I would like to begin by thanking blogger extraordinaire John Crawford for organizing this fundraiser; the gracious Melissa Thew for hosting this event; John Herrmann and Anita Delmer for having the good sense and fortitude to sign the letter challenging the water rate hike; and all of you here today, who have contributed your time or money in support of our cause.
But first a little background, because to paraphrase Mark Twain, the City has shed much darkness on the subject of the water rate hike.
Historically, the City has been the purveyor of its own water. However, it has also entered into water contracts with other municipal suppliers.
To fund infrastructure improvements, make repairs and subsidize operating costs, the City floated two bonds: one in 1998 for $6,475,000; and another in 2003, for an additional $6,750,000. More recently the City borrowed $1,500,000 from the San Gabriel Water District for water-related purposes.
According to the City, our total current debt is $18,757,563, which includes bond interest. Unfortunately, I cannot vouch for these numbers as the City has a history of providing inaccurate or incomplete information regarding Sierra Madre's water system and water debt.
I will focus on the inaccurate or incomplete information that the City provided to the residents in connection with the water rate hike in a moment. If you'll indulge me for a few minutes, however, I wanted to share with you the first time I was misled on the subject of Sierra Madre's water.
At my first City Council meeting as your Council member in 2006, I was asked to cast a vote approving a proposed contract with the Metropolitan Water District. The contract memorialized the parties' agreement to connect the MWD's water line running down Grandview to our municipal water supply. The City and newly elected Council Member Mosca claimed that we lacked an adequate supply of water to extinguish a wildfire. According to Council Member Mosca, waiting to approve the contract put the City at risk. Because I had just been installed in office, I asked to continue the hearing so that I might study the proposed contract. The Council rejected my request to continue the hearing and approved the contract over my objections.
Well, in 2008 a wildfire swept through our hillsides. It was extinguished without any of the MWD's water because Sierra Madre had an adequate supply and the connection to MWD's water line had never been made. Last time I checked there still was no connection to the MWD water line!
Disinformation has also been the City's rule as far as the water rate hike is concerned.
On May 13, 2010, the City Council began the process which culminated in the water rate hike. Towards that end, the City staff sent ratepayers a written notice regarding the proposed rate increase. That notice was intended to comply -- but did not -- with California's Proposition 218. For those of you unfamiliar with Proposition 218, it was a Proposition approved through the initiative process. It was intended to enhance voter participation in the efforts of municipalities to increase their revenues.
At this point I want to note that Proposition 218 is not merely a regulation or statute, but is part of the Constitution of the State of California.
Among other things, Proposition 218 requires that at least 45 days before a hearing on a water rate increase that Sierra Madre provide the ratepayers with a notice that contains the amount of the proposed fee and the reasons for that fee. That notice contained no such information.
First, the notice did not provide each Owner with the amount of the proposed rate increase as required by Proposition 218. Instead, the Notice required each Owner to estimate his or her increase based on such factors as the meter size and the possible applicability of a discount for "low income." Because the Notice lacked definitions or explanations for such factors, however, it was impossible for each Owner to make any estimation of meter size or determine whether he or she qualified as "low income."
How many of you, when you received this notice, knew your meter size?
How many of you, when you received this notice, knew what the City meant by low income and more importantly whether you qualified for a low income exemption?
As if these violations of Prop 218 were not bad enough already, the City continued to consider the proposed rate hike at subsequent City Council meetings without sending the residents additional written notices. Even worse, the City in October 2010, determined that the original, proposed rate increase from May 2010 should be changed. That's right, the rate hike that the City proposed to implement in October 2010 and which it finally approved in January 2011 was not the rate increase it proposed back in May of 2010.
How many of you knew that the City approved a different rate increase? How many of you received a notice, as required by Proposition 218, informing you of the revised rate increase? The answer is none, because the City never sent one!
Worst, the reasons the City provided for the rate increase were misleading at best. The City's party line has been that much of the rate increase was to fund capital improvements. To replace, for example, aging pipes. In a letter to a resident in August 2010, however, the City conceded that the rate increase was not enough to fund a pay as you go capital improvement program. "Funding a capital improvement program to begin immediate replacement of deteriorated water mains (for example) would require a rate increase significantly higher than what was proposed earlier this year."
Then, in October 2010, the City conducted a "Water 411" presentation complete with PowerPoint slides.
Not one, but two PowerPoint slides state that the rate increase "did not provide for a pay as you go capital improvement program."
Instead, the PowerPoint slides reveal the driving force behind the rate increase - the water debt. The PowerPoint continues "the proposed rate increase covered only the bond requirements and projected operational expenses."
How many of you here today would have protested the proposed rate increase had you known that none of the money was being used for repairs or improvements?
Despite our repeated demands, the City has refused to comply with the notice requirements of Prop 218, leaving only a legal challenge, which is the filing of a writ of mandate, as the instrument of our redress.
I also note that a trial court in Merced County recently heard a case involving the City of Livingston's alleged violation of Proposition 218 based on, among other things: the City's failure to provide adequate notice of the hearing on the rate increase; failure to provide separate notices for hearings on the rate increase; and failure to provide a separate notice of a revised rate increase. Does any of that sound familiar?
The Court ruled in favor of the ratepayer plaintiff based on all of these failures and against the City.
In closing, I want to thank you all again for contributing to this cause, which is nothing less than a vindication of our rights.