SJB mayor updates water status
by Priscilla Hill, Mayor of San Juan Bautista
The majority of the previously elected and all of the currently
elected city officials of the city of San Juan Bautista have had a
policy of doing the city’s business through appropriately noticed
public meetings in the city of San Juan Bautista. However, some
individuals, particularly two who recently lost City Council
elections, have chosen to play fast and loose with facts and
innuendo in the press. It is time for the city to set straight
several facts that have been wildly misstated and
misrepresented.
SJB mayor updates water status
by Priscilla Hill, Mayor of San Juan Bautista
The majority of the previously elected and all of the currently elected city officials of the city of San Juan Bautista have had a policy of doing the city’s business through appropriately noticed public meetings in the city of San Juan Bautista. However, some individuals, particularly two who recently lost City Council elections, have chosen to play fast and loose with facts and innuendo in the press. It is time for the city to set straight several facts that have been wildly misstated and misrepresented.
1.) The city has been awarded 3 EDA (Economic Development Agency) grants for water upgrades. Two of these grants have been completed successfully, the most recent in 2002. The EDA’s document retention laws for the two completed grants are three years. Since the latest one was completed in 2002, the documents passed the required retention date in 2005.
2.) The Board of Directors of the San Benito County Water District (SBCWD) voted 5-0 in June of 2006 to remove their agency from the current EDA grant. At that time the SBCWD Board of Directors allocated a $2 million investment, which does not require repayment and all requirements for redundant third party involvement were eliminated. This represents significant savings to the San Juan Bautista ratepayers.
3.) The city sends out an average of 720 bills each month. Some are for water, some for sewer, and most for both water and sewer. The City provides water and/or sewer services to homes and businesses both inside and outside of the city limits as allowed within the city’s water/sewer service district.
4.) The water and sewer services are separate businesses of the city of San Juan Bautista. Therefore, the city is a corporation with different business units. With the rate increases implemented in 2005, both of these businesses are fiscally sound. With the rate increases recently approved, they both have sufficient capability to repay the expected loans for the project. There is rate case documentation available on the city’s website www.san-juan-bautista.ca.us under “Public Works.” Additional documentation not available in electronic format is available at City Hall.
5.) The city has Notices of Violation (NOV) from both DHS (State of California Department of Health Services) and the RWQCB (State of California Regional Water Quality Control Board). The city was also under a cease and desist order (CDO) until recently when the order expired. The RWQCB is still operating as if that CDO was still in place as it only takes a vote of the RWQCB to issue a new CDO. The RWQCB continues to require regular reporting from the City as to progress on fixing the TDS (Total Dissolved Solids) and salt issues with the water. DHS also requires continued updates on efforts to replace the current open air water reservoir. Fines will result if the city does not show rapid and continued progress towards fixing the situations which led to these notices and orders. A new CDO will be formally issued if the RWQCB is not satisfied with construction progress. Documentation available electronically may be reviewed on the city’s website under “Public Works”.
6.) The U.S. Commerce Department Office of the Inspector General (OIG) recently performed a pre-award audit at the city. The reason for the audit, as stated by the OIG, was a lack of activity by the EDA. The reason for the audit had nothing to do with anything either done or not done by the City of San Juan Bautista. The city of San Juan Bautista has regularly filed documents with the EDA over the last two years. Due primarily to staffing shortages at the EDA, the documents filed with the EDA were not being acted upon in a timely manner by EDA staff as required by the OIG. Therefore, the OIG’s routine oversight activities viewed the grant as inactive. That was the cause of the pre-award audit, per the OIG.
7.) The city of San Juan Bautista responded to the OIG’s audit and provided a complete copy of the response to Main Street Media (owner of the Hollister Free Lance and The Pinnacle) as well as made available for the public to view at the receptionist desk in City Hall. The response contained yet another copy of all the documents requested and previously provided to the OIG.
8.) The OIG wanted documents in electronic format that the city does not have in electronic format. Those documents were provided to the OIG in paper format. The OIG did not want to accept this form of the requested documentation.
9.) There was one item that could not be provided in a document. It was an RFP from 1997, which was destroyed in 2005 per EDA record retention rules (see item 1 above). The document concerned procurement of professional services for the previous EDA grant awards. Those services were not to be included in the new grant and, therefore, the records were not retained. The OIG staff member was working under the misunderstanding that the EDA could be made to pay for services not in the grant budget, which is part of a contract. This is not true; the EDA will only pay for the itemized elements approved with the grant application. The professional services in question are not part of the EDA grant’s scope of work. Since much of the requested backup documentation is not available electronically, the full response cannot be posted on the Website and must be viewed at City Hall.
10.) The OIG’s experience was with federal and state audits. The individual who came to the city to perform the audit did not understand municipal finance and, in particular, California municipal finance. For example, the individual did not understand “private placement financing”. Numerous conversation were held with the OIG to attempt to explain this concept and how it is used by small California municipal and special district entities. In a nutshell, private placement financing allows a government or special district to send a bid to financial institutions, such as banks, for the purchase of the entire bond issuance. The costs of this type of financing are usually less than $20,000. As a comparison, the costs for a typical open market public bond issuance is in excess of $175,000. Additionally, small bond amounts, such as the $5.4 million the City will be issuing, are generally not able to be rated by rating agencies such as Moody’s. Due to these facts, the use of private placement public bond financing has become common practice in California.
11.) The city will go forward with this water and sewer project; the city has no choice as state regulators are requiring immediate action and progress. The City had to respond again during the week of May 21 to requests from the RWQCB concerning progress reports. A conversation was held with DHS earlier in May on the same topic. There are recent instances in the state where the local water/sewer agency was not meeting the requirements of the state regulators and the state took over the system(s). Where the state has taken over water and sewer system, the state makes all decisions on the projects and imposes the rate structure on the residents that the state determines is appropriate – no open forums, no rate payer votes, and no rate payer protests as provided by Proposition 218. Feedback from where this has happened reports rates have increased almost 800 percent in one area. We do not want this to happen in San Juan Bautista so the project will be done and done in the time frames that are acceptable to the regulators. There are, however, elements of the total planned project that are beyond the specific violations addressed in the previously discussed NOVs and CDO. These include such items as enlarging the undersized fire hydrants in downtown San Juan Bautista. The goal was to complete this type of work while the streets are torn up for the new water delivery system, thus saving the ratepayers the costs of tearing up the roads once again some time in the future when the costs would be higher. While these items are critical to San Juan Bautista’s public safety efforts, they are not mandated by State regulators and the city faces no fines if the “optional” work is not done. Should expected funding become unavailable, the city will adjust the project accordingly and some of the necessary, but not mandated work, will be postponed.
These are just a few of the facts that the city wants to get straight with the public. The city is acting responsibly to meet state regulations and to do so at the most reasonable costs to the San Juan Bautista ratepayers. Letters of the type recently published in The Pinnacle, written by individuals who either do not know the facts or chose to ignore the facts, are unhelpful distractions. The voters of San Juan Bautista voiced their opinions in last November’s election. The city will continue to make public records documents available on the website and to make monthly status report updates during the City Council meetings.
