The conformation came in just under a month after being promised some explanation for how the City's lease-revenue bonds work and documented confirmation that the SDWD pays nothing directly or indirectly toward city hall or park bonds.

Because this issue had been brought up several times during previous meeting and not adequately dismissed by the City, this was an issue worth considering.

The City sent us a part of the City's financial statement. The City Finance Department also answered the following questions.

Which of the bonds listed in the attachment are (or could be) a liability for the SDWD?

See p. 58
2004 SDWD Water Revenue Refunding Bonds
2007 SDWD Note Payable to R.E. Badger Water Facilities Finance Authority

Which of the bonds listed in the attachment are paid directly or indirectly with direct or indirect contributions from the SDWD?

See p. 58-59
2004 SDWD Water Revenue Refunding Bonds
2007 SDWD Note Payable to R.E. Badger Water Facilities Finance Authority

Are any of the payments related to the bonds that SDWD pays structured such that the amount is related to the overall debt of the Encinitas Public Finance Authority (EPFA)?

No.

Conversely, are all of the bonds clearly compartmentalized
such that the SDWD is completely shielded from liabilities related projects that most folks consider to be city projects?

Yes.

In response to our inquiry regarding the use of SDWD staff and equipment for City of Encinitas projects, the City admits that staff and equipment have been used for City work. Our sources in the SDWD who tipped us to the practice gave no indication that the City has reciprocated the efforts. Because the Water District does not track the efforts, we won't be able to assess the scope or balance of the costs. We are told that the City jumps on the opportunity to nickel and dime the Water District.

An independent board of directors for the San Dieguito Water District would be able to determine if the current practices are fair to the ratepayers.

Here is the City’s response:

The San Dieguito Water District in one of four divisions within the City of Encinitas Public Works Department. There are times assistance is needed by each division in order to respond quickly to emergency situations in a cost-effective manner. Emergency cooperative response by various divisions could include sewer spills, major storm related damage, water main breaks, etc. When inter-department assistance of less than one day during normal working hours is requested, the cost for assistance is typically not tracked or charged to the other division. However, when there is overtime involved, the division being requested to assist will be reimbursed from the overtime or contractual budget by the division requesting assistance. There have been no large scale emergencies within the City that have occurred in the past two years that have required the use of District staff.

We asked the City how the city allocates the costs of operations with the SDWD. We also requested a copy of the cost allocation policy between the SDWD and the City.

RESPONSE: see attached file

The attached file does not appear to be a policy.

We also asked how much of the budget is subject to cost allocation. We also request documentation on the total cost/amount subject to the allocation rules in the most recent fiscal year.

RESPONSE: see attached file

Same file as above.

Under the proposed rate structure the SDWD will add money into the rate stabilization fund.

From the SDWD staff report: Operating Reserve Rate stabilization reserves are used to help offset unexpected or unforeseen costs for purchased water or system repair True to its purpose the District has used this reserve to absorb some of the unexpected cost increases due to drought conditions The reserve will be below target for the next few years but will be built up over time and at target again by FY14 The Rate Stabilization Reserve is shown the figure.

UT Council to consider pay increase.
The council also will consider giving Cotton an 11 percent raise, which would bring his compensation, including wages and deferred compensation, to $242,640. His last raise was in May 2007.

UPDATE: The council postponed the vote for two weeks.

From the SacBee Saturday, February 13, 2010
Sacramento city officials acknowledged Tuesday they misused utilities funds to pay for general government expenses.

... The 1996 voter-approved initiative bars local governments from using ratepayer funds such as water and sewer to cover general government expenses...

Marty Hanneman, the city's utilities director, addressed the City Council on Tuesday night, outlining a number of steps the city has taken to address Proposition 218 violations and proposing additional measures. He said there had been memos indicating possible problems.

...

Councilwoman Lauren Hammond said she was upset the violations could have caused utility rates to go up for residents because the money for utilities was being diverted elsewhere. She said her own bills went from less than $79 in 2003 to more than $106 in late 2009.

"I have no confidence in your cost allocations. It's not personal. I just don't believe you," she told the utilities director. "Obviously the city of Sacramento has never complied with Proposition 218 … Something is seriously wrong here and we have not fixed it and management has not fixed it."

...

City officials say they still don't know how much the violations cost ratepayers. The grand jury cited a 2008 consultant's report that found violations had cost the utilities funds more than $21 million since 1996.

...

As a result, it's not uncommon for localities to stretch the limits of the law. "The issue goes way beyond the city of Sacramento," he said.