Oxnard Utility Ratepayer Advisory Panel meets on Wastewater, clashes with staff

Panel member Starr: "We're not just potted plants"

By George Miller

Oxnard’s new Utility Ratepayer Advisory Panel met On 1-25-17 in a sometimes contentious session (Read Agenda meeting docs and Video). Next meeting is 2-1-17.The new Asst. City Manager Ruth Osuna had the unenviable assignment of facilitating the Panel. By some accounts, last year’s panel failed miserably, and helped lead to the present stalemate on rates. It culminated in the passage of the Measure M rate rollback, and a pitched legal battle between the City and Aaron Starr of Moving Oxnard Forward. All this occurred before Ms. Osuna was on board (read all about it on CitizensJournal.us).   

urapassembly012517

A quick summary:

  • Meeting management control disputed
  • Rate-setting process, schedule laid out, questioned
  • Panel’s approval process not defined
  • Wastewater dept. described
  • Summary finances reviewed, some was questioned
  • Data requirements set by panel member. Much has still not been provided or is even complete.
  • Schedule and sequencing questioned
  • Haven’t yet gotten into major cost drivers: capital plan, debt, reserves.

In spite of the big problems and high visibility connected with the rate-setting process,Measure M passage and related litigation, only about 30 non-staff, support and media people showed up for the meeting. This process was done only a year ago, but it was unacceptable to the last panel and to the public, who rejected it overwhelmingly at the polls voting for the Measure M rate rollback initiative.  Now, it must be repeated.

Rocky start to the meeting

The meeting did not go very smoothly, as some of the Panel members wanted  a greater role in running their own panel, while Ms. Osuna struggled to maintain full control. Panel members appointed and present were: Business/Industrial: Nancy Lindholm, Aaron Starr (Measure M author and Moving Oxnard Forward Chair), Rudy Rehbein; Single family residential: Manuel Herrera, Richard Elzinga, David Littel; and Multi-Family: Elva Marie Lindsey. Alternates are: Single Family: Steve Nash; Multi-Family: Brent Reisender; Busienss/Indstrail: Frank Brommenschenkel, Barbara Macri-Ortiz.

We had a foreshadowing of problems to come at the Tuesday City Council meeting when Alicia Percxell, wife of Aaron Starr and a Professional Registered Parliamentarian, asserted that the City was violating Roberts Rules of Order, which they accept in City ordinances as the basis for running meetings, with just a few exceptions. When Starr brought that point up and Percell reinforced it  during public comments. Assistant  City Attorney Shiri Klima quickly stepped in to dispute that, claiming the City hadn’t accepted it for committees. Percell fired back that acceptance is inclusive of them (more on this down below). So, we’ll count it as a disputed legal point right now.

The meeting conflict wasn’t necessarily all bad, as it brought out differences, provided valuable input and resulted in some apparent accommodations to the panel.  It appeared that Starr, Herrera and Littel all wanted more panel control. The others were either neutral or seemed more willing to operate under city staff guidance, or were still trying to get the lay of the land.

Starr, Herrera, and Littel were the most engaged and pushed for more panel control. Less so were Lindholm and Lindsey. The others said little or nothing.

 

We received this email from Alicia Percell on 1-27-17:

The video from last night is online here:

http://www.ustream.tv/channel/oxnardnews

Editor’s note: this goes directly to video: http://www.ustream.tv/recorded/99339992
 
But they EDITED IT to remove the dispute at the beginning over who was in charge…  Fascinating.
 
-Alicia
 
 

Meeting actions- initial

starraaronurap0125-17

Aaron Starr, URAP Panel Member speaking at 1-25-17 meeting. Photo: CitizensJournal.us

Kyron Johnson of the Public Works Dept. introduced the Panel members/alternates and read the Panel purpose, mission and term/meeting dates, which you can find in the meeting documents. There has been some dispute about these.  Ms Osuna reiterated the Brown Act constraints of interaction and communication, which she said apply to the Panel. Starr persisted. Osuna said “we are going to have a Facilitator not a Presiding Officer and that was my direction.” Assistant City Attorney Shiri Klima immediately came up to dispute Starr’s assertion. 

“We’re not just potted plants”

After the meeting was (sort of) called to order, Aaron Star continued for a while on the issue of applicability of Roberts Rules of Order to meeting control by the Panel members rather than City staff. At one point he said: “We’re not just potted plants.”He was supported on this by Panel members Herrera and Littel; and also during the public comment period by residents Alicia Percell, Steve Nash, Larry Stein and George Miller. In opposition to their stance on this was Pat Brown.

 

Public Comments

nashstevespeakurap012517

Steve Nash, Panel Alternate and former Panel member. Photo: CitizensJournal.us

James M. says he is willing to shoulder his financial responsibility, but not others, especially multiple families paying only one fee. Joe Gomez complained about rising price and the difficulty of paying. He said he has heard of cities with abundant desalinated water and thought that would save money.  G. Miller asked what lessons were learned from the last panel and what will we do differently as a result. He called for more involvement by and consultation of the Citizens so that they have ownership of the results.  Alicia Percell, a Professional Registered Parliamentarian, pointed out Roberts Rules of Orders, page 500, and asserted  that when Roberts Rules are accepted by a city, they apply to all committees and subcommittees, including this one (the panel). She offered help to the City in interpretation of the Rules She opined that URAP should run its own meeting, not staff, analogous to how the  Council meetings run, or the Panel will be just a “dog and pony” show again. She provided copies of some basic steps of Roberts Rules.  Larry Stein (who served on the previous URAP) said there are lots of skills on the URAP. He added that staff took up too much time for members to provide adequate input and consolidate it into input to the results. He also said members should run meetings not staff. Also said no provisions were made for utility rate subsidies (for indigent). He said finances weren’t adequately discussed including subsidized feeder stock to the GREAT water program. He reinforce that URAP should drive discussion, not staff. Steve Nash (former URAP member and current alternate) agreed with Stein and warned that we will duplicate results if we persist in  the current path. He said all other city bodies operate under Roberts Rules and it is absurd that this group does not. This has everything to do with residents providing suggestions to Council. He was chair of the Ethics Advisory SubCommittee of the Procedures Committee. He advised the City to correct the organization problem and that Panel members should be Chair and Vice Chair. Panel Alternate Barbara Macri-Ortiz commented on the need for the utility infrastructure fee.

 

Wastewater Manager

Wastewater Manager Ng Thien provided a Wastewater Division overview, customers, volumes (17 million gallons vs 31 million capacity, 431 miles of pipes, 15 lift stations)  and a general process description of plant and operations. He has a good way of presenting technical items clearly to laymen. He mentioned that in 2009 they went from a flat rate to a water usage-basis billing model. His rem,arks were brief, but he will likely become much more important to the process in future meetings.

 

Finance

Finance person Lisette Maldonado (sp?) said final audited numbers for the CAFR (Comprehensive Annual Financial Plan for last fiscal year may not be available until Feb 21. She said that the budget assumes that the 35% increase made last February will stay in place and an additional 10% was supposed to  be effective January 1, 2017 (Council has already deferred this). She said the court stay on Measure M passage leaves the 35% in place but the 10% is deferred until Measure M litigation is resolved. 2017 revenue was budgeted at 36 Million, with $14.4 million collected through November (5 months). Revenues up $3.2 million YTD mostly attributable to rate increase, plus $1.5 more in permit and fee revenue- much is one-time for new connection activity. Last years CIP’s (Capital Improvement Projects) still being reconciled- due this month with about $9 million carryover. The chart below was presented and was the focal point of the financial discussion.

wastewaterbudget012517

Note that the November numbers are year-to-date (5 months). Starr said that the current year’s five-month dollar amounts for Personnel Services and Operating Expenses (i.e. multiplying by 12/5) results in figures that are significantly below the budgeted numbers for 2016/2017. They’re talking about using as their baseline an increase of between 33% and 39% above the actual dollars currently being spent.  That’s an extra $2.1 million per year for personnel costs and $2.3 million per year for operating expenses. Throop blamed this on undermanning and austerity. Starr asked for actual figures. Throop pointed out that the model needs to be a “should be” scenario of what is needed to be functioning and that what was spent previously was inadequate. Starr conceded that there has been deferred maintenance, spending and activity. He said budget must be based on actuals, then modified by what is agreed is needed. Littel concurred with Starr. He also said 16 positions don’t amount to $6 million dollars. The questions are: does the undermanning account for most of the underspending,  was some already made up by consultants and do we really need all of those people?

Panel Member Elva Marie Lindsey asked if anything is built in for reserves. Panelist Nancy Lindholm wanted annualized numbers. Starr said utilities are being charged $7MM to the general fund for infrastructure fees (internal services). In more detail, he summarized to us his meeting explanation]: the three utilities combined are being charged $7MM to the general fund for infrastructure transfer fees. Of that amount, about  $2.3MM are being charged from the wastewater utility. Those fees are an arbitrary charge imposed by the city on the utilities to skim money off the top. It’s a calculated amount in lieu of a property tax, had the utilities been privately owned. Such a scheme had been ruled unconstitutional in Howard Jarvis Taxpayers Association v. City of Fresno (2005).

Klima interrupted Starr, claiming his subject matter comments weren’t agendized and he’d have to wait for the panel discussion. He cleverly volleyed back, putting it in the form  of a question on what is in the “internal services” budget line. No answer was forthcoming at the meeting- answer deferred.

Throop mentioned that without the stay on Measure M., we would have been down to only $900,000 in WasteWater fund reserves at year-end, which leaves nearly no margin for contingencies- no emergency buffer and is in deep default of our bond covenants. The City had asked for a 9 month extension on the letter of credit, but as granted only 6 months.

In response to our offline question, Utilities Director Dan Rydberg opined that this rate-setting exercise will make a case pretty close  to the last one.

Unaudited balance sheets provided by Larry Stein 1-23-17(not discussed at meeting):

balance-sheet-wasterwater-collection-funds-611-628-fy-17-period-6

balance-sheet-wastewater-collection-funds-611-628-fy-2016-period-13

 

Public Works Director

Public Works Director Rydberg gave an overview of the Wastewater Dept. rate model assumptions (see chart below, which shows flow and major steps; status pie charts show percentage of completion)  and mentioned  the spreadsheet model was developed 1.5 years ago and needs updating of financial data- which he said is about 3/4 done.

wastewatercostofserviceoverview012517

Other Activity

Also in question was what specifically makes up “internal services”? There were questions about the infrastructure charges, which are levied on Wastewater based on the value of the utility’s assets as a percentage of assets in the city, rather than pegged to actual costs.

Starr wants three full years of actual cost history. Staff said that the final audit numbers aren’t in yet. He wants to see what they have now.

Starr presented  a list of data requirements to Osuna, which he says that the panel needs to make an informed decision and recommendations to the Council, which it reports directly to, not to staff. Here is his list:

  1. Provide financial statements for the wastewater funds for fiscal years ending 6/30/14, 6/30/15 and 6/30/16.
  2. Provide a listing and breakdown of all WW reserve categories, not just operating reserves, for the fiscal years ending 6/30/14, 6/30/15 and 6/30/16. Describe their restrictions and limitations.
  3. Need access to draft rate model Excel workbook so that we can do live on-the-fly changes in the assumptions.
  4. Historical operating and maintenance costs for the past 3 fiscal years (years ending 6/30/14; 6/30/15; 6/30/16), broken down to GL account level. Current YTD and projected amounts for FYE 6/30/17 and 6/30/18, broken down to GL account level. Compare to average of past 3 fiscal years. We will want to analyze the reasons for variances from the average.
  5. Historical infrastructure transfer amounts to general fund for years ending 6/30/14; 6/30/15; 6/30/16. Current YTD and Projected amounts for FYE 6/30/17 and 6/30/18. Compare to average of past 3 fiscal years.
  6. Historical amounts transferred to general fund for indirect overhead allocations (dept breakdown) for years ending 6/30/14; 6/30/15; 6/30/16. Current YTD and projected amounts for years ending 6/30/17 and 6/30/18. Compare to average of past 3 fiscal years. We will want to analyze the reasons for variances from the average and how the methodology has changed.
  7. CIP listing w/ cost for each project and year of predicted expenditure.
  8. Provide a list of pass-thru expenditure types. These ought to be limited to non-discretionary costs by third parties.
  9. Sensitivity analysis for certain inputs. For example, a 10% increase in electricity costs results in an X% increase in operating costs; or a 10% increase in chemical costs results in a Y% increase in operating costs.
  10. What are the monthly wastewater treatment volumes since July 2013? What are the assumed monthly forecasted volumes through June 2018?
  11. For the most recent year ending 6/30/16, what would be the fixed costs, assuming zero wastewater operations?
  12. For the most recent year ending 6/30/16, what would the total expenditures have likely been, assuming that the entire year’s volume equaled only twelve times the lowest month’s volume?
  13. What are the bond coverage requirements? How are rates impacted by the debt coverage policy, rather than the debt coverage ratio required by the city council’s policy?
  14. Are there other city council policies related to WW rates that impact costs?
  15. Provide the current Draft Cost of Service report at the next meeting, noting the areas that will likely change. It is completely unreasonable for us to first see a report 1 day before the 3rd meeting.
  16. Provide draft language for city council resolution/ordinance.

Starr went through the above  list. The only issue seemed to be the Excel Spreadsheet rate model,. which Osuna said wasn’t available. Starr said he knows its; available because he used it in a meeting with Public Works and Finance in November. City Manager famously canceled all further meetings with Starr. Osuna and Throop both said that the model needed to be updated and that it won’t be ready for weeks. Starr said the panel should see it now because it is largely updated and that they need something to work with now. He was refused.

We have heard that staff doesn’t want the panel to obtain the model. At the meeting, we were told that the model wouldn’t be available until about the time when staff is ready to present proposed rates to the panel, which seems beyond absurd.

Member Herrera wanted to know about rate subsidies for the indigent. Osuna told him that can’t be handled via the utility per Prop 218 and would have to be handled  via something like a 503C corp. and funded independently.

Osuuna also said that capital improvement plan info would be forthcoming  with all cost info.

The possibility of a need for more meetings than planned was raised. Osuna said they will do if necssary (this could delay completion of rate-setting process).

Panel Member Herrera also expressed concerns about panel organization. but Osuna deferred any discussion. Starr said he spoke to the Mayor about this, who “really twisted my arm to do this” (be on te panel), but Starr insisted upon assurance that the panel would run this. Osuna shut him up too.

Herrera also said that no one disagrees that rates should be higher, but the question was how much and what would it be used for. He said the process didn’t work well last time, was confused,.He asked what the city has learned and what would it do differently? He asked if there was any other ways to offset higher costs, such as using other city funds and was told that the  WasteWater Division is a separate entity and funds may not be mixed.  Member Littell endorsed what Herrera said and is also concerned about  the rate structure for low-income people.

Osuna said that WasteWater is not in good financial condition, that there was lots of misinformation, it was unclear, technical, complicated. She added that they need to have information in a form that people can understand, so that decisions can be made on behalf of the people.

Liitel wanted to know what could be done to improve efficiency, which could further reduce expenses.

 

Post meeting discussion with CFO Jim Throop

After the meeting, I asked CFO Jim Throop if he was withholding the model because it wasn’t nearly complete . He agreed. I asked him when it will ready and be provided to the panel and can staff  work with Panel to interactively simulate changes on it with the panel. He thought that interactive real time use of it was impractical. Starr, in a phone conversation with me later that evening disagreed, saying he had already done it.  Starr and this writer have both done this before in the business world, so we’re wondering what the big problem is. Throop said you can’t just run what-ifs by changing one number and might have to change multiple ones, such as volumes, manning, etc. He also claimed that the model can’t be made available because it is proprietary to the consultant- Carollo Engineers. Another party disputed that with me subsequently. The Carollo contracts appear in the next section- have at them.

I also asked Throop what the strategy was to replenish reserve up to bond covenants and City policy levels. He said that they are developing scenarios for 1 to 4 year replenishment periods and that bonds may have to be issued to mitigate the impact on rates.

 

Consulting Contract with Carollo Engineers

Fourth Amendment: includes current wastewater rate-setting exercise: http://oxnard.granicus.com/MetaViewer.php?view_id=72&clip_id=3530&meta_id=167911

This Fourth Amendment allows Carollo Engineers to continue to provide oversight and management of the update to the Wastewater portion of the Public Works Integrated Master Plan and its deliverables. This Amendment seeks to revise and add new tasks associated with the analysis of wastewater rates and charges to include an update to the existing Cost of Service Study in preparation for the upcoming Proposition 218 notice process. Specifically, Carollo Engineers will update the wastewater rates and charges model along with the Cost of Service Study, attend and assist with the Utilities Ratepayers Advisory Panel meetings, and assist in the preparation of a wastewater Proposition 218 notice and the anticipated updated wastewater rates ordinance.

First Amendment: http://oxnard.granicus.com/MetaViewer.php?view_id=68&clip_id=2939&meta_id=144881

Some applicable verbiage:

Task 3.1. 7 Fees and Utility Rates Analysis – Draft Consultant will develop a draft revenue requirement and rate and development fee analysis for each Public Works Division. The financial analysis will consider the overall funding strategy including nearand long-term capital and operational needs, as well as potential impacts on customer usage due to modifications of the rate structures. The results of the revenue requirement will be used in the City’s rate model to define what levels of rate increases are necessary in order to fund ongoing expenditures, identified capital needs, meet the City’s policy goals, and adhere to Proposition 218 requirements. Consultant will also create updated development fees to equitably recover the costs to provide capacity to serve new developments. These development fees will adhere to California Government Code §66000.

Task 3.1.9 Develop City Water Utilities Rates and Charges Model Consultant will develop a rates and charges model (Rate Model) for the water utilities for the City, including: wastewater, water, and stormwater annual service charges, and one-time capacity charges (i.e. connection fees) for each utility. This model will be designed to incorporate the input from the capital improvement plans (CIP) financial analyses, and estimated capital and operations and maintenance (O&M) costs from the Integrated Public Works Master Plans (Master Plans). This includes defining the rates and charges to be fair and equitable as defined under Proposition 218, and California Government Code Section 66000. The Rate Model will incorporate the input from the Master Plans, and will calculate rates and charges for the system users including residential, commercial and industrial over the 20-year planning horizon. Special emphasis will be on the initial 10-year cash-flow projections.

Final Rate Study Report Nov. 2015: https://utilityrates.oxnard.org/wp-content/uploads/2015/11/Oxnard-Cost-of-Service-Report.pdf

Carollo is doing extensive Public Works design tasks too, as is Aecom.

The main rate drivers would be : operating costs, capital improvement projects, reserves replenishment and debt service. Development fees would figure in, too.

 

Council members

I was able to contact Mayor Flynn and Council Member Bert Perello (who was at the meeting but didn’t speak) separately on the next day. Both agreed that the panel running the meetings was not too much to request. Both cited Brown Act constraints as reason why the Council could not act quickly on this. Flynn said the Council hadn’t provided any direction on Panel management. Since staff determined this, there may not  be any reason why someone couldn’t take the matter up with the City Manager. Evidently, neither one saw fit to put it on a special meeting agenda so far. Flynn expressed some concern about Starr potentially dominating the Panel. Perello was all for it. Flynn was quoted by The Ventura Star as saying it’s usually a staff decision and that he can’t make it alone as Mayor. Last we heard, the Panel reports to the Council, not staff.. We have been told that the Ventura County Regional Sanitation District presents on a screen a budget spreadsheet model, and that its members were able to make on-the-fly changes to develop their final figures. Interesting how they can do this, but somehow Oxnard can’t.

 

Do Roberts Rules of Order apply to URAP?

After hearing Alicia Percell and Aaron Starr claim that Roberts Rules apply to the Panel, I asked for proof.  Percell sent the following:

Attached is a copy of the oxnard-city-council-procedures-manual.

On PDF-page 9 of that document, you will find the following:

“Rules of Order: Except as otherwise provided by applicable law or as specifically provided in this Procedures Manual, the latest revised edition of “Robert’s Rules of Order” shall govern the conduct of the meetings of City Council.”
So the city council has adopted Robert’s Rules as its parliamentary authority.
 

When a “society” (as Robert’s calls the parent body) adopts Robert’s Rules as its parliamentary authority, the rules in Robert’s Rules say that the committees and subcommittees of that society are also to operate under Robert’s Rules.  The city council doesn’t have to specifically write a policy for every single committee they create because Robert’s Rules itself imposes it on the committees unless the city council overrides that portion of Robert’s Rules by creating some sort of exception in its own policies.  They haven’t created any such exception.

See Robert’s Rules of Order Newly Revised, 11th edition, p. 500, starting on line 22 (underline added for emphasis):

“Committees of organized societies operate under the bylaws, the parliamentary authority, and any special rules of order or standing rules of the society which may be applicable to them. A committee may not adopt its own rules except as authorized in the rules of the society or in instructions given [page 501] to the committee by its parent assembly in a particular case.”
-Alicia
 
See previous article on this subject:

Parliamentarian takes exception to running of Oxnard Utility Rate PanelBy Alicia Percell, Professional Registered Parliamentarian- Editor’s note: At the 1-24-17 Oxnard City Council meeting, Alicia Percell voiced her objections…

The City was successful in getting a stay on Measure M wastewaster rate rollbacks, but cancelled the planned 2017 increase of 10% until the questions about the legality of the measure are resolved in court.

 

Meeting documents:

NAME DATE AGENDA EVENT
       
Utilities Taskforce – Utility Ratepayers Advisory Panel Meeting – Revised January 25, 2017 – 06:00 PM Agenda 

Video

 

1/17/17 Utility Task Force Meeting (UTF)-Including URAP Panel Selection

 

urapschedule0117

TIME/LOCATION

  • 6 PM to 9 PM
  • Oxnard Performing Arts & Convention Center (PACC)
    Ventura Room
    800 Hobson Way, Oxnard, CA 93030

Here are the 2-1-17 agenda topics (agenda should be posted soon:

PRESENTATIONS ON THE FUTURE NEEDS TO MAINTAIN AND UPGRADE THE CITY OF OXNARD’S WASTEWATER TREATMENT PLANT AND SEWER SYSTEM

1. SUBJECT: Condition Assessment of the Wastewater Utility as presented by Carollo Engineers

2. SUBJECT: Wastewater Utility Proposed Capital Improvements as presented by AECOM

3. SUBJECT: Respond to questions by Utility Ratepayers Advisory Panel (URAP) members at the URAP meeting on January 25, 2017

4. SUBJECT: Review updated URAP meeting schedule

 

Spanish interpretation will be available.

Screen Shot 2017-01-18 at 4.04.14 PM

Tour the facility to get an up-close look at challenges we face as we work to provide safe, quality service for the community. Tours require at, closed-toe shoes. Tours start promptly on time. Latecomers will not be able to join the tour.

Spanish interpretation will be available.

Screen Shot 2017-01-18 at 3.59.12 PM Saturday, January 28, 2017
10 AM to Noon
Screen Shot 2017-01-18 at 3.59.12 PM Saturday, February 11, 2017
10 AM to Noon
Screen Shot 2017-01-18 at 3.59.12 PM Thursday, February 9, 2017
3 PM to 5 PM
Screen Shot 2017-01-18 at 3.59.12 PM Saturday, March 11, 2017
10 AM to Noon

1/17/17 UTF Meeting Video (View it here)    

1/17/17 UTF Agenda (Download)

1/17/17 UTF PowerPoint (Download)

7/1/16 – 11/30/16 Utilities Financial Report (Download)

12/16 Wastewater Division Monthly Report (Download)

12/16 Water Division Quarterly Report (Download)


 

2017 Wastewater URAP Application Process

2017 Wastewater URAP Application- Press Release

 


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


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3 Responses to Oxnard Utility Ratepayer Advisory Panel meets on Wastewater, clashes with staff

  1. Eileen M Tracy January 30, 2017 at 8:19 pm

    I’d like to see where in the General Fund does the city pay for wastewater services at all city facilities. This charge cannot be charged to ratepayers, as it does not represent the cost of service.

    I’d also like to undertand why the mayor/council is so reticent to intervene on who runs the subcommittee.

    I thought Stein’s remarks about where the cost of services can be located beyond the CAFR.

    Finally, I’d like to see staff apologize for their rudeness to panel members.

    Reply
  2. Steven Nash January 30, 2017 at 8:56 am

    This is excellent reporting by CJ and Mr. Miller (except, perhaps, for the “Duh” editorial comment).

    Reply

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