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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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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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.

Eye On Sacramento Objects to Repeal of the 10-Day Sunshine Rule

Statement from Eye on Sacramento to Sacramento City Council on the Repeal of the 10-Day Sunshine Rule on City Contracts over $1 Million

Monday, March 10, 2014

Dear Mayor Johnson and Members of the City Council,

We are writing to express our strongest possible objection to the proposal before you tomorrow evening to gut the current city council rule that requires that all city contracts involving more than $1 million be posted on the city’s website and be made available to the public at least 10 days before the council takes action on such contracts.

This 10-day posting/disclosure rule is commonly known as the city’s “Sunshine Rule” and was adopted to assure that the public and the media have adequate time to review and provide feedback to you on the terms of major city contracts before you vote on them (Council Rules Chapter 7, Section E-2-d; found here).

The council’s adoption of the Sunshine Rule has been the single most important upgrade in city government transparency in the past 20 years.

Had the Sunshine Rule been in place when the city was considering approval of its 20-year exclusive, no-bid prime garbage contract with BLT Enterprises (now Waste Management) in 2010, it is unlikely that such an unfair and grossly burdensome contract would have been imposed on hapless city utility ratepayers. Because the Sunshine Rule was not in place at the time, the egregious city/BLT Enterprises contract was jammed through late at night during the final session of the term of the city council with zero public or media awareness or analysis. The Sacramento County Civil Grand Jury has castigated the city for both the atrocious terms of the BLT contract and the shady circumstances under which it was approved (Grand Jury, 2011-2012 Reports, page 39; found here).

The proposed draft of the new council rules proposes that the Sunshine Rule apply in the future only to city labor contracts – which are already covered by the current Rule since every city union contract involves more than $1 million. Gutting the Sunshine Rule would return us to the council’s bad old days when it all too often provided de minimis notice to the public and the media of the terms of large contracts that have a lasting and major financial impact on the city. That is simply unacceptable.

How can you expect the citizens of Sacramento to trust the city council and city government when you are taking active steps to hide from them the details of major city contracts? When you intentionally change the rules so you can provide inadequate public notice of the terms of major contracts you only breed public cynicism and suspicion over what it is you are trying to hide from the public.

For example, is it sheer coincidence that this move to gut the council’s Sunshine Rule is occurring just three weeks before you are set to approve a massive public subsidy of a new sports and entertainment facility, set for April 1st? Somehow we doubt it.

There has been no showing whatsoever of any need to water down the Sunshine Rule. The council already has a relief valve in place in cases of exigent circumstance: the council, by a 2/3rds vote, can choose to waive the 10-day posting requirement.

We can only surmise that some council members are seeking to gut the Sunshine Rule now in order to deprive the public and the media of a reasonable opportunity to review the several hundreds of pages of legal documents that will comprise the “arena deal.” We can only conclude that you don’t want the public and the media to have adequate time to review the documents, determine the impacts and provide citizen feedback to you, their elected representatives.

If you approve this rule change tomorrow evening you will be sending a clear signal that you want to keep the public and media in the dark for as long as possible about the final terms of the arena deal and deprive them of the time needed to adequately review the final deal and provide informed feedback to the council. No council member voting to gut the Sunshine Rule could ever again creditably claim to be supportive of transparency and openness in city government.

We beseech you: please show a higher level of respect for your constituents and reject this misguided effort to gut the city’s Sunshine Rule. Thank you.

Very truly yours,

Craig Powell, President

Phone: (916) 718-3030

cc: Mr. John Shirey, City Manager
Ms. Shirley Concolino, City Clerk
Mr. James Sanchez, City Attorney
Media Distribution List

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.

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

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

 

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

When the utility folks get up to testify at city council hearings, they are typically the last to appear, long after the homeless and Occupy Sacramento activists have left, leaving a weary mayor and city council behind to summon the attention span necessary to ponder the implications of federal clean water mandates and steel-riveted transmission lines. It’s a subject that rarely sustains the attention of either politicians or city voters. Inattention, however, has its own special costs in government, as it does in real life.

To say that the city council has exercised inadequate oversight over the city’s utility systems would be an understatement. The consequences of its neglect range from the current major snafu in garden refuse pickup to a grand jury investigation and lawsuits two years ago over the city’s illegal diversion of millions of dollars of ratepayer funds.  read more …

The City’s Garbage Contract with BLT Enterprises: Time for Full Accountability

Review the full report

IX. SUMMARY

We sincerely hope that Sacramento city officials and the Sacramento County Civil Grand Jury, as well as local media, will investigate and further examine the problems and serious issues that have plagued the City of Sacramento’s administration of its waste disposal contract over the past 15 years, as identified in this Eye on Sacramento report. It is time for full accountability.  … full report