9:30 a.m.
Intent to approve reports meeting – March 3 –Time TBD
Public hearing – May 5 – Time TBD
Ballot count – June 24
Announcement of results – July 7- Time TBD
