Saturday, 27 May 2023

Water district presents rate hike options Saturday

CLEARLAKE OAKS – Citing a budget crunch and the need for capital improvements on equipment, the Clearlake Oaks County Water District plans to ask its customers to consider several rate hike options at a meeting this week.


The district is planning a hearing at the Eastlake Grange, 13010 E. Highway 20, at 7 p.m. Aug. 16 to present choices to the community and receive input from ratepayers.


Darin McCosker, general manager and chief water plant operator, said he's going to propose three options to his board and the 1,715 water customers and 1,630 sewer customers.


Those options include a 39.4-percent increase on sewer and water, which was the proposal the Saturday meeting originally was called to consider, along with 25-percent and 10-percent hikes.


The originally proposed 39.4-percent increase on both sewer and water would raise the base monthly single-family dwelling water rates from $23.79 to $28.59, and sewer rates from $31.83 to $44.19.


All of the proposals would do away with the current rule allowing water users to have a 200 cubic foot allowance included in the base rate, McCosker said.


In addition, he's proposing to adjust the rate structure for single-family mobile homes with no meter and have district employees contribute more to their health benefits.


McCosker also will suggest to the board that, next July, they should review their financial situation and if it's stabilized they can look at rolling back the rates.


The decision, said McCosker, is ultimately up to the board.


But the district is behind in audits for two years, an issue that has both community members and board member Frank Toney saying they want to see the district get its financial house in order before raising rates.


Clearlake Oaks residents Judy Barnes and Judy Heeszel, who have attended meetings to find out more about the situation, told Lake County News they felt audits needed to be completed before new rate were passed.


“There's a lot of unanswered questions about the budget,” Barnes said, with the lack of audits raising a red flag for her.


Putting in place a permanent rate increase without having a new budget ready doesn't make sense to Barnes, who has personally visited with McCosker to question him about the district's situation.


Heeszel, a retired teacher's aide, questioned some district hires at what she felt were extremely high wages and advocated for a thorough financial examination before taking action.


She said she's concerned about the impacts of climbing rates on the community's elderly members, living on small incomes.

 

New board confronted by budget problems 


McCosker took over in January as general manager from Ellen Pearson, who worked as auditor/secretary until the district let her go in March.


Along with a new district manager, three of the district's five-member board were newly elected last fall. Board President Helen Locke, Vice President Mike Anisman and Frank Toney joined directors Pat Shaver and Harry Chase.


The new members had sought board seats because they were concerned either about customer service or certain district rules.


Locke credits McCosker for doing away with the “voice mail hell” that customers used to encounter when calling in, which has since been replaced by district staff answering calls and returning calls quickly. Anisman said hundreds of calls previously had gone unanswered.


Anisman, Locke and Toney said they weren't prepared to find out the district was running deep in the red. Anisman said the last three to four budgets the district has produced have been in the negative.


“It's an awful situation,” Locke told Lake County News.


The district's current financial condition has been attributed to what McCosker called in one district meeting a “plethora of reasons” – from poor management to lack of communication.


Bigger issues for the district is crumbling, outdated infrastructure, and rates that haven't kept up with the needs for maintenance and an increasing list of state and federal regulations, board members and McCosker said.


Since taking over, McCosker has been trying to play catch up, a task that has left him clearly frustrated. However, he said he's determined to streamline costs – including a spending freeze he instituted – and make the financial operations of the district more transparent.


“I honestly was completely overwhelmed and didn't know how we would dig ourselves out of this hole,” McCosker said.


Pearson said the district was making ends meet when she was there, although she had asked the district board since June of 2005 for a rate increase, which didn't happen.


McCosker has brought bookkeeper Jana Saccato on board at the district. He said she's been trying to catch up on the district's ledger entries, which the previous bookkeeper wasn't making. Saccato's work, he said, has helped stabilize the financial picture.


Pearson said the district hadn't had an auditor/bookeeper since May of 2006, after a woman who held the position for six months and made a mess of the books left.


Poor budget management also resulted in more than $4,600 in overdraft charges on the district's accounts in 2007 and $6,200 in penalties from the Internal Revenue Service for not following procedures, said McCosker.


Anisman said the issue with the IRS was “the final straw” for him when it came to Pearson's job with the district.


He said Pearson went on vacation and a few days after she left the board received word from the bank that they had no money. They then found out the IRS was putting a lien on the checking account for failure to pay back taxes – taxes which the district is still working to pay.


“She never told anybody,” he said. “She left and went on vacation without telling anybody.”


Pearson said she did tell Shaver – the only board member who would talk to her – about the situation before leaving on vacation.


Those overdrafts and penalties were as a result of having no auditor/bookkeeper. She added that state water code prevents the general manager from also auditing the district's books.


McCosker said the district's finances are behind in audits which has resulted in fines. At its most recently meeting on July 16, the district board gave McCosker direction to come back with three bids from audit firms to complete the necessary audits. He'll take those bids to the board's Aug. 20 meeting.


It's hoped those audits also will give the district a clue to the source of its financial stresses. Board members like Toney also hope it will tell them what happened to $65,000 of $78,000 the Federal Emergency Management Agency gave the district for several projects. Pearson said that money was still in a district account when she left.


Looking at the district's finances over the last 10 years, McCosker said in 1998 the board decided to reduce rates 6.7 percent, then raise rates 0 percent on water for five years before a rate increase was enacted.


Pearson disputes that there were no rate increases in those years, saying that they were just very small, only about 2 to 3 percent.


In 1998, the district had $1.3 million in reserves, but negative budgets and borrowing against reserves did away with that cushion, McCosker said.


The rates that did follow were too small to help; McCosker said from 2002 to 2004 the district spent about $1.2 million on new canal crossings for sewer, a 200,000 gallon clearwell at the water plant, cleaned and inspected 17,000 feet of sewer mains, and repaired many leaks in the sewer system.


Before McCosker took over the district's management in January, the district's reserves were down to $13,000.


A small, 3-percent rate increase that was approved four years ago went into effect July 1, McCosker said.


But the most pressing issues facing the district is the budget shortfall, which McCosker said he can't do anything about unless rates go up.


“We are barely keeping our head above water right now,” he said, which is why the district needs at least a 10-percent increase, which will help pay for the expensive auditing process.


Views on solutions differ


While the board is in agreement that they're facing financial difficulties, the question of what to do next seems to have brought them to no consensus.


Toney said he wants to see the results of the audits, which are needed so the district can start the work of building a new budget. That needs to happen before going to a rate hike, he said.


He said of a hike, “I'm not for that, because we need to start cutting costs internally before we start laying this on the ratepayers.”


During a June meeting month Toney suggested a hiring freeze as well as a temporary halt on pay increases for the district's 15 employees, but received no support from fellow board members. He also said the district's benefit and salary packages are “overdone” and should be scaled back.


In making the original proposal for a 39.4-percent rate increase, McCosker was concerned about overcoming an estimated $250,000 deficit, a number which since has been reduced by about $100,000. However, McCosker cautions that without audits it's hard to know the district's true financial picture.


That original proposal also would fund a $450,000 capital improvement plan to update the system, said McCosker.


“We have $14 million worth of stuff that is getting older as we speak,” he said at a recent meeting.


Among the equipment concerns is the need to replace pipes and tanks, including the district's redwood storage tanks located in High Valley, which hold 200,000 gallons of water and could cost as much as $750,000 to replace. There also are needs for a water plant and capital improvements at the wastewater plant, said McCosker.


Toney said he believes the district should hold off on capital improvements and tank replacement projects until it gets its financial house in order. He also suggested the district pursue entrepreneurial opportunities, such as selling treated wastewater to farmers rather than having it pumped to The Geysers steamfield.


Anisman said he believes the rate hike is needed in order to do the significant upgrades the district needs – from new tanks to maintenance – which he compared to making the jump from DOS to a Vista computer operating system.


“The people I have heard from personally have all said, 'We need a raise',” said Anisman.


The rate hikes are necessary, and not a luxury item, said Anisman. If the ratepayers don't shoot the proposal down Aug. 16, it will likely go forward.


McCosker said Supervisor Denise Rushing helped get the district some budgetary relief by securing an agreement with the county to make an early, $80,000 payment from property taxes to the district, which Rushing urged instead of taking a loan. She's also suggested the district ask the county to pay its water bill to the district early.


“Denise Rushing has come through on her promise and moved mountains to get early payments,” he said.


E-mail Elizabeth Larson at This email address is being protected from spambots. You need JavaScript enabled to view it..


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