today
9 a.m. 15th Annual Plant Sale Bayside Grange
read >10 a.m. 35th Annual Daffodil Show Fortuna River Lodge
read >10 a.m. Peace Begins with ME Eureka Center for Spiritual Living
read >10 a.m. Annual Juggling Festival Humboldt State University
read >10:30 a.m. Learn How to Meditate Humboldt Area Foundation
read >11 a.m. Understanding Islam Arcata Library
read >noon Rainwater Harvest and Reuse Systems Living Earth Landscapes
read >2 p.m. Antigone Matinee College of the Redwoods
read >2 p.m. So Hum Tales Mateel Community Center
read >2 p.m. Open Jazz Jam Morris Graves Museum of Art
read >2 p.m. Irish Tea and Celebrity Cake Auction Fieldbrook Winery
read >2:30 p.m. Open Mic World Cup Cafe
read >6 p.m. Vintage Jazz (jazz) Chapala Cafe
read >6 p.m. Competitive Scrabble See Event Description
read >7 p.m. Open Mic Mosgo's
read >7:30 p.m. Zoe Boekbinder Westhaven Center for the Arts
read >8 p.m. Karaoke at Bear River Casino Bear River Casino
read >8 p.m. Karaoke Blue Lake Casino
read >8 p.m. Cabaret Arkley Center for the Performing Arts
read >9 p.m. Deep Groove Night Jambalaya
read >9 p.m. Piano Ben Six Rivers Brewery
read >previous columns
Dec. 24, 2009
Poor Climates
It ain't enough by a long shot, but the Copenhagen Accord was neccessary
read >Dec. 17, 2009
Hopenhagen
Tensions high as the last week of the climate change conference gets underway
read >Dec. 10, 2009
Early Days, Late Days
Hope and trepidation at the opening of the UN climate change summit
read >
Photos
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Eureka sewage treatment plant and water tower. Photo by Heidi Walters
Waste Water
Inside the byzantine finances behind Eureka's proposed water rate increases
By Ryan Burns
Solve this riddle: The Eureka Redevelopment Agency owes the city's wastewater fund more than $5 million. Yet, according to city officials, the city technically never loaned the agency that money (with one exception) -- not from the wastewater fund or anywhere else. It spent the money on sewer system projects, just as you'd expect: repairing pump stations, replacing sewer pipes, etc.
How can there be debt when no money was exchanged?
It gets more confusing. The Eureka City Council and the Eureka Redevelopment Agency are separate legal entities, yet they're made up of the same five people. This makes for a bizarre, Mad Hatter-type scene at public meetings when the City Council "adjourns" and then "reconvenes" as the Redevelopment Agency. They don't even stand up.
Eureka City Councilman (and, consequently, also Redevelopment Agency Board Member) Larry Glass even gets mixed up sometimes. "Some of these things are so complex and confusing you don't even know where to start asking questions," he said last week. Glass has been looking into the City's labyrinthine finances, trying to understand why residents' water and sewer bills are set to jump almost 75 percent over the next five years.
The reasons seemed straightforward back in September, when the council first laid eyes on a staff report about the issues: Maintenance and repairs are needed, as is new infrastructure like the Martin Slough Interceptor, a long-planned collection and pump station that will be shared by the City and the Humboldt Community Services District. The closure of the pulp mill is another factor, since it eliminated Humboldt Bay Municipal Water District's biggest customer. Its other customers, including the City of Eureka, now have to pick up the slack.
Not surprisingly, things have proved to be a bit more complicated than that. Glass has questioned the City's decision of three years ago to replace all its old water meters with electronic ones. The revenue boost that was supposed to result has not occurred. Meanwhile, San Luis Obispo developer Forster-Gill, Inc. has expressed doubt that the City's infrastructure can handle the company's planned new development in the Ridgewood neighborhood south of town. (The City insists it can.) And now, citizens and taxpayer groups are up in arms over the proposed rate hikes.
First, let's get back to that riddle: As of June 30, the end of the last fiscal year, the Eureka Redevelopment Agency owed the City's sewer fund $5,028,172 for a long list of projects, some dating back more than 25 years. To date, none of those debts have been repaid. On its face, this appears to be a violation of a City ordinance -- Title III, Chapter 5.015(C) -- requiring all loans from the sewer fund be repaid annually, with interest. But, according to City Finance Director Valerie Warner, that's not exactly the case. These particular debts, with one exception, aren't subject to that ordinance. Why?
"I think it's because they're not exactly viewed as loans," Warner said.
The money in question, she explained, came from the sewer fund and was used for sewer projects within the City's redevelopment area. If Eureka didn't have a redevelopment agency, these would all have been simple A-to-B transactions. Instead, the projects were "booked" to the Redevelopment Agency for the following reason: Magically, the sewage fund will eventually get reimbursed for work it might have done anyway.
This is due to the intricacies of redevelopment law in California. Redevelopment agencies have access to a unique kind of financing that city funds can't touch, called "Tax Increment Financing." This funding mechanism, invented by the state in 1952, allows redevelopment agencies to spend future tax revenues, based on the assumption that the improvements purchased with that money will eventually generate those gains.
Here's how it works: Say a city has an ugly piece of property. Property tax value in the area is minimal; sales tax is nil. But since the property falls into a designated redevelopment area, a redevelopment agency can spend, say, $10 million to clean up the site, build some new roads and maybe put in a cute little schoolhouse. Soon, people want to live there. Property values skyrocket. The city starts earning higher tax revenues, and the redevelopment agency's investment pays off. This is how redevelopment laws work.
In the case of Eureka's wastewater fund, various projects over the last 25 years were picked up and claimed by the Redevelopment Agency. The wastewater fund paid for the projects, and will someday be able to recoup its expenditures. The Redevelopment Agency, meanwhile, gets to claim the money that went into the projects as debt. And debt makes the whole redevelopment cycle spin; debt is necessary for redevelopment agencies to claim tax increment financing.
All told, the Eureka Redevelopment Agency owes the City more than $9 million, but almost all of that stems from the kind of financial wizardry outlined above. The only actual transfer of money from the wastewater fund to the Redevelopment Agency occurred in 1998: The fund loaned nearly $1.6 million to the agency to help finance the Eureka Boardwalk. Since about $675,000 of that loan remains outstanding, this particular transaction apparently did violate the City ordinance prohibiting such loans. However, Warner said that's a moot point.
"If we were guilty of violating our ordinance, the solution would be to pay it back immediately with interest, which is exactly what we're doing," she said.
City Manager David Tyson said Monday that when the City borrowed that money, officials were aware of the consequences. "At the time, the idea was that [the loan] was to be paid back at an interest rate greater than what the money was earning sitting idly in our reserves," he said. The proceeds for the payoff will come from bond sales, Tyson explained.
Some residents have characterized this redevelopment-enabled spending as irresponsible, and they've called for the agency to pay its debts to the City. But both Tyson and Warner said this is the standard procedure for financing major infrastructure. "The same way a person takes out a mortgage for their house, you pay for it over the period of time that you use the assets," Warner said.
Some residents, including City Councilman Frank Jager, argue that the City has allowed its metaphorical house to fall into disrepair. More than a third of the City's wastewater collection system was installed before 1920, including some pipes that are more than 100 years old. Deputy Director of Public Works Bruce Young said maintenance of the water and wastewater systems is "kind of like painting the Golden Gate Bridge: You need to constantly be working on your infrastructure to keep it moving forward." But there's no sense replacing something that's still functioning, he added. "It's a matter of, do you spend the money needlessly, before you have to?"
An exception to this only-as-necessary approach was the City's installation of electronic water meters -- a $2.8 million investment that was supposed to increase revenues, though Warner said that wasn't the primary reason for the change. The meters have streamlined the logistics of meter-reading and allowed for more accurate billing, she said. And sooner or later, all the old meters would have been replaced anyway. Still, she said, she's not sure why revenues have not increased as the City expected. Old meters tend to slow down, causing the City to under-charge customers, she said. But after a full year using the new meters with no additional revenue, the City started to troubleshoot. They found that some of the meters had been set up incorrectly, resulting in more under-billing.
"We made a number of corrections to those," Warner said, "and I'm still not seeing the additional revenue that we expected." The troubleshooting continues.
Justified or not, the rate increases will be more than in inconvenience to many Eureka businesses. Barbara Groom, owner of Lost Coast Brewery and Café, had the City calculate her projected bill over the next five years. The result was a jump of more than $60,000 per year -- from $44,000 to $105,000 under the new rates, she said. Most of that would come from her wastewater bill, which is based on water usage. But Lost Coast Brewery's water doesn't go into the wastewater system; it goes into bottles.
"It's very hard to compete up here as it is, since we're not on the I-5 corridor," Groom said. "But we always had lower water and sewer [rates] than big cities. That helped us stay competitive." The company, which has expanded in recent years in defiance of economic trends, is on the verge of acquiring property in Eureka for a new brewery. "We might have to rethink that," Groom said.
Tyson said the City will do everything it can to lessen the burden on businesses like Lost Coast Brewery and residents alike. He even hinted that the proposed rate hike may yet be negotiable. In fact, City staff may be rethinking its proposal entirely. "We are looking at alternatives to the [increased] rates," Tyson said, adding, "I can't share them yet because we're still in the analysis phase."
One way or another, though, infrastructure improvements must be made, and the City's meager reserve funds must be built up. While staff understands the burden this puts on rate-payers, these are necessities, Tyson said, not, as some have argued, items on a wish list. "It's really time for the City to address ... to continue to address its infrastructure," he said.
The City Council will hold a public hearing on the possible water and sewer rate increases at its Jan. 5 meeting.
1. Bertrand Giasson:
Dec. 31, 8:40 p.m.
why did the water tower have to be replaced LACK OF MAINTANENCE Why wasthe "wastetreatment plant" built without extra capacity? So more money can be spent on an addition. Why was a sewer line built through a marsh wich makes repairs and maintainence impossible? So money can be wasted? And now everyone has to pay huge rate increases? I DON'T THINK SO!!
2. Mark Blume:
Jan. 1, 9:54 a.m.
If I had a business and ran it like the City of Eureka runs their business,It would end up in bankruptcy,not to mention criminal court.Eureka needs to split up those two agency's and start running the city's businesses like a regular business,in the red,not the black.Time for us citizens to hit the city with a lawsuit and make them stop putting us citizens in the poor house.
3. blume of crap:
Jan. 1, 8:11 p.m.
The two agency's ARE "split up", you moron.
Hit the City "with a lawsuit"? Based on what exactly?
Lots of big, tough words, but no substance behind them, Mark; Try reading the article once again, Mark, only this time, pay attention to the words.
I am so sick of people like you spouting off with absoulutely no understanding.
4. Ron Kuhnel:
Jan. 1, 10:50 p.m.
Interesting article and helps to explain a little about why the city feels it needs so much money so fast for fresh water delivery and wastewater disposal and treatment.
But it does not really explain why there is such an uproar over this proposal.
Here are some of the reasons for the outcry.
1) The city sent out a nearly unintelligible letter and rate chart to Parcel Owners and Rate Payers that most people could not understand and many threw away.
2) They eliminated the Senior Sewer Rate unnecessarily
3) They came up with a regressive rate formula that disproportional impacts lower income citizens and encourage waste not conservation.
4) They tied your sewer bill to your water usage negatively impacting those who water lawns or gardens. They claimed that your winter water usage would be used to calculate summer sewer bill but neglected to include this in the proposed rates.
5) They gave renters who do not pay their own water bill no say in the matter.
There is more, but basically this rate increase proposal was poorly done and attempts to do too much too fast at a time when citizens are already reeling from a down economy.
It is good to read the city manager said “the proposed rate hike may yet be negotiable. In fact, City staff may be rethinking its proposal entirely.” Because that is exactly what needs to be done.
This attempt to raise rates under Prop 218 needs to be set aside. Public workshops should be held to gather citizen input into the proposed new rate structure. Money owed the wastewater fund should be repaid, and the long list of future projects should be re-prioritized to lower financial impact. This rate proposal will have to be done over, and due to Prop 218 in much the same manner, but if the rate increase is toned down to a reasonable amount and a more equitable rate structure proposed than this can be something the city council could in good faith approve. But not this one.
5. Get a Clue Ron:
Jan. 2, 12:26 p.m.
"2) They eliminated the Senior Sewer Rate unnecessarily"
When the attorneys say that a Senior discount is illegal, I take their word over the words of a member of the Humboldt Taxpayers league. Preferential rates are illegal, Ron. Addtionally, Seniors are the most affluent segment of our population.
Their waste still needs to be treated, and their water is the same as everyone elses, so why on earth do they merit a discount; if they are paying for the cost of treating the waste and the water, and they receive a discount, then the rest of us would have to cover the cost.
There wasnt too much of an "outcry" as only 35 or so people showed up to the workshop.
Your disingenous diatribe calls for workshops as if there havent been any, and there have - and hardly anyone showed up, Ron.
6. Ron (again):
Jan. 2, 3:22 p.m.
Actually I do think I "have a clue" and your use of the term "disingenous [sic] diatribe" to describe my call for public workshops does not change the facts. What was held before were not workshops...they were presentations, where poorly publicized meetings allowed the city to present its rationale for its poorly thought out rate models and answer questions.
The attorney I have heard weigh in on this (the one that wrote Prop 218) said that preferential rates are not illegal unless they are tied to usage measurements, which currently they are not. Can you cite which attorney advised you otherwise?
Finally, sure some seniors are affluent, but many are not, and are just getting by on minimal social security. Whether ore not they should be granted a discount is a public policy question, but to suggest it cannot be legally done is what is disingenuous.
7. Get a clue Ron:
Jan. 2, 4:33 p.m.
You dont have a clue as what a workshop is, dude.
What you think that was at the Wharfinger building where a whopping 35 people showed up? That, my friend, was a workshop.
You hit the nail on the head though, friend - as the rates are changed; as they are set to be properly based upon usage, WHICH IS WHAT IS BEING PROPOSED -Senior discounts will be illegal.
If you call rate models which were which were calculated by engineering and financial professionals, "poorly thought out", it's only because you are obviously gearing up for another run at a city council seat -
meanwhile the folks are basing the new rates on the true cost to operate the system and build reserves.
Here's the kicker though - leave the rates as they are; then you can have your senior discounts and artifically low rates - but - under new guidelines, namely prop 218, rates MUST be devised based upon usage measurements.
So - after you've decided to keep our rates the way they are, where are you gonna buy the water? The water district won't sell it to us unless they can cover the cost of delivering it to us, and how are we going to pay for future infrastructure costs?
8. Sue Brandenburg:
Jan. 2, 5:14 p.m.
Go to March 1, 2001 in the North Coast Journal. Cover article Eureka's unsanitary sewers. Compare it with today's article. Mr. Tyson was quoted as saying the city had money in the reserves for the Martin Slough Interceptor. Compare everything with this current article. As to proposition 218 taking away the senior discount, it definitely calls out for fair share. Helping lower income people can come from the general fund and shouldn't apply to just one class of people
9. Get a Clue Ron:
Jan. 2, 5:40 p.m.
"Helping lower income people can come from the general fund and shouldn't apply to just one class of people"
While I agree with the sentiment Sue, that any discount should apply to lower income folks, as opposed to just Seniors, who, again, as a whole are the most affluent segment of our population, you lost me with a call to fund these discounts out of the general fund.
Where in the hell is the general fund going to come up with the money to fund these discounts; it's currently running at a multi million dollar deficit - in the RED, Sue.
This is what is ironic to me - that folks wanted to get rid of the utility users tax, which would have helped keep the general fund in the black and perhaps helped fund a legal discount for low income folks (not an illegal discount from the water or sewer funds)-yet people like Sue throw out phrases like "helping lower income people can come from the general fund".
Uhh, no, there are NO FUNDS available to help, clang, clang clang, wake up people. Course it's easy to try and cast the blame on the city manager, or whoever, when funding has been removed because thats what folks like the humboldt taxpayers league wanted.
Infrastructure costs have risen dramatically, Sue, particularly since the Katrina event in 2005; the costs of structural steel, and iron, as well as other items necessary to build sewer and water treatment facilitiies have more than doubled since 2001.
10. Cheese and Rice:
Jan. 2, 6:38 p.m.
In reading this banter... I cannot wait until this gentleman provides all the answers to this troublesome concern. I remember a bumpersticker that asked the question, "where does it all go?" Sounds like it's gonna be backed up sooner or later, so it wont matter where the money comes from or doesnt come from, because we will all bask in the stink.
11. Sue Brandenburg:
Jan. 2, 9:52 p.m.
Well "Get a clue Ron" one million dollars for remodeling city hall. We're paying interest on that one. 2 million for unnecessary water meters. What was it 286,000 for a arbitrator for the fire and police department complaints. Saw where the city paid over 100,000 for someone to write a grant request. Saw where the city paid over 130,000 a couple of years ago for s study so they could have raises. How many properties aren't getting any property tax because the city has given them long term exclusive rights to bid. The city also under the guise of redevelopment has loaned l00,000's of thousands dollars to non-profits with deferred or amortized arrangements. None of them pay property taxes. If this city is broke it is because of poor management. Helping a few people with sewage rates shouldn't be a big deal in a well run city.
12. Get a Clue Ron:
Jan. 3, 11:46 a.m.
"2 million for unnecessary water meters"
Sue, the meters needed to be replaced - the old meters old and had far exceeded their recommended useful life; furthermore, that is an expense of the Water fund, not the General fund, so no way to fund the discount from that.
Many if not most of the other items you mention do not involve the general fund, and if they did - they are only a partial g/f expense.
Regarding Redevelopment, you can't put the toothpaste back into the tube; the property tax increment earned there goes into the RDA.
The non profits that you mention that are not paying any property taxes are providing other benefits to the city, that you conveniently neglect to mention, like providing affordable housing, something mandated by law (in other words, they are helping needy people).
13. Living In Eureka:
Jan. 3, 2:18 p.m.
In the last few months the residents of this city have seen their garbage bill & their sales tax increase to try & keep this city up and running. Now they want a VERY LARGE increase in the sewer/water service??? What part of "tighten your belt" does the city not understand? Bad management? You bet. The city might have thought of the problems we are having YEARS AGO! Maybe before the Board Walk, maybe before the remodel of City Hall, or the new water meters we didn't need. We can live without all of these things, but try live without flushing your toilet! If the city wants to do away with the senior discount, then everyone should be required to pay the same amount for water & sewage. Why should a resident that uses less water than a hotel or laundromat, have to pay more for service??? If the residents can not afford this increase, neither can the businesses. That will mean more jobs lost, just what our area needs! Poor management? You bet!
14. Get a Clue Ron:
Jan. 3, 4:35 p.m.
L.I.E., our rates in Eureka will remain among the LOWEST in the state, even after the increase.
"then everyone should be required to pay the same amount for water & sewage. Why should a resident that uses less water than a hotel or laundromat, have to pay more for service??? "
Everyone WILL pay the same rate for water, L.I.E.; however it will cost differing amounts for sewer based upon what type of waste you are putting into the system.
A brewerey, or a restaurant for example is going to pay more in waste fees because it costs more to treat that waste.
Too bad the pulp mill shut down. No more free ride for us.
15. Get a Clue Ron:
Jan. 3, 4:35 p.m.
L.I.E., our rates in Eureka will remain among the LOWEST in the state, even after the increase.
"then everyone should be required to pay the same amount for water & sewage. Why should a resident that uses less water than a hotel or laundromat, have to pay more for service??? "
Everyone WILL pay the same rate for water, L.I.E.; however it will cost differing amounts for sewer based upon what type of waste you are putting into the system.
A brewerey, or a restaurant for example is going to pay more in waste fees because it costs more to treat that waste.
Too bad the pulp mill shut down. No more free ride for us.
16. Sue Brandenburg:
Jan. 3, 4:55 p.m.
To: Get a clue Ron, It has occurred to me who you are. I am now going to address you as Sweetie. It is just the opposite of what I usually refer to you as. The water rates are going up too, so you can't use the water meter theory to discount the fact of mismanagement. Let's use one of the non-profits meaning non taxpayers that the City of Eureka has given deferred loans. They own 6 million dollars of property in the county, mainly in Eureka. The CEO of this non taxpaying entity, that you say helps the needy is helping herself to $90,000 a year. They keep their "affordable housing" in shambles. But, recently on the internet I read where they now have a profit-sharing plan. How's that for a oxymoron. 2008 they put $265,000 into the plan. That is if their tax return is correct. Next, the MAC, the city is paying just about 50,000 to 55,000 a year in loan payments. Did that come out of another account too. There are enough l/2 houses in the City of Eureka for a population of 280,000. The money that has been wasted in this city could feed a small country.
17. Get a Clue Ron:
Jan. 3, 6:34 p.m.
Uhhm, no, Sue, I don't believe you have a clue either, especially as to who I am.
I dont have any idea of what non profit you are talking of, but if they are paying good wages and offering their employees a retirement plan (that IS what a profit sharing plan it), then I say that is fantastic.
I'm not exactly sure what "water meter theory" you are referring to, other than to guess that you think I am someone else.
The non profits I have referred to are the ones that have affordable housing, Sue, not halfway houses. Stay on topic you stupid bitter old bitty.
As far as costing US the taxpayers of Eureka, YOU have done a fine job with your frivolous lawsuits.
Anyway, YOU made the completely IDIOTIC statement that water and sewer discounts could be paid for out of the General Fund. ONCE AGAIN - REALITY CHECK - the general fund is in a deficit position to the tune of several MILLION DOLLARS.
Now, I do not work for the City, nor am I a council member or member of any commission, despite your thinking to the contrary.
What I see people like YOU, Sue, doing is making outlandish claims (you know, like saying Eureka can afford to pay discounts from the general fund).
When BULLSHIT is called, quite properly on such idiotic cries, you do an about face and hurl monkey poo at past actions of the the City - actions, my dear Sue that are irrelevant when it comes to our discussion - I didnt take part in any of these decisions, and what is done is done
while such decisions may have a part in why the general fund is in the condition it's in (and I would argue that it is the State of California as a whole, as a state govt, and the Ca economy which has brought Eka and many, many cities to their knees) the fact is that the General fund can NOT AFFORD to pay discounts are.
I simply call bullshit where I see it, and, dear Sue, I cannot even see you, as you have covered yourself in it.
18. Sue Brandenburg:
Jan. 4, 9:07 a.m.
Get a clue Ron: You just smeared your ignorance all over the internet. That is why people like you don't use their names.
19. Get a Clue Ron:
Jan. 4, 7:12 p.m.
Sue, Sue, Sue,
Please point out where I am incorrect. Show the "ignorance" that I have "smeared all over the internet".
I've kicked your bitter old ass to the curb with facts, Sue.
Please don't act all high and mighty because I've called you as you are - a bitter old woman. After all the name calling you've done over the years, your tender sensiblilities shouldnt be offended in the least.
The ONLY thing that I have corrected you on is your bullshit that the general fund could afford to pay for discounts. Please explain how that is smearing my ignorance all over the internet.
BTW, Sue, most of us on the old blogosphere are anonymous. Doesnt make what we say any less true.
20. Bob Garlicky:
Jan. 5, 12:24 p.m.
The above comments make me sleepy! I think I will take my afternoon nap now! Why don't you [sheeple] investigate the blantant corruption and greed as it applies to the sewer plant (43 million dollars and Donna Westfall being the culprit behind the $38,000 that the so-called CITY COUNCIL MEMBERS had spent on the investigagtion of her allegations here in Crescent City baby!) construction CR CY tax monies wasted by crafty city council (YES!) members existing in Del Norte County, California?
21. geldtrick:
Jan. 18, 1:24 p.m.
Krass! Hätte ich garnicht gedacht...
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