We are raising awareness and understanding of why Vallecitos Water District rates are high, and what can be done about it.
An FVC co-founder presented to the American Institute of Certified Public Accountants and was asked to submit a brief on his advocacy efforts for publication. Please read and don’t keep it to yourself – be an advocate. Thank you
The roles of elected officials include setting the general direction of the agency and making policies consistent with the vision and mission of the agency. Executive management is responsible to implement policies and make the elected officials and the public aware of the impacts of policies considered. When policies are not in the public’s interest, and executive management fails to disclose the true impact of adopted policies, consumer advocates take on the role of ensuring that the public’s interest is at the fore-front of decision making.
***On the Agenda***
Vallecitos Water District’s January 20, 2021, Board Agenda includes the following which may be of interest to you.
Item 1.1 B. minutes, regular board meeting – Boys and Girls Club: Director Boyd-Hodgson asked about a recent reimbursement to VWD Board Members for a charitable event (auction) held by the Boys and Girls Club of San Marcos. Directors Sannella and Hernandez were defensive of VWD’s support of this charity. Sannella claims that the event is necessary for public outreach. The Board of the Boys and Girls Club are predominantly from the development community. https://www.boysgirlsclubsm.org/board
Gifts of public funds are explicitly prohibited by the California Constitution Article XVI, Section 6. A confirmation/receipt sent to VWD for Sannella for a prior Boys and Girls Club auction stated that $56 of the $150 ticket (paid for by ratepayers) is for the value of the goods and services received (the meal) and the remaining $94 is tax-deductible, i.e., a charitable contribution. One year a ticket was given to Sannella’s wife, paid for by ratepayers, and at least one other year, tickets were given to members of the development community, paid for by ratepayers.
Item 1.3 G. Reserve Activity Report: Ratepayer reserves (operating plus replacement) continue to increase, now at $100.8 million. No other water agency in San Diego County has accumulated this much money from their ratepayers. Actual replacement costs were $9.2 million last fiscal year and typically between $5 and $8 million per year. There has never been a draw from operating reserves. There is no need to run up reserves to this level other than to continue to fund the developer fund deficit.
The developer fund deficit is now at $12.8 million, but will likely be over $16 million at year-end after the June debt service payment.
The only money available to fund the developer fund deficit is from ratepayer reserves, yet VWD continues to claim that they do not subsidize development with ratepayer money. ???
Items 1.5, 1.6, 2.1, 2.2, 2.3, Construction and Development:
Every dollar spent to cash finance development or construction (acquisition) of District assets is a missed opportunity to curtail the deficit. VWD should be debt financing all capital improvements, even on the replacement side (to transfer debt for cash to the development fund).
Development is happening with deficient developer fees. Another missed opportunity to curtail the deficit. Developer fees (Cap Fees) need to be raised ASAP.
2.4 Urban Water Management Plan (UWMP): In the past, the UWMP and Master Plan preparation were coordinated together. VWD is the only water agency in San Diego County (maybe all of California) with a deficit in their developer funds. So why aren’t they preparing a new Master Plan, the basis for Cap Fee adjustments?
The last Master Plan was prepared in coordination with the 2015 UWMP preparation and commenced in 2014. UWMPs are required to be prepared every five years and prudent to do the same for Master Plans – particularly when you are the only agency with a deficit in developer funds.
The Development Subsidy Paid for by Ratepayers
As of June 30, 2020, the developer fund deficit is now $15.5 million (up from $14.6 million this time last year). This deficit represents money paid by Vallecitos customers (ratepayers) to fund urban development – a subsidy. Developer fees are not sufficient to pay for their impacts and Vallecitos has no plans to adjust developer fees for at least five years. Vallecitos projects the subsidy paid out of our water and sewer rates will increase to $21.2 million within one year. Vallecitos is the only water or sewer agency in San Diego County, likely all of California, with a developer fund deficit – the only agency that subsidizes urban development with ratepayer money.
Ratepayer Reserve Surplus
As of June 30, 2020, ratepayer reserves are now at $97.8 million, compared to $23.2 million when developer-backed politicians gained control of the Board in 2013 – that’s money above and beyond what is necessary to pay for operating costs and asset replacements. It is prudent to maintain some level of reserves, but no other water or sewer agency in San Diego County has accumulated more ratepayer money in reserve than Vallecitos. Fifteen percent of our current water bill goes to increase reserves even further. Vallecitos projects water and sewer rate increases of 3.5% to 4% next year “and beyond.”
Attend VWD Board Meetings
Vallecitos Water District Board of Directors meets every first and third Wednesday of each month at 5 pm. Attend and provide public comment expressing your concern about the breaks given to developers at the expense of ratepayers. For agendas and more information.
BIA and Developer Payments to Martin and Sannella
Vallecitos Water District (VWD) Board Members Mike Sannella and Hal Martin receive campaign contributions from the Building Industry Association (BIA) and developers. Even though the two-member standing committees of VWD must, by policy, rotate members every year, Sannella and Martin have remained the only members of VWD’s Finance Committee since 2014. Since then VWD ratepayers have paid $52.3 million to amass reserves, fund the developer deficit, and pay for future developer obligations. Also, since then, not one action item has come before the Board regarding long-range financial planning. Learn more at https://friendshipvallecitoswater.org/get-educated/#developer-contributions
The Political Shift that Cost Water Customers Millions
In 2013, newly elected officials of the Vallecitos Water District broadened their scope to include growing the economy.
“The District’s interest has to do with providing basic services, sewer and water, at the best price. That’s all it is. It has nothing to do with helping out developers.” Jim Poltl, Former Member of the Board of Directors
In response, “I look at the bigger picture – economic stimulus. Smaller governmental agencies … make that happen.” Hal Martin, Member of the Board of Directors
Would the economy have grown without the breaks given to developers? Did we pay more for water to stimulate the economy? Or did we just bolster developer profit margins?
Check out these recent presentations to learn more: San Marcos Water Rates and Politics, San Marcos Democratic Club, June 13, 2020; Attorney General Consumer Complaint, May 22, 2020; California Water Politics and Pricing, AICPA Government Performance and Accountability Committee, May 5, 2020; San Diego County Taxpayers Association Golden Fleece Nomination, February 12, 2020; San Marcos Water Rates and Politics, Republican Women of California, February 3, 2020; and San Marcos Water and Politics-The Price We Paid, Palomar College Political Economy Days, October 23, 2019, recorded lecture, presentation slides, and news article.