Responding to the city’s contention San Benito Foods owes
Hollister a debt of $1.4 million for use of wastewater facilities
during the past three canning seasons, the company has filed an
appeal claiming it owes a scant portion of the alleged amount.
The appeal refutes a
”
final invoice
”
from City Manager Dale Shaddox dated Aug. 21 that catalogued
previous billing statements to determine the debt.
”
The city’s position has not changed,
”
according to the introduction of a letter that accompanied the
invoice.
Responding to the city’s contention San Benito Foods owes Hollister a debt of $1.4 million for use of wastewater facilities during the past three canning seasons, the company has filed an appeal claiming it owes a scant portion of the alleged amount.
The appeal refutes a “final invoice” from City Manager Dale Shaddox dated Aug. 21 that catalogued previous billing statements to determine the debt. “The city’s position has not changed,” according to the introduction of a letter that accompanied the invoice.
The city is claiming San Benito Foods – which cans more than 100 tomato-related products during a 10-week summer peak season – paid only portions of bills since 2000.
The issue came to light in early July when Shaddox, then new to the job and while examining the city budget, discovered a nearly $1.6 million debt in a sewer enterprise fund. Since July, the city carefully scrutinized past invoices and subsequently narrowed the debt from nearly $1.6 million to $1.4 million.
“They (San Benito Foods) paid in the past what they thought had been agreed upon between the city and San Benito Foods,” said John O’Brien, the local attorney representing the company. “What the city is doing is going back to prior years and alleging additional funds are due.”
Historically, according to the appeal from San Benito Foods, the company has been billed about $200,000 a year to use the industrial wastewater plant. In the past three years, the bills have reached more than $500,000.
For the plant’s use in 2000, for instance, Hollister billed the company $919,000, according to the city invoice. San Benito Foods paid only $365,000.
“Of the $1.4 million, they may owe some of it, but a very small portion,” O’Brien said.
The company alleges much of those extra costs originated from capital improvements to accommodate the city’s treatment of its domestic wastewater at the industrial plant.
The industrial plant was built in 1972 to service the two local canneries, while the city started using it in 2000. The other cannery, Tri-Valley Growers, closed shop 12 years ago.
City officials claim Hollister paid its fair proportion of costs for operation, maintenance and capital items at the industrial plant.
Within 30 days of the appeal’s Sept. 8 filing date, a hearing before the City Council must be scheduled, according to code regulations. Hollister officials have not contacted San Benito Foods authorities about the matter since receiving the appeal, O’Brien said.
Cass said a hearing will be scheduled soon. From there, depending on the Council’s decision, the potential exists for the matter to end up in court.
“If that’s the way we have to go, then we have to go that way,” Councilman Robert Scattini said. “Attorneys don’t work cheap and it would cost the city money in litigation. I’d prefer to settle out of court.”
In the appeal, San Benito Foods expressed several frustrations with the city’s handing of the issue. The company was often billed for services that occurred during months when the cannery didn’t operate the plant, such as $50,000 for the levy breach causing a sewer spill in May 2002, according to the appeal.
Since the initial disclosure of the debt by Shaddox, city officials have periodically met with San Benito Foods officials. Both sides, however, stand firm on their arguments.
“It’s too bad it got to this point,” Councilwoman Pauline Valdivia said. “Somebody’s not going to be happy. Hopefully, that’s not going to be us.”
