Oxnard poised to approve 60% utilities increase after contentious meeting- up to 400 show up

Final vote is on Tuesday 1-16-16

By George Miller

On Tuesday 1-19-16, the Oxnard City Council approved the first reading of new policies and ordinances to increase utility rates for water, wastewater and solid waste disposal by a mind-boggling 60% or $750 annually for a typical residential customer, over the next few years. Future plans appear to be even more costly. The final vote is scheduled for next Tuesday night, 1-26-16. Council chambers were packed, almost entirely with opponents of the proposed increases. The corridor outside was also filled, as were three remote rooms. We heard crowd estimates of up to 400 people, which would make it the most heavily-attended meeting in about 14 years.

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Oxnard Council chambers were packed with opponents at 1-19-16 hearing on utility rate increases, with many more in the corridors, at the libraryts, human resources room and elsewhere. Photo: Barbara Pinedo.CitizensJournal.us

 

Aaron Starr, candidate

Aaron Starr, candidate for City Council and leader of Moving Oxnard Forward

Some people left in frustration over not gaining access to the meeting room. Others left in disgust after listening to the proceedings or not wanting to wait so long (the discussion went to almost midnight). Not only were many  shocked and angry individuals motivated to come on their own, but more came because of organized opposition by activist group Moving Oxnard Forward (MOF). Group leader Aaron Starr, who is also a candidate for City Council and Controller of Haas Automation, Oxnard’s largest industrial company, appeared to be responsible for much of the crowd. Starr said that MOF generated about 2500+ protest ballots it brought to the meeting, plus it motivated others to sent

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them directly to the city, along with those who responded on their own, for a total of 4839.

But stopping the City staff and Council-backed increase proposal is designed to be very difficult to accomplish. Under state law, that can only be done with a majority vote of ratepayers, requiring about 18-20,000 votes, or by convincing the Council that it would be a very bad idea. When one considers that city voter percentage turnout for elections is often in the 30’s and even lower for special elections, something as obscure as this is even more difficult.

The 4839 written protests and hundreds of angry residents weren’t enough to stop the Council from voting 4-1 to approve it, with only Councilman Bryan MacDonald dissenting.  But if a substantial number of people protest it and the city still moves ahead with it, there could be significant political repercussions, with elections coming up in November, or even a referendum or a recall, which has happened in the past under similar conditions.

Statement from MOF leader Aaron Starr:

“While we are disappointed with the decision of the City Council last night to significantly raise the utility rates of working people in Oxnard, we are uplifted by the public’s response.  Our efforts increased awareness of the issue, led to a doubling of the number of protest forms filed and resulted in hundreds of angry residents appearing at the City Council meeting.  We believe that the City could have better planned for the turnout.  This is a controversial issue and needed a larger venue.  We have heard reports of many people who couldn’t find parking and couldn’t get in the building.”

The city says that utilities are underfunded, that service and safety will be endangered if increases aren’t made to fund necessary work and that bond ratings will be lowered, making future borrowing more expensive. Rate increases have lagged behind cost increases for several years. City staff maintain that large rate increases are needed just to break even on revenue vs. expenses, then to attend to needed maintenance and capital improvements. The proposed increases don’t even include the major future expenses of a proposed rebuild of the wastewater plant and major build-out of the GREAT water desalination program, which would presumably jack up rates even higher in the future. 

The presentation did not include total planned expenditures, revenues or financing. It was only after residents questioned all of this that Mayor Flynn, in what looked like a pre-planned exercise, prompted Utilities Director Rydburg to reveal that for every dollar of wastewater costs, we only receive .86 in revenues, for every dollar or water costs, we receive .73 and a dollar of solid waste disposal costs is offset by $1.34 in revenue. He said it will only get worse without increases.

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Oxnard City Manager Greg Nyhoff. Photo: George Miller/CitizensJournal.us

Oxnard info on rates: http://utilityrates.oxnard.org/

Ox-Wastewater-Treatment-Plan-Dec-2015-Print

City Manager Gregg Nyhoff said that this is the largest increase by far, exceeding all he has ever had to take to residents in his entire career. But, he supported the increase, saying that the drawdown of reserves, expenses exceeding revenues, escalating costs, extensive deferred maintenance and looming bond rating cuts make all this necessary.

He said that bond ratings are as low as BBB (one step removed from higher risk, higher priced “junk” bonds, that 30% increases are needed the first year alone to replenish reserves, that we shouldn’t have to worry about the wastewater system going down.

He promised a quarterly report on Utilities Dept. status and use of funds.

OXccRydberg

Oxnard Utilities Director Daniel Rydberg was the key speaker on rate increase rationale at the 1-19-16 Council meeting. Photo: Barbara Pinedo/CitizensJournal.us

Public Reaction

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Perennial financial watchdog and candidate Larry Stein opposes Oxnard utility rate increase 1-19-16. Photo: George Miller/CitizensJournal.us

55 people signed up to speak on the increases. Nearly all were opposed and many were angry at the city for letting things get this bad, questioned whether everything in the plan had to be done, criticized the cost-effectiveness of proposed work, such as the desalination project, wastewater rebuild, solid waste capital plan and more.  Some understood and were receptive to smaller increases, improving efficiency and spreading major expenses over a longer period. Nearly all were upset about the huge increases, resident problems in paying for it and questioned how it could possibly be so large. Many complained about the small meeting room, poor conditions, poor meeting management and long waits. Many left in frustration, including registered speakers.

Retired businessman Fernando Ventura said (to City Council) “you KNEW what was happening. If you didn’t, why are you here? … Why did you let it get this far? … I had a construction company and I knew what money I had every day … My neighborhood is a dump. Who cares?  Nothing but Mexicans here … Take the bull by the horns, do the job, protect people or get ’em fired  … If you can’t do it, get your check, go bye-bye.”

Some questioned how the city could even understand the financial situation to know whether a rate increase is needed, given how bad city financial records are.

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Retired businessman Fernando Ventura attacks city for incompetence

The city has been unable to close last year’s books as of 6/30/15. They engaged auditors to help them get to the bottom of it. At a recent fiscal policy task force meeting of key city financial executives, auditors and consultants, the auditors all but threw up the hands in surrender, saying that they have not been able to reconcile cash, keep discovering more discrepancies, including about $90 million in additional liability and simply cannot locate some records. At that meeting,we heard the City Manager say it was the worst he had ever seen and that he had no idea how bad it was when he came on board. We heard today that CFO John Lillio, who joined the city a few months ago, resigned.

Steve Klinger, CFO of electronics company Scosche (130 employees) , said “this is an extreme increase … hurting our employees, making Oxnard less competitive, less business-friendly… you were elected as guardians, stewards…. get your fiscal affairs in order… not simply increase prices for wish lists…. don’t make large commitments without financing, cut expenses… make cuts… reduce expenses, consolidate, outsource, sharpen your pencils.”

Larry Eldridge: His parents owned mobile home parks nationwide, did own water treatment, wastewater processing. Never borrowed money (it was above our means).  Oxnard not well-managed. Bring bills down. He and others on fixed income can’t afford.

David Mormon: Read CAFR, thinks city has millions in excess funds.

Abrizo Ramirez: Devastated by higher rates, lots of people won’t eat.

David Littell: Water rate increase necessary. Don’t want to be like Flint, MI withy bad water or LA with continual water main breaks.

Multiple LasPosa (Camarillo) residents complained about far higher rates compared to those in Oxnard
city limits.  City says they will address this.

Ade Delcar: Never saw anything like this in 40 years,. The charts were awful. Comparing apples with oranges. $4MM swap cancellation threat is “scare tactics,.” City not trustworthy. The only good thing about the study (presentation) was the picture of Einstein. (see photo- below)
OxnardEinsteinRates

Jose C.: Working hard to pay bills., No time to take English classes. Always pay on time, but need help now.

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More than one person has said that the water crisis and cut mandates are artificial and largely ineffective. Kelly Morris’ (photo) sign says that only 10% of state water consumption is “urban” (residential. She told us that cutting 20% of that accomplishes very little. Photo: George Miller/CitizensJournal.us

City Council

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Bryan MacDonald was the sole opponent of the plan on the Oxnard Council

Council members Dorina Padilla, Mayor ProTem Carmen Ramirez and Mayor Tim Flynn readily agreed to move the rate increases ahead.  Bert Perello did so while appearing to view it as a fait accompli and said that he had no choice. Councilman Bryan MaDonald had significant reservations about the magnitude of the increase and justification, so he voted no.

Some Council members blamed previous councils and departed staff, who they labeled as incompetent, even dishonest, for the situation. We didn’t hear any accept responsibility for the situation. City Manager Nyhoff, who has been here about a year and a half, has replaced nine department heads, who are in turn reorganizing and revamping policies and procedures. It was Nyhoff who also engaged consultants to assess the city organization, make recommendations and help revamp policies/procedures/training. Interim Utilities Director Daniel Rydberg, whose assignment was made permanent late last year, has helped to maintain continuity and was a key architect of the long term utilities plan.

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Oxnard Mayor Tim Flynn

Mayor Flynn

The Mayor has been a big proponent of big increases to replenish reserves, wipe out the huge backlog of deferred maintenance and revamp facilities. He blames past councils and staff for the situation that has resulted, but doesn’t explain why the effort to fix this didn’t start until about a year ago.  In a conversation on 1-20-16 with us, he expressed that the biggest problem has been communicating the need for all this. He laments the difficulty of getting such a complex message out to the public. He felt that the presentation was too long, boring and complex and would have liked to see it boiled down to a simpler 15 minute presentation for each utility. He said the public is not inclined to take enough time to adequately understand the situation and is interested mainly in the bottom line. We briefly discussed lack of confidence and trust in the city. Indeed it is difficult to explain why the utilities have been neglected for 15 years, underfunded and under-maintained.

By law, the increases can be stopped if  more than half of ratepayers/owners protest them. In practice, this is nearly impossible to accomplish. Consider how few people vote in regular elections and far fewer still in special elections. Most people we have talked to aren’t even aware that a rate increase is pending, even though the city and opposition have reached out to all ratepayers on this. But if a substantial number of people protest it and the city still moves ahead with it, there could be significant political repercussions, with elections coming up in November, or even a recall, ballot initiative or referendum, which has happened in the past under similar conditions.

Simi Valley recently increased rates after only 8% of ratepayers protested. But even after the increases, Simi’s increased rates are lower than Oxnard’s are now, per Aaron Starr of Moving Oxnard Forward. Oxnard initially failed to include Simi in its comparative analysis of other cities. Simi also imports much more of its water than Oxnard does.

There is little doubt that there is deferred maintenance, that many positions are unfilled and that expensive consultants are used to fill the gap.

Some people believe that we need rate increases, but not so much, that elements of the proposed projects are unnecessary, could be moved out later and that new debt should be minimized. They think the best action might be for the city to scale back its proposal somewhat and/or shift to less debt growth.

Rate subsidies for indigent, seniors

People of limited means are already having  a hard time paying utility bills and the rate increases are a real budget buster for some. It was pointed out that rates may only be set based on costs, not ratepayer circumstances and that rates may not be subsidized by other ratepayers.  A subsidy policy and funding will be reviewed. It is our understanding that about $13,000 in donations to subsidize the bills of indigents has been collected for the Rate Assistance Fund DONATEand there is talk of using interest on deposited funds to augment that.

 

Here is the city’s formal rate increase proposal notice, which you could have protested, up to 1-19-16: http://www.ci.oxnard.ca.us/Uploads/Proposition-218-Notice-Ballot.pdf

 

Organized Opposition: Moving Oxnard ForwardStopOxnardUtiulityRateIncrease

While there are several vocal rate increase opponents, such as perennial watchdog activist and candidate Larry Stein, retired municipal financial executive Jim Lavery and former Oxnard Finance Director Phil Molina, major organized resistance to the utility rate increase juggernaut is relatively new. It is  coming from citizen activist group Moving Oxnard Forward, chaired by City Council candidate Aaron Starr, a financial professional who is Controller of Oxnard’s largest industrial facility, Haas Automation.

The group sent out its own notice protesting the increase and urging residents to fight it. They also posted 50 4′ x 8′ signs around town and did thousands of robocalls and personal contacts to organize so many people. Their position is that the rate increases are based on some erroneous information and they object to some of what is in the plan. Examples are: questioning the need for a full waste water system rebuild, which also includes what they say are some unnecessary frills, such as solar power, when methane power is already available. They also object to what they say is highly inefficient half billion dollar investments in desalination, which the city plan forecasts only $1.3 million in annual revenues for by 2025. They also maintain that improvements should be focused on making the systems more efficient for lower rates. City staff informed us that the de facto desalination revenue is actually higher, when water pumped into the  ground and other uses are recovered. But even with this, the payback ratio looks pretty weak, although staff did not specify what they thought it was..

Former Public Works Director Ken OrtegaOrtegaKen

Former Oxnard Public Works Director Ken Ortega, who is now working with a larger organization, told us he has in hand a proposal to build a 12,500 acre-ft/yr AWPF (Advanced Water Purification) facility for a cost of about $98 million. It would supposedly produce water with all costs included at about $700/acre-ft.  One acre-ft= 43,563 cu ft= 325,851 gallons. Residents are billed per 100 cubic feet of water (750 gallons) consumed. We have heard of other proposals at $900-1100/ ac-ft. Compare that to imported water at $1300 and steadily rising, if it’s even available.

Ortega also sent a letter to City Council members, panning the rate increase proposal and suggesting that increases be limited to debt service requirements and that the city focus on efficiency improvements to contain rates.

He further told us today that he was very disappointed with the rate increase action. He disagrees with the cost projections and disagrees with some of the proposed work, such as on the desalters. He said concentration should be on water quantity, not improving quality, which is already very good. He said builders should shoulder more of the expense via infrastructure cost payments. Ortega said that development and associated fees cratered during the great recession.In response to our question, he said that the half billion in GREAT expenses are obviously not covered by developer fees.

He told us that the GREAT program was originally destined to do 7000 acre feet per year and that the initial capital cost was $53 million. Now it is envisioned to be built out to 28,000 acre-ft/yr system. Around $200 million has been spent with at least another $250 million envisioned for the next phase.

He said that parks, medians and some newer development should be using recycled water for landscaping and that Riverpark was built double-plumbed to accommodate this. He informed us that there are $250/acre-ft  “LRP” subsidies for reducing Metropolitan imported water which could be used for this.

He also informed us that any Calleguas rate increases are automatically passed through to ratepayers with no rate increase approvals, per ordinance. So bills will likely go up still again.

If I understood Ortega correctly, he said that it is incrementally cheaper to run the desalter than to import water.

He also told us that there are great potential operational efficiency improvements in water and solid waste as well. There are also opportunities in wastewater in a smaller “footprint,” reduced energy use and process improvements.

He did say that some rate increases should have occurred sooner. Ortega mentioned that the largest capital investment in recent history (2007) was the $140 million wastewater “redwoods trunk” and headworks projects, which he thought impact fees were supposed to pay half of.

stoputilityrateincreases

This is part of a mailer sent out by activist group Moving Oxnard Forward to protest the utility rate increases and solicit help.

 

1-19-16 Council Meeting agenda

Name Date Duration Agenda Minutes Video
City Council Meeting – Utility Rates Public Hearing January 19, 2016 06h 07m Agenda Minutes Video

Meeting presentation materials are in the agenda, above.

 

Some past articles:

Oxnard moment of truth coming on utility rate increases- Tuesday

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George Miller is Publisher of CitizensJournal.us and a “retired” operations management consultant residing in Oxnard

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One Response to Oxnard poised to approve 60% utilities increase after contentious meeting- up to 400 show up

  1. William "Bill" Hicks January 22, 2016 at 5:10 am

    It sounds like Oxnard City Council Members may have been negligent now, and in the past, by not making appropriate and justifiable increases in utility rates. There could be political reasons for that that are coming home to roost.

    My guess is that there could reasonably be a change of faces on the City Council in November at the very least. The questions that need to be asked now is how many Council Members will be replaced? How many other City Officials, Staff, should be replaced for their negligence? What services should be eliminated in order to make the needed adjustment to keep life support services alive? There are likely more adjustments I’m not aware of , but his could be a starter.

    Reply

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