Local Oxnard accountant-activist makes utility rate/policy recommendations

By Lawrence P. Stein

WaterRatesEditor’s note: The new Oxnard Utilities Rates Advisory Panel, (URAP) has created quite a bit of healthy discussion. Even though he previously predicted a trebling of utility rates, he believes that consumers are being outrageously overcharged for water to support what he feels is an overly expensive,inefficient GREAT water recycling program and subsidize large agricultural.industrial water customers. Mr.Stein makes the following recommendations ….

 

A purpose of Session 2 of the URAP meeting held September 2, 2015 was to gather input regarding policy issues. I recommend the following policies.

  • Bonds be issued at a minimum bond rating of BBB+
  • Guidelines be established to determine when utilities rates be lowered (a suggestion from URAP member Mary Ann Larrieu).
  • Reserve Funds for long term capital improvements (Sinking Funds) be invested long term (2 to 5 years) at a rate, if possible, that is greater than the rate the city is paying on its bonds. Sinking funds should be saved at the rate of the depreciation schedule.
  • An emergency reserve fund be established with ½ invested for 6 month terms after a predetermined amount has been set aside in a market rate fund.
  • Reserve Funds that equate to 2 months of working capital be invested for 6 month terms.
  • The meter fee be abolished for the Water Fund.
  • The fee for the Waste Water Fund is based proportionately to water delivered and total cash outflow (including debt service and reserve set aside).
  • A two fee system of water rates be established based upon consumption; the first fee is for operational costs, the second fee is for fixed costs and debt service. In as much there are limited funds set aside for long term capital improvements, operating reserves, emergency reserves and other bond covenants, once these reserves have been stabilized, the fee could be reduced. These cash reserves would improve the bond ratings, reducing the cost to borrow funds.
  • GREAT Water should not be sold at a rate less what it costs to produce and deliver.
  • Production of the 2nd and 3rd skids of GREAT Water production should not be started until the delivery method of first two skids of converted potable water for residential use has been approved.
  • The Water Fund pay the Waste Water Fund the cost of feeder stock.
  • All recommendations from the URAP Committee and URAP members be forwarded to city council and the public prior to study sessions.
  • A joint study session on Prop 218 be conducted jointly by Mr. Saperstein, the city’s legal expert on water issues and a legal representative for the Howard Jarvis Taxpayers Association, an organizations that was recognized by the city’s consultants as an organization that offers a different perspective that those of municipalities. This study session should be conducted prior to rate hearings.

Respectfully submitted,

Lawrence Stein

 

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Larry Paul Stein

Larry Paul Stein

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Larry Stein is an accountant and  former Oxnard Mayoral candidate, who has been following City of Oxnard financial issues for over 20 years.

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2 Responses to Local Oxnard accountant-activist makes utility rate/policy recommendations

  1. Larry Stein September 11, 2015 at 11:19 am

    Cost comparisions

    I asked to see comparison of general fund revenue, water revenue, waste water revenue, and debt service for those revenue components compared against a list of California communities of comparable size to Oxnard. See attachment. That comparison was not provided.

    I asked to see what it would cost to produce 7,000, 14,000, 21,000, and 28,000 acre feet of GREAT Water. That information was not provided.

    I asked to see what it would costs to store 7,000, 14,000, 21,000 and 28,000 acre feet of GREAT Water. That information was not provided.

    I asked to see the Financial Statements for all funds for the period ending June 30th 2015. That information was not provided.

    Percentage of rate increases were provided, but dollar amounts were not provided.

    The options provided seem very limited. for example the cost of building a pipeline to farmers versus building injection wells for water storage for residential users was not provided.

    I am left with the impression that a large amount of information is being withheld from discussion.

    I would like to know how other URAP panelist are thinking, but time isn’t provided for more open discussions.

    I was told at the last URAP meeting that there is only enough feeder stock to generate 18,000+ acre feet of GREAT Water. I have estimated that production of 18,000 acre feet of GREAT Water is the production level that makes GREAT Water market competitive, it would be less expensive to produce GREAT Water rather than buying imported water. Those cost go down even more once debt service is paid off. The cost of imported water is expected to increase significantly in the next 3 to 5 years.

    A important issue was discussed at the last meeting, if nothing is done, bond convents would be violated. That issue was glossed over. It was mentioned that large percentage of the increase in revenues for water and waste water funds are earmarked solely for cash reserves to meet bond convents. The city has a long track record of spending cash from funds that are used by other funds. There is nothing to indicate that the practice has stopped. There are no controls in place to prevent that from happening again.

    There are no controls in place to prevent lavish facilities from being built instead of just functional facilities.

    There was very little discussion on the dollar amount needed for continued capital improvement or the annual capital improvement budget.
    Past practice of city council was not to approve the requested amount for capital improvement for street repairs. Staff would indicate that $7,00,000 would be needed for annual street repairs, but council would only authorize $3,000,000 In the past 5 years city council has had to borrow over $50,000,000 for street repairs; that funding is still insufficient. I am concerned that without all the information being disclosed, this committee and the city council cannot make the best decision. I have the impression that the outcome has been predetermined by staff. This is a common practice from staff, Fire Station at College Park is a recent example of that practice. Fire station 8 was to have cost $4,000,000. After staff provided selected information to city council (the $4,000,000 was never presented), council approved a $12,000,000 station.

    Respectful; submitted

    Larry Stein Have a Great Day and a wonderful week.

    Reply
  2. Debbie September 10, 2015 at 12:11 pm

    Thank You Mr. Stein for your diligence on behalf of all of Oxnard. I am always impressed with your intelligence and ability to investigate, comprehend, assess and communicate these complex issues!

    Reply

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