Santa Paula Council Meeting: Lawsuits, Water and Challenging Budget

By Sheryl Hamlin

After the invocation by Michelle McGhee and the Pledge of Allegiance, Mayor Procter welcomed Mike Morgan, Vice Mayor of Camarillo and Mark Lawler from Ventura Regional Sanitation District. Mr. Lawler explained that the VRSD is unique in that it is completely fee-based, so it competes for customers in the areas of water, wastewater, storm water, refuse disposal and painting and coating of waste water facilities. Mr. Morgan spoke about his city’s new water recycling plant for which they receive water credits from the State of California in their drought calculation when they deliver recycled water to customers.

The council appointed Mayor Procter and Vice Mayor Hernandez to be the delegate and alternate respectively to the League of Cities Annual Conference. The council also appointed Mr. Gail Ikerd, the current chair of the commission, and Mr. Fred Wacker to the Planning Commission. These two gentlemen were the only applicants. Vice Mayor Hernandez lamented that there were “not many people busting down the doors” to volunteer, while Council Member Gherardi suggested there be outreach for minorities and women to which Mayor Procter said “in a democracy … those who show up”.


Amicus support for City of San Buenaventura v. United Water Conservation District

The first legal issue involved “Amicus Curiae” (friend of the court) support for the City of Ventura in its suit against the United Water Conservation District (UWCD) fee increase for the City of Ventura. Ventura argued in court that the fee increase violated Prop. 218 stating that when UWCD charged higher rates for non-agricultural uses, it violated State law. The district court concurred and authorized a refund. However, the Appeals Court disagreed and said that the fees did not violate Prop 218 because according to the staff report “…they did not constitute ‘property-related fees and charges’ or ‘taxes.’ The fees were instead valid regulatory fees.” Now the case is going to the next level: the California Supreme Court. By such filing, if accepted, the city of Santa Paula will be able to file an opinion with the court on this case. Council Member Gherardi asked if this issue was similar to the case in San Juan Capistrano where tiered rates were ruled illegal because the city did not justify the tiers. City Attorney Cotti explained that potentially the ruling in San Juan Capistrano may affect the waste water treatment facility fees, except that they told the bondholders there would be no rates lowered, but left the option open for water user rebates.

Ventura County Professional Firefighters Association

Recall that the explosion at the Santa Clara Waste Water company on Mission Rock caused health issues for three firefighters who are still out on medical leave. The City of Santa Paula is filling those positions with reservists who do not receive benefits because they are not full-time-employees, a practice which the Firefighters Association says is illegal, thus the suit. Santa Paula has budgeted $40,000 for this suit in the FY2015/2016 budget and did not indicate how much had been spent in the current fiscal year.

Subrogation of costs for SCWW explosion 

In the explosion on Mission Rock, Santa Paula’s insurance paid for damages. Now the Santa Paula insurance carrier is trying to recoup these costs from Santa Clara Waste Water (SCWW), which is a legal process known as ‘Subrogation’ wherein the insurance company sues the company causing the damages for reimbursement. Council Member Tovias said that a subrogation case can take years and in the meantime warned that Santa Paula’s insurance will likely be raised because claims exceed insurance payments saying this happened previously where Santa Paula was hit with a $2,000,000 surcharge from the insurance company. He did not indicate how this surcharge was paid.

East Area I: Wishtoya and Friends of Sespe River

Mr. Fontes, in his summary about the constrained FY 2015/2016 budget, cited “legal challenges” from two environmental organizations, the Wishtoyo and Friends of the Sespe River, saying these actions delayed the East Area One. Representatives from both organizations who were contacted indicated that there were no lawsuits filed. The Wishtoyo did submit a lengthy analysis to the most recent EIR, which is on-line. In addition to the Wishtoyo, three other organizations also filed letters with concerns in the EIR: Sierra Club, Friends of the Santa Clara River, Keep Sespe Wild. Mr. Fontes’ statement about legal action should be clarified.


Brian Yanez, the Interim Public Works Director, presented this item:

Discussion of Governor’s Executive Order B-29-15 and State Water Resources Control Board Resolution No. 2015-0013



Ms. Rita Stafford, a Santa Paula resident, spoke in public comments about water with questions of 1) turf removal, 2) why 28% and not 25% and 3) how is usage based? 25% of what?

Mr. Yanez said they are asking for Stage II which is actually 28% reduction. During the period April 2013 to April 2015, Santa Paula reduced it water usage by 18%. Now the city needs to produce an additional 10% in water reduction. He noted that the department has all property records, but has not yet drilled down to the biggest users. He said that some people don’t even know there is a drought! As for turf removal, Santa Paula is working with the city of Ventura to obtain Proposition 84 funds. He said one might expect a $500 turf removal rebate but cautioned that the ‘before’ and ‘after’ water usage and pictures must be available when applying for the credit. The city must report monthly to the state, but there is not specific information on repercussion for not meeting the goals. The water tip line has been used extensively to identify wasteful water practices, he said. There was also a discussion about the use of “adjudicated water”.  Adjudicated water was reported earlier here under Sustainable Groundwater Management Act (SGMA). Council Member Crosswhite asked about “purple pipe”. Brian Yanez stated that the city has identified the streets for this duplicate set of piping which will direct recycled water to parks for landscaping. Note that it was reported earlier that Limoneira was granted a reprieve from adding purple pipe to the residences in East Area One. Details in Section 3.7 of the East Area One Development Agreement cite “economic conditions”.

The item was approved. Now it is up to the citizens to conserve water.



Mr. Fred Robinson, former Council Member and current Planning Commission Member, spoke in Public Comments. Saying he knew how challenging this year’s budget process has been, yet he wanted to impart some advice. The revenue situation is dire with property taxes up and sales taxes down, but he felt asking the School District for funds was a “slippery slope”. He also said fund raising was a bad idea because such efforts would conflict with fund raising efforts for local non-profits, suggesting that citizens could continue to donate to the Police and Fire Fighter associations on their water bills. As to an assessment district, he felt it was an excellent idea, but from experience thought that the city was not going to approve such an assessment due to the high number of low-income residents and seniors on fixed incomes. He cautioned against the following: 1) underfunded public pensions and suggested this be a future agenda item, 2) the fire fighter lawsuit could take years and much money to fight and if the city lost, it would need to hire full-time people, 3) cost of insurance can and will rise, citing the $2,000,000 previous surchange Santa Paula received from the insurance carrier. And finally, he cited the need for more sales tax waxing poetic about a Costco for Santa Paula. Although there is “light at the end of the tunnel”, East Area One is a “long tunnel” which will not yield financial results for years he said.

 Fred Robinson

Fred Robinson

In his summary, Mr. Fontes noted two serious expenses for FY 2015/2016: CalPERS increase of $350,000 and $100,000 insurance. The fire department has taken a $400,000 hit with the fire fighters out on medical leave with no indication of the length of such leave. No layoff and no pay cuts were budgeted, yet 48 employees get a “5% step increase”. There were “no concessions”, presumably he meant to worker representation units. Still hoping for development, he cited East Area One, Fagan and Adams Canyon and added downtown saying rhetorically “what becomes of downtown when East Area I takes off? …. Do we make it like a nice, old town Santa Paula with new retail?” 


Using an accounting technique of carrying over fund balances, the FY 2015/2016 General Fund budget is balanced with a razor thin $10,700 positive balance.

It is important to understand that cities use “fund accounting” where projects are grouped into funds composed of potentially several accounts. A fund has a balance sheet, so the calculation of a fund balance includes the value of any asset in the fund, as well as cash and receivables. And a receivable could have the potential of never being collected. A fund balance DOES NOT imply that there is a specific amount of cash, rather it imparts a “value” of the fund, all of which is certified in audits, if the city chooses to add this service to the annual audit.

In balancing the General Fund budget, the city carried over $201,481 from the General Fund balance from FY 2014/2015. The actual revenue versus expenses calculation is: $14,086,725 (revenue) minus $14,277,521 (expenses) or negative $190,796. However by adding the carryover of $201,401 to the negative $190,786, the result is a positive $10,700.

During the presentation several charts were given; however there was NO DISCUSSION about the creation of the budgets for the Enterprise Funds. It is hard to imagine why the council did not adjourn and reconvene as the Utility Authority to discuss these budgets.  Here are some important charts presented by Sandra Easley, Finance Director.

This is the Citywide Expenditure totaling $36,015,676, which includes the Enterprise Funds. Salaries and Benefits are the modal category.


In the next chart, the General Fund expenditures are shown with 76% being salaries and benefits.



And the expenditures by department in the General Fund, show the Police as the largest recipient of these funds with fire second.


And finally, this chart shows the number of employees over the past fifteen years. There was discussion about adding several positions back into the mix “unbudgeted”. 

One simplistic calculation not discussed at the meeting shows that of the General Fund Salaries and Benefits totaling $10,804,486, each of 118 employees would cost $91,563 including salaries and benefits. If this calculation were applied to the citywide staffing budget of $13,450,406, it would be $113,986 per fully loaded employee. These types of “back of the envelope” calculations give budget planners and citizens a view of the challenges cities face when providing services and adding staff. No information about salaries versus benefits was given; however, it must be understood that the city can control the salary to some extent, but the benefits will increase due to outside forces. As Mr. Robinson advised, the city would be wise to study the projected pension expenditures for the next five years and, in fact, Dr. Gardner recommended this in the very first budget meeting in December 2014. At the same meeting, Dr. Gardner said that development fees were not a sustainable source of income and that the city should look for sales tax because it was too dependent on property tax revenue, as was also stated by Mr. Robinson.


The council will hear the final budget report on June 22, 2015, just in time to make the June 30, 2015 deadline.

To watch the full meeting, click here. To download the staff reports, click here.


Sheryl Hamlin: With an MS in Industrial Engineering, Sheryl Hamlin spent years in technology with stints at Motorola, Tandem Computers and various startups. She has been on the boards of neighborhood organizations both in San Francisco and Palm Springs where planning issues were her specialty. She now resides in Santa Paula and loves the historic fabric of the city.  Ms. Hamlin’s blog Stealth Fashion  and  technology product ‘ Plug and Play Webmaster’.

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