Scandal at the City … Utilities department needs an overhaul

By Craig Powell

Last month came the blockbuster news that in 2013, two employees of the city’s Department of Utilities were caught engaging in sexual activities in the backseat of a city vehicle in a city park on city time. Both were married, but not to each other. City managers gave the couple what was effectively a slap on the wrist: temporary cut in pay, loss of some vacation time and a “no fraternization” order.

But when a whistleblower complaint was filed almost two years later with the city auditor’s office, the full story started tumbling out. The two employees lied during the investigation of the original complaint, claiming that that had done no more than “kiss twice.” It turns out that they were actually spending up to three hours of their workdays in a city trailer having sex. City emails and interviews confirmed that they also bought, sold and used cocaine and alcohol while in the trailer. They admitted that it was “possible” that at least one of the employees drove city vehicles while under the influence of alcohol and cocaine. They also sometimes put in for overtime on days when they partied for hours in the trailer.

They were dumb enough to exchange sexually explicit emails and pornographic pictures and videos with one another using city email accounts. One of them even had a practice of sending pornographic emails to other DOU employees, including high-level DOU employees, none of whom apparently objected.

Out of respect for their families’ privacy, I’ve chosen not to disclose their names. But since both held senior positions with major responsibilities before they resigned, it’s entirely fair to ask: Did their extended “extracurricular activities,” which apparently went undetected by oblivious senior DOU management for at least two years, compromise public health and safety? One of the them was a project manager in charge of managing city contracts with the contractors that have been installing water meters and tearing up our streets to move backyard water service to the streets in front of people’s homes, the source of much consternation, waste and dangerous construction practices in recent years.

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Eye on Sacramento Urges City Council: Give Back the Tax!

MEDIA RELEASE

Date/Time: March 21, 2016, 4:00 p.m.
Contacts: Craig Powell, President,
Eye on Sacramento
Phone: (916) 718-3030
E-mail: craig@eyeonsacramento.org

Sacramento City Council Poised to Increase Utility Taxes By

$10 Million/Year as Part of its Major City Utilities Rate Hikes;

Eye on Sacramento Urges Council: Give Back the Tax!

Tomorrow evening, the Sacramento City Council is poised to approve double-digit, four-year hikes in city water and sewer rates. In 2018, the council is expected to seek voter approval of 16% annual hikes – for four straight years – in the city’s storm drainage rate. Collectively, the water, sewer and storm drainage rate hikes, if approved, would draw an estimated $88 million more each year from the pockets of Sacramento residents and businesses once fully implemented.

But there is more to the story.

Because of an imbedded 11% city “utility tax” that is unknown to most city residents, close to $10 million of the $88 million will be siphoned each year from utility customer payments and diverted into the city’s general fund to pay for the general costs of government. The diversions will reduce resources available to keep city water safe and clean, and to keep our sewer and storm drainage systems operating effectively. The diversions also drive up the need for future city utility rate hikes.

“The Council has a clear conflict of interest in deciding whether and how much to increase city utility rates,” said Eye on Sacramento President Craig Powell. “They know full well that for every dollar they increase city utility rates, they automatically divert 11 cents of that dollar into the city’s general fund due to the utility tax. This creates an almost perverse incentive for tax-hungry politicians to raise utilities rates as high as possible so as to inject more dollars into the general fund which councilmembers can spend any way they please,” Powell added.

“The Council can eliminate its conflict of interest and ease the burden on hard-pressed Sacramento residents and businesses quite easily: by returning to the Department of Utilities the $10 million in higher utility taxes that the utility rate hikes would generate each year, preferably with instructions to rebate 100% of the funds to utility customers,” Powell said.

“Several councilmembers have made public statements that major utility rate hikes are needed to upgrade and maintain our water, sewer and storm drainage systems. If that is, in fact, their sole and honest motivation for supporting major rate hikes, they can prove it quite easily by returning the nearly $10 million in higher utility taxes that the rate hikes will generate each year back to the Department of Utilities, instead of snatching it from the pockets of hard-pressed ratepayers for purposes entirely unrelated to utilities service,” Powell concluded.

Just how hard-pressed are Sacramento residents? Based on the most recently available data from the U.S. Census, EOS has computed that the mean household income in Sacramento has declined a stunning 12% from 2007 thru 2013.

The City Council will meet tomorrow evening, Tuesday, March 22nd, at 6:00 p.m. at City Hall, 915 I Street, Sacramento, CA 95814. Make your voice heard by phoning, e-mailing or coming down to City Hall tomorrow evening to make your voice heard on these important issues. Join us in urging the City Council to “GIVE BACK THE TAX!”

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City shares footage of encampment clean-up

MEDIA RELEASE

Date/Time: March 01, 2016
Contacts: Linda K. Tucker
City of Sacramento
E-mail: ltucker@cityofsacramento.org
Phone: (916) 808-7523

City shares footage of encampment clean-up

Hazardous waste, garbage must be hauled off bi-weekly to maintain public health and safety

See video of the clean-up from Thursday, Feb. 25

Note to news editors

  • Total running time of video (b-roll and sound on tape) 2:05
  • Spokesperson in video is Enrique Hernandez, Integrated Waste General Supervisor, Department of Public Works, Recycling & Solid Waste Division
  • High resolution footage is available upon request.

Background

Large truckloads of garbage and hazardous waste from an illegal campground were hauled away late last week from private property near Sutter’s Landing Regional Park and the American River in the City of Sacramento. It’s a recurring event.

Illegal camping of up to two dozen people has periodically occurred at this location for more than a decade. Taxpayers pay for a special police and social service team to offer the group services before clean-ups take place. Those that choose not to accept services simply move on and leave truckloads of hazardous materials behind. Needles, car parts, tires, feces, evidence of stolen items mixed with garbage, wet sleeping bags, and housewares are the norm. Clean ups like this are necessary throughout the City twice a month.

The City taxpayer cost of Public Works equipment and staff amounts to at least $80,000 a year for clean-up of encampments like this one. Also, Sacramento Police dedicate a team of two officers and a sergeant to serving homeless people and addressing encampments. At least 3,700 cubic yards of debris was picked up by the City last year. That’s about 300 large dump truck loads. See the monthly data.

Protestors at City Hall since December repeatedly ask the City Council to repeal the camping ordinance. The City believes repealing the camping ordinance to allow camping anywhere on public and private property is not safe, sanitary, or a means to ending homelessness. Alternatively, the City dedicates taxpayer dollars toward services. The City also works with Sacramento County and multiple partners on finding permanent solutions to housing homeless people.

Get the facts from City Hall.

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The Pot Tax … Helping kids at the expense of the general fund

By Craig Powell

Jay Schenirer means well, he really does. But programs launched with the best of intentions are no guarantee of sound policy or effectiveness, as Schenirer’s recent proposal confirms.

His basic idea is to dramatically increase city funding of programs for children and young adults by getting voters in June to approve a “new” 5 percent tax on marijuana cultivation, with the proceeds directed exclusively to youth services, bypassing the city’s general fund. Schenirer and his hardworking staff have spent the past year compiling research studies that show the benefits such programs can have on outcomes for kids.

Schenirer is certainly not new to youth issues: He’s spent most of his adult life working on them—in state service, on the city school board, as an education consultant and as the founder of youth-focused nonprofits since his 2010 election to the city council. (He’s raised more private funds for these nonprofits from corporations and foundations than any other councilmember with the exception of our city’s star private fundraiser, Mayor Kevin Johnson.) Schenirer is almost certainly the council’s foremost authority on youth issues, with Rick Jennings—the long-term CEO of the Center for Fathers and Families who served on the city school board alongside Schenirer—a close second.

Schenirer and his staff have prepared a thoughtful 22-page blueprint for how to create a new city department of youth services, an idea that city manager John Shirey threw cold water on by calling it a wasteful increase in city overhead. Shirey prefers to have the parks department, which administers the city’s current youth services programs, handle any expansion of such programs.

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The Grinch Backs Down – Utilities Department Reverses Policy In Time For Christmas

By Craig Powell

Inside City Hall

Last month, my column included my Christmas gift wish list to city leaders, pretty much all of which involved wishes for changes in the city’s troubled Department of Utilities. Instead of granting any of my wishes, the DOU acted like the Grinch last month when it announced the repeal of a decades-old policy under which it would repair breaks in the sewer pipes that run between a resident’s house and the sewer main that typically runs down the middle of city streets or alleys. This change in DOU policy was poised to sock a number of Sacramento residents hard in the pocketbook this season, including a widow on 34th Street, when a sudden reversal of DOU policy chased away the Grinch and saved Christmas for some Sacramento families, with an excellent assist by an able and energetic local TV news station.

Here’s a little plumbing lingo you’ll need to know: The sewer line that runs between your house and the city’s sewer main is called a lateral. The portion of the lateral that lies underneath your front yard is called the upper lateral, while the portion of the lateral that’s underneath sidewalks and city streets (and alleys) and connects up with the sewer main is known in the biz as the lower lateral.

Under a new DOU policy that went into effect on Oct. 1, the city stopped repairing both the upper and lower laterals, leaving it to homeowners to pay the often high cost of repairing such lines. The new policy is part of a DOU effort to reduce the level of service it provides residents while charging ever more for it (which, come to think of it, is pretty much a citywide policy now). It’s like tech industries but in reverse. For example, a couple of years ago, the city stopped picking up recyclable waste on a weekly basis and reduced service to every other week. We also lost street cleaning service as well as the claw, apart from its reappearance for three months at this time of year. After a brief pause, garbage rates are once again climbing. Of course, no one at the DOU suggested that garbage rates be lowered to reflect reduced levels of customer service.  Monopolists rarely do.

How much could homeowners end up paying under the DOU’s new policy on sewer laterals? In a recent ABC10 report on the issue, Karen Silva, owner of Navajo Pipelines, a major city contractor on the water meter project, said replacing a lateral line under a major thoroughfare could easily cost $50,000. She also expressed concern about the quality of work that some contractors might perform. “What if we have sinkholes? What if the sewer main collapses? Then what?”

Coincidentally (I think), in mid-October I had a lower lateral line collapse in the alley that adjoins an apartment house I own in Midtown. What would have been repaired by the DOU without charge two weeks earlier would now end up costing me $5,000. The ABC10 report included an interview with Clara Cid, the widow of the late renowned Sacramento Chicano artist Ricardo Favela. Cid was dealing with the same problem at her home on 34th Street: a break in the lower lateral in the alley behind her home. She faced the prospect of a Christmas ruined by the costs imposed on her by the new DOU policy.

But there actually is a “good news” ending to this story for Cid, as well as 40 other city residents who were informed in the past two months of problems with their sewer lines. Once ABC10 started peppering DOU with questions about its new policy, the DOU abruptly changed its policy once again, announcing that it would repair breaks in lower laterals. (But homeowners will remain responsible for repairs to their upper laterals.)

What left something of a bitter aftertaste about this episode was a follow-up email the city sent to Joe Rubin, the producer at ABC10 who produced the story. The email, from city media officer Linda Tucker, claimed, “The change in direction [returning to the former policy of the DOU repairing lower laterals] is in no way a result of any questions posed to the City by ABC10. Staff had been having conversations about a definitive direction throughout the last four weeks.”

The question is: Does anyone really believe that? To believe it, you’d have to believe that city staff began having “conversations about a definitive direction” (whatever that means) of the new policy almost from the instant the new policy was implemented, a policy that was itself implemented after months of DOU internal deliberation. It’s possible, but very unlikely. It’s much more likely that the DOU abandoned the new policy after feeling the heat of ABC10’s attention to a dumb policy that was causing Cid and others like her major financial grief. Why didn’t they simple acknowledge that ABC10 coverage was about to shine a very bright light on a dumb policy change and they decided to drop the new policy so the DOU wouldn’t look quite so much like a Christmas Grinch?

To understand the city’s highly defensive posture on such matters, you first have to understand the role that investigative journalist Joe Rubin and the media companies he’s been associated with (first, Sacramento News & Review and, now, ABC10) have played in exposing multiple instances of major waste and misconduct in the DOU over the past year or so.

Rubin’s exposes have included revealing tens of millions of dollars of waste in the installation of water meters in city sidewalks; exposing the wasteful DOU practice of abandoning backyard water mains long before they’ve exhausted their useful life; exposing the DOU’s use of a chemical in the city’s water supply that led to concentrations of a likely carcinogen that city tests revealed exceeded maximum EPA standards for almost a year; and revealing contracting irregularities and overbillings in the DOU’s chemical contracts.

This is not the first time city staffers have said that changes in city policy following a Rubin expose had nothing to do with Rubin’s news coverage. On Nov. 21, just one week after publication of Rubin’s blockbuster story in Sacramento News & Review that revealed wasteful practices in the city’s water meter and water main projects, city manager John Shirey announced that the city was changing its policies and would start installing water meters in people’s yards instead of in sidewalks and that each backyard water main would be examined to assess its remaining useful life. Shirey stated in his announcement that he had asked the DOU to conduct a review of the water meter and water main programs “well before [Rubin’s] article appeared,” meaning that the changes in city policy had nothing to do with Rubin’s expose.

Side note: Under the city’s new policy, water meters are supposed to be installed only in folks’ yards unless a homeowner specifically requests that it be installed in the sidewalk and agrees to pay a $400 fee. But Eye on Sacramento, the watchdog group that I head, is receiving reports that meters are still being installed by default in city sidewalks. We’re also received reports that DOU contractors are not always examining backyard water mains to assess their remaining useful life but are, instead, abandoning such mains and digging up streets unnecessarily to move water service to the street. (If you observe such practices in your neighborhood, please drop us a line.)

We at EOS were pretty skeptical of Shirey’s claim that he had ordered a review of the water meter program “well before [Rubin’s] article appeared.” So we filed a records request with the city that sought copies of all communications between Shirey and the DOU relating to Shirey’s alleged directive to the DOU to conduct a review of the meter and water main programs before Rubin’s article was published. City staff was unable to locate any such communication. It’s possible that Shirey instructed DOU director Bill Busath by phone or in person to conduct such a review, but it’s not likely. A city manager of Shirey’s skill and experience would almost certainly have made sure that a directive from him to a department director calling for a review of two of the largest capital improvement projects in city history be documented, at least by email.

Rubin gets under the skin of city managers because his stories uncover waste, fraud and abuse of taxpayer and ratepayer money and bad policies that embarrass city managers who, frankly, ought to be doing a better job of overseeing city government. It seems that they just cannot stand for Rubin to get any credit for triggering positive changes in city policies. Instead, they attack his stories.

Shirey’s public rebuke of Rubin and ABC10 for the story on excessive levels of a likely carcinogen in the city’s water supply made the point that the city never violated an EPA regulation. Well, that’s fine, but it’s also not relevant: The ABC10 report never claimed that the city violated an EPA regulation. ABC10 reported that numerous city tests showed that the city’s use of a test chemical (ACH) led to elevated concentrations of a likely carcinogen in the city’s water supply beyond that allowed under EPA standards for nearly a year. The report also expressed suspicions that the city may have shifted testing locations and taken the extraordinary step of injecting county water into the city water supply just days before a mandatory EPA test in order to dilute concentrations of the carcinogen to below EPA limits to avoid violating an EPA regulation and triggering an EPA citation.

The city is even hounding reporters who report on the ABC10 story, namely yours truly. After publication last month of my column, which included a brief summary of the ABC10 story on elevated levels of a carcinogen in the city water supply, the city’s Linda Tucker fired off an email to Inside Publications publisher Cecily Hastings that accused me of “propagating false information about our drinking water.”

Well. I knew that Rubin had the test reports in hand that proved the aEl Centro Reservoir trihalomethanesccuracy of his story. I also knew that ABC10 had its story vetted by ABC’s corporate legal counsel before running it. But out of an abundance of caution, I asked EOS policy director Erik Smitt, an engineer and experienced water plant operator, to analyze the data. He selected the test reports from a single city test site for review and plotted a graph that tracked the levels of the carcinogen over time. (You can view the graph at eyeonsacramento.org.) Smitt found that the mean (or average) concentration of the carcinogen at the test site throughout the one-year period in which the city was injecting the chemical ACH into the city’s water supply exceeded the allowable EPA standard of 80 parts per billion.  El Centro Reservoir trihalomethanes

Meanwhile, I’m pleased to report that Cid’s Christmas was not ruined by the DOU Grinch, thanks to the skilled and energetic reporting of the ABC10 team. As Cid was quoted as saying in the news broadcast, she considers the reversal of the DOU policy her family’s “own miracle on 34th Street.” And, yes, I’ll be asking the city in the New Year to credit me for the $5,000 plumbing bill I paid to replace the broken lower sewer lateral in the alley behind my property.

 

PROPOSED CITY UTILITIES RATE HIKES

January marks the beginning of key hearings on the city’s proposal to increase water rates by 9 percent, sewer rates by 10 percent and storm drainage rates by 16% in each of the next four years. The rate hikes are expected to increase a typical Sacramento homeowner’s monthly city utilities bill from $116 to $185 per month.

To express your views on the proposed rate hikes, I encourage you to attend the city’s Utilities Rate Advisory Commission meeting at 5:30 p.m. on Wednesday, Jan. 27, in the city council chambers in New City Hall (915 I St.). The commission’s recommendations will then likely be considered by the city council in either February or March. You can stay up to date on developments, as well as find out how you can help in the effort to moderate city utility rate hikes, by signing up for EOS email updates at eyeonsacramento.org.

 Craig Powell is a local attorney, businessman, community activist and president of Eye on Sacramento, a civic watchdog and policy group. He can be reach at craig@eyeonsacramento.org or 718-3030.

City of Sacramento Departmental Directory

EOS posts the updated directory for the City of Sacramento Departments.  A link also runs at the top left of the EOS home page.

Balanced in Name Only … Small budget surplus is no cause to break out the champagne

Published on Sunday, 01 June 2014

Balanced in Name Only

Small budget surplus is no cause to break out the champagne

By Craig Powell

There is only a tiny handful of policy wonks who actually look forward to the release each year of the city manager’s proposed city budget for the fiscal year that starts on July 1. I’m one of them. City budget manager Leyne Milstein drove that point home in my interview of her last month, joking that I was one of only three people who have actually read the document that only a wonk could endure, much less enjoy.

But endure it I did and, knowing that most of you don’t spend your nights curled up with the city budget, I’m offering you the CliffsNotes version of it this month.

The good news is that after five years of battling chronic budget deficits, city manager John Shirey is proposing a $383 million general-fund budget that actually ekes out a small $2 million budget surplus. (The total city budget, which includes fee-collecting “enterprise funds” like city utilities, the convention center and marina, is actually $872 million, but most attention is paid to the city’s general-fund budget, which funds basic city services such as police, fire, parks, etc.) That means no cuts next year in services or city employees.

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Eye on Sacramento’s Final Report on Proposed Water and Sewer Rate Hikes

EYE ON SACRAMENTO’S FINAL REPORT – City of Sacramento Water and Sewer Rate Hikes and Infrastructure Repair Plan

 EXECUTIVE SUMMARY

Through years of neglect and under investment, the city’s water and sewer infrastructure is a mess.  The mess is a consequence of several factors: (1) the city council’s historic failure to focus on long-term needs and its “core” government mission; (2) the failures of the city council and city managers to adequately oversee the Department of Utilities (DOU); (3) broken promises by DOU management on how revenues from earlier rate hikes would be spent; and (4) unsound city policy that has allowed escalating labor costs to crowd out infrastructure spending.

Even if the problem is fixed with massive new investment in utilities infrastructure, how can the city ensure that it doesn’t backslide into such a mess again?  The DOU can avoid a repeat of the current mess by returning utility tax revenues back to the DOU to sustain ongoing infrastructure investment, by adopting smart DOU oversight reforms, by providing specialized oversight of infrastructure spending, by securing concessions from city unions to free up funds for infrastructure spending and by adopting a number of labor reforms.

While framed as a proposed three-year hike in water and sewer rates, the DOU’s plans to borrow $1.8 billion over the next several years will “lock-in” double-digit annual rate hikes for the next 10 to 15 years, as set forth in DOU rate projections  The city council and the public need to be aware that, with the tripling of Regional Sanitation’s sewer rates over the next eight years, the water and sewer rate hikes proposed or projected by the DOU, along with future expected hikes in storm drainage and solid waste rates, will push up the monthly city utility bills for a typical homeowner from $120 per month to over $380 per month over the next 15 years.

The city’s proposed and projected rate hikes will have a profound impact on middle class and working class residents and those on fixed incomes.  The proposed infrastructure repair program will impose an effective lien of $32,500 on the typical Sacramento home.  With local unemployment now back up to 11.4%, 51% of all Sacramento homes underwater on their mortgages and an 8.1% drop in Sacramento home values last year and a further drop of 2.1% projected for the rest of the year, the city council could not pick a worst time to impose a major new financial burden on Sacramento’s citizens and communities.

The recently discussed life-line subsidy idea fails the test of fairness as it would reward better off homeowners while doing nothing to assist worse off renters.

The proposed hikes will have major negative impacts on commercial property, the housing stock, new construction, property tax collections, local school districts and local economic growth prospects.

Before launching a project of this magnitude, the city should install a permanent DOU director with significant experience and expertise in planning and overseeing major, complex utilities infrastructure projects on the scale that is being proposed.  The city council and the public must have confidence in the oversight capacity of DOU management, particularly in light of longstanding concerns with the functioning of the DOU.

With the planned rehab of the city’s two water treatment plants and the city’s placement of numerous underground, stand-by holding tanks in the central city over the past 10 years, the city has substantially diminished the risk of a water or sewer infrastructure failure causing either a significant threat to public safety or a serious disruption of life in Sacramento.  According to DOU director Dave Brent, the principal risk of infrastructure failure is now limited to highly localized impacts that are not expected to endanger public health.  Consequently, there is no public safety reason to initiate major rate hikes in the depths of the current recession and no reason to finance the bulk of the needed work with massive borrowings instead of funding the work on a “pay-as-you-go” basis.

City treasurer Russ Fehr has consistently advised the city council to limit the use of debt financing to only those big-ticket projects that simply cannot be financed out of current cash flow.  He states that the city is “facing a debt nightmare” and that “borrowing for routine maintenance is insane.”

Overreliance on utility debt financing and poor management of utilities infrastructure projects has led to two major municipal bankruptcies this year, in Harrisburg, PA, and Jefferson County (Birmingham), AL.  Bond covenants, including coverage rations, can have capricious effects on utility rates and communities, particularly during sharp economic downturns.

The proposed first tranche of bond financing should only be used to rehab the water treatment plants.  It should not be used to accelerate the installation of water meters, a strategy that would substantially increase ratepayers costs with no significant corresponding benefit.

The DOU’s $250,000 public relations campaign to sell major rate hikes and infrastructure repairs to the public and the city council has been largely a waste of ratepayer funds.  The DOU has maintained a false and misleading narrative on the nature and extent of the proposed rate hikes and has doggedly withheld from public view 15-year rate hike projections and financial plans that would have revealed the full extent of future rate hikes and infrastructure financing.

Eye on Sacramento advises the city council to: (1) to approve single-year hikes in water and sewer rates as a “place setter” to provide the city with the time to renegotiate key labor agreements to unlock cost savings and enact needed reforms and DOU and project oversight measures; (2) authorize debt issuances only to finance the rehab of the city’s water treatment plants; and (3) direct city staff to redesign its infrastructure repair program and its financial plan to fund the lion’s share of the repairs on a prudent, less costly, less risky “pay-as-you-go” basis.

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Find Out More About Proposed Utility Rate Hikes

Find Out More About Proposed Utility Rate Hikes

City of Sacramento, Department of Utilities Rate Increases

Pipe Dreams: Sacramento’s water rates will keep climbing

Eye on Sacramento’s Projection of Our Monthly City Utilities Bills Over the Next 15 Years

Sac City Utility to Shackle Rate Payers With $3.9 Billion. That’s $35,000 per Household

Follow The Money

Pipe Dreams, Three-year water and sewer rate hikes would be just a down payment

EYE ON SACRAMENTO’S FINAL REPORT – City of Sacramento Water and Sewer Rate Hikes and Infrastructure Repair Plan