Wednesday, November 02, 2005

Oh, Look, Mommy, it’s the old wallet in the street full of cash tied to a string and when Old Mr. Harris bends down to pick it up I yank the string and pull the wallet into the bushes, Bwa-hahahahahah!

Yes, folks, the Los Osos Sewerville Gong show continues. This morning’s Tribune headlines, “State Rejects Osos Sewer Deal,” this after a week-long earnest negotiation (Bwa-hahahaha) and a compromise “deal” voted on by the CSD at their Sunday, Oct 30 meeting.

Turns out first of all that the State Board, uh, “forgot” to put the item on their agenda, even as a place marker. (In an October 31 letter to Celeste Cantu, Executive Director of the State Water Resources Control Board, CSD President Schicker queries: “We are unclear as to why this item had not already been agendized for tomorrow’s meeting (November 1, 2005) as we all began acceptance of the negotiation process twelve days ago.” [The Board requires a 10 day agenda notification.] Uh, let’s see, 10 days, 12 days, uh, Gosh, good question.

Another good question is this: The SRF Loan in question is project specific. So why did the State Water Boys even show up for a wasted week of negotiations, then sign off on a tentative “compromise,” in the first place.

Weirder still, this loan amount was vastly increased at the request of the previous CSD and sent down with no secured revenue stream, no Proposiiton 218 vote, and full knowledge that there was a recall pending and letters to the State Board pleading for them to hold off on encumbering this community with that vastly increased loan before the recall election – all of which was totally ignored by the State Water Board at the time. But NOW we hear that the loan can’t possibly be used to keep this project going (but with an out of town treatment plant) because, according to Water Board spokesman, William L. Rukeyser , “We cannot go ahead and risk millions of dollars that belong to the citizens of California.” Bwa-hahahahah. Selective "due dilligence," doncha think?

Mr. Rukeyser is also quoted in the Trib as saying, “If I get a car loan from the bank, I can’t go out and buy a gym set for my kids.” Gym set? Uh, Gee, Mr. Rukeyser, last time I looked, Los Osos got a loan to build a wastewater treatment system and after a week of negotiations, was ready to move ahead on laying pipe which is part and parcel of building a wastewater treatment system, the only difference is the treatment plant itself wouldn’t be located in the middle of town. Mr. Rukeyser’s analogy should have been, “If I get a car loan from the bank and I buy a Pink Cadillac instead of a Blue Cadillac and the loan is secured by my property as collateral, and I repay the bank on time and with interest, why is the bank having a cow? Why should it care whether the Cadillac is pink or blue?”

And finally, said, CSD President Lisa Schicker of the negotiations and compromise plan that was accepted by the CSD, “If they weren’t going to enter into good faith negotiations, what was the purpose of dragging us through this?”

Good question, Lisa. Good question.

At the Oct 30 CSD meeting, someone mentioned Trojan Horses. Gosh, you think?

Well, at this Thursday’s Nov 4 CSD meeting, the Board may have an interesting option to consider: Call the lawyers, (O.K. all you guys who wish to sue us, stop jostling, everybody, take a number and get in line, we'll get to your court cases as they comes up, no hurry, our attorney is on retainer so we've got all the time in the world.) then start setting the CSD’s house in order, start work on penciling out two or three options of sewer plans, including Tri-W and putting Step/Steg back on the table, complete with full long-term operating, maintenance and replacement costs for each system, and a look at possible self-bonding and or builder-designer financing, then present the options to the citizens for a vote to see which one they want to “buy.” (Pink Cadillac? Blue Caddilac? Yellow Yugo?)

Then, while the lawyers spend decades in a futile recreation of Charles Dickens’ Bleak House, Los Osos can get busy building its self-funded, self selected sewer system.

It’s doable if the citizens of our bearish community wish it to be so, which has always been the case.


madeadecision said...

Follow advice on a project from a journalist? This is nuts.

Ann, stick to asking questions.

You expect the homeowners and property owners in Los Osos to tax themselves after it has just proceeded to have PO'd the state, defaulted on a loan, defaults on an assesment, stiffs contracters for which it will get sued, passed a law that the current board is now acknowledging was counter-productive and were ready to repeal on Sunday (doesn't that tell you something after all the junk about how that law was going to 'protect' Los Osos) - Measure B and it's supporters have been exposed for the crock of dung they put before the community about it.

Shark Inlet said...

Ann has a couple of interesting questions:

"The SRF Loan in question is project specific. So why did the State Water Boys even show up for a wasted week of negotiations, then sign off on a tentative 'compromise,' in the first place."


Why does the SWRCB now want a Prop 218 vote to secure their loan will be repayed when they didn't require that for the original $135M loan?

Here are some answers (not necessarily the state's answers, but ones that come to my mind as a taxpayer and as a citizen of the state).

The SRF loan is site specific and project specific. The project and site can be changed if the change is approved in advance by the SWRCB. They want proof that a change in the project is a good change before they'll approve of any such change. They came to the table because Sam asked them and because they were willing to consider an out of town plant until it became clear to them that Measure B would prevent building at TriW. Measure B would need to be repealed before the state could legally turn the money faucet back on.

Why a vote? The revenue stream from the plant was presumably going to secure the loan and pay the state back. If no plant is built (due to another lawsuit, another recall, another board) the state wants a promise to get the money back. Simply put, the very state the CSD is in now would scream out "untrustworthy". Why not ask such an entity for additional measures to make sure you get paid back?

As someone said at Sunday's meeting "you are already $30M in the hole, what makes you think that you'll be able to save that amount of money on a new plant?" (Well, something like this was said.) The $30M figure came from the fact that we've already bought a design for some $10M and done $10M worth of work on the current construction and an additional $11M in fines gets us to $30M pretty quickly. With these factors and especially a change in the interest rate, the Sewer/Plant you are talking about building, Ann, will cost us a minimum of $250/month even with an O&M savings built in.

So, are you willing to pay $45/month extra for some 20 years is an extra $7800 (present value with a 3.5% inflation rate) that I don't want to pay. When Chuck said that we are going to "move the sewer no matter how much it costs" he was being honest. Ron makes a compelling case over at sewerwatch that Los Osos residents were willing to go with an in-town plant because it would save money ... why isn't the current board listening to Ron's argument?

Shark Inlet said...

Just a quick note ... the costs of the current board ... buying additional studies, paying contractors for doing nothing, incurring fines, are likely to raise the cost of a TriW plant from $205/month to $215-220/month.

That is even if they vote Thursday to start construction Friday morning.

Good call, guys!

"We can do it cheaper." Ha!

Churadogs said...

Dear Inlet, the interesting thing about the "deal" being dumped is that it was dumped AFTER the CSD AGREED to the requirements of the deal on repealing Measure B and holding a Prop 218 election. Both of those things would have "secured" that loan. Still not answered is how that loan came to be without a Prop 218 vote AND/OR a secured revenue stream and in the face of appeals from the community NOT to issue the loan until AFTER the recall election. That's something perhaps Mr. Blakeslee needs to look into?

Also not clear, is the timing of the SRF stopping the last installment during the contract's "stand-down" period. Did the State Water Board breach the contract? The lawyers will have to look into that, methinks.

I suspect that the Fat Lady may have a few interesting arias starting up about now. Stay tuned.

Churadogs said...

oops, forgot to note to Madeadecision, regarding "taxing ourselves" to finance a sewer. Whether it's a self-bond, a State Loan, a builder/designer financing plan, or a loan from a guy named Guido, the homeowners of this community will pay for financing a sewer -- one way or the other.

Shark Inlet said...

Well, if the 218 vote was "no", and a plant is not built at TriW, there would be no guarantee that the loan would be repayed. The homeowners would be off the hook and the lack of plant at TriW to produce revenue could have the state on the hook for millions. They didn't want to take that risk.

I suspect that in future SRF contracts there will be a 218 clause to keep "another Los Osos" from happening. Right now the state is out some millions of dollars and the CSD has no way of paying them back. If the CSD disolves itself, the state is out the cash.

Certainly no reasonable person would look at the CSDs actions (stopping the construction, talk of moving the plant, talk of redesigning the collection system) as anything but changing the project. The CSD chose to violate terms of the contract that says such actions are only permissible after prior approval of the SWRCB. Even if the state typically gives groups such as the CSD a month or so to justify such changes before they turn off the money, the CSD did violate the contract.

Your fat lady comments are right on target. Here is my question: will the current CSD start up construction on TriW immediately and get the SRF money flowing back again (costing taxpayers only some $2-6M to pay the contractors to do nothing) or will the CSD choose to continue with the "move it no matter what the cost" plan which may run us an additional $20, $50, $100 per month per household?

The former choice is wiser and would require fighting Measure B in court. The later will be a continuation of the campaign of financial ruin they've promised us and we were foolish enough to vote for.

Shark Inlet said...

Speaking of "taxing ourselves", a quick calculation on the possible costs of the current board's actions:

Losing a 2.3% interest loan and choosing a 5.5% loan instead
Losing a $35M federal "free money" grant
Getting $11M in fines
Having to pay contractors some $7M for doing nothing.
Paying to design a new plant even though we still have to pay for the design of the previous plant

So, even if we sell off the TriW site to developers and can manage to save some $16M on the out-of-town plant and even if we save $20/month on O&M ... this new board is costing us an extra $80/month.

Hopefully they'll wake up now and understand the reality that some of us have been telling them about for months.

Churadogs said...

Dear Inlet, you mention that in future all State Revolving Fund loans will have a Proposition 218 clause in them. Why, "future" loans? Prop 218 was in place when this loan was sent down without a vote. If I'm not mistaken, isn't that failure to hold the vote what one lawsuit is all about? So, it's a puzzle to me how this happened. I'm also puzzled as to why the Water Board apparently knew full well about Measure B and the recall, yet ignored all warnings and not only pushed the original loan through, but encumbered the town even more with the, what was it?, increase of some $40 million? It funny to me now that they're expressing concern that they have to "protect the taxpayer's dollars" and etc. NOW??? Seems to me that horse left the barn some time ago.

Also a problem for the lawyers: IF the State stopped the previously approved September installment BEFORE the stop work order was officially ordered (i.e. were still simply in stand down) then I presume a case could be made that THEY, not the CSD, were in breach of contract and all the pile-up that occurred after that is their doing.

Well, the saga continues. Stay tuned.

Anonymous said...

Hello all. I notice the first item on the agenda for tonight's meeting has to do with ratifying/amending the SWQRCB proposal. Is that possible now that is has been "rejected?" If it is possible, do you think they are going to somehow address the Measure B issue? Would appreciate thoughts from others. Thanks.

Churadogs said...

Dear Anonymous, just noticed something (Duh), there are not dates on the posts, only time?? Which means, when you say "tonight" nobody knows what night, what date. Hmmm, interesting. Also don't know how old these posts are either. More interesting (Duh, is right on my part, I assumed the software would log in time and date??) But I don't see the date anywhere. Will have to write to Greg, the blogmaster, to see if the program allows for dates.

Anyway, agenda items must be posed X number of hours/days before a meeting. If things change, they can always be canceled or postponed to a later date, but they can't be added without the proscribed notification time. In the Case of Thursday, Nov 3rd meeting, that Agenda Item was moved to after public comment, I think, since it was, at that point, moot, sort of.

Anonymous said...

I was asking about the Nov. 3 meeting agenda which is all history now.......................
Thanks though.

Churadogs said...

I asked the Blog Master (Greg) to see if the blog program allowed for dating comment entries. He said he'd look into it. Right now, we all know what TIME we post, but not what day.