October 14, 2005
Congresswoman Lois Capps
23rd Congressional District
1707 Longworth House Office Building Washington D.C. 20515
SUBJECT: URGENT REQUEST FOR IMMEDIATE ASSISTANCE
Dear Congresswoman Capps:
With urgency, the Los Osos CSD Board of Directors respectfully requests your immediate intervention with State and Regional Water Board staff decisions regarding the funding and regulations for our wastewater treatment project.
1. Today, State Water Resources Control Board (SWRCB) staff, in a breach of contract, unilaterally pulled our State Revolving Fund Loan for a project under construction. This decision places our LOCSD in debt to contractors for several million dollars.
2. On October 6, 2005, Central Coast Regional Water Quality Control Board (CCRWQCB) staff threatened us with millions of dollars of fines, now exacerbated by the State Water Board’s decision to stop our construction loan.
A Short History of an Incomplete and Unpopular Project. Beginning as early as Summer 2001, citizens began regularly protesting a “downtown sewer project”, for environmental, engineering and socioeconomic reasons. This project is now the most expensive per capita wastewater project in the nation.
Beginning in Summer 2003, an increasing number of citizens protested detrimental project changes under the Coastal Permit; the supposed “buried project” was now 40 feet tall with potential sewer spills to the Estuary. In November 2004, with an 86% voter turnout and by more than a two-to-one majority, two of us were elected backing a “Move the Sewer” platform.
Beginning in December 2004, citizens and the two minority Board Members made repeated requests in person, writing, and video to the State Water Board, asking them not to disburse any funds until after the recall and Measure B elections were decided, due to high controversy and great financial risk. Despite overwhelming testimony, court challenges and just thirty days prior to the election, (an election that could have been held four weeks earlier), agency personnel ignored our requests and disbursed the SRF monies anyway.
On September 27, 2005, the citizens of Los Osos recalled three directors and approved Measure B, a Citizens’ Initiative, which is now law. Measure B does not allow a wastewater treatment facility to be sited at its current location, on environmentally sensitive lands in the middle of town, next to our library, schools, Catholic church, homes, Chamber of Commerce, community center, and just uphill from our National Estuary.
It appears that the recalled directors timed several critical events with the knowledge and assistance of the SWRCB and RWQCB staff. Rushing the start of construction and financially encumbering this community through construction loan disbursements, just prior to the election, was and is troubling. These discretionary actions have set up our CSD for a fiscal crisis and potential bankruptcy.
Under their own State SRF guidelines, the project is both controversial and outside the affordability criteria. Measure B placed on a ballot, should have postponed all approvals or disbursement of funds.
Our Board pledged to the people to move the treatment plant safely out of town, away from the Morro Bay National Estuary. Also, Measure B requires it. At this point in time, only grading work at the downtown facility site has been done. We have viable plans and willing sellers of land out of town, land that was included as the environmentally preferred project in our adopted EIR.
Our Board has met six times since the September 27 election, in order to proceed as quickly as possible. We formed a Negotiating Team to discuss concerns with the State and pledge full cooperation to expedite an acceptable project, but we have encountered resistance at every turn.
We seek relief from threats, fines and loss of funding. Staff decisions have created an unnecessary financial crisis for our community and a no-win solution for all stakeholders involved. This only adds to the delay of solving our water quality issues. The Los Osos CSD cannot continue construction without allowable modifications to the State Revolving Fund Loan contract. We must be able to revise the RWQCB’s Time Schedule Order 00-131 to avoid fines, in order to complete a project that will meet with citizen approval.
Our Board remains committed to building a safe and affordable sewer. We need your assistance to do so. Please contact us as soon as possible because the people of Los Osos need your help at this critical time. Thank you for your consideration. We look forward to a satisfactory resolution for all concerned with the guidance of your office.
Most Sincerely,
Lisa Schicker, John Fouche
President, Vice President
Julie Tacker, Chuck Cesena, Steve Senet
Directors
[Note: in logging this, the additional names of the other board Members dropped off. The entire Board signed the document.]
Thursday, October 20, 2005
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15 comments:
In other words they are writing "Please side with us, a small community who has proclaimed ourselves exempt from state laws (measure B) as we fight the big, bad state government who is attempting to enforce state laws."
Here is my question ... what would Lois Capps be able to do to force the State of California to revise the RWQCB Time Schedule Order?
Furthermore, why should we presume that the State law is incorrect or that those at the RWQCB who are charged with enforcing the laws are in any way incorrect?
The loan contract that the CSD signed says that the loan will be called in if the work is stopped without first getting approval of the SWRCB.
Did the new directors not read the loan documents before they stopped construction? Did they not get advice from their new GM and counsel?
To me it sounds like a child complaining that her allowance is taken away because she didn't complete the weekly chores: "that's not fair!" and "I'm going to tell grandma."
Frankly I am gettin tired of this new board taking actions and blaming all the negative fallout on the previous board. Yes, the previous board borrowed money and yes the construction started. Now that those things have happened, what should this board have done? Perhaps they should have read the contract before they welched on their end of the bargain.
Hey sharkie, blow it out yr cloaca...
To Shark, first off, work on the project has not been stopped. You're confusing actually ordering work stopped with Clause 15 in the contract which calls for a "time out," no harm, no foul. The state water board apparently made the same mistake and prematurely stopped payments, hence the preliminary letter to tell them to keep the money coming or the CSD would sue.In short, right now, the SWB has violated the contract as near as I can tell.
Next up, if the CSD Board decides to move head with laying collection pipe, (thereby forever foreclosing on considering a step/steg system) they can authorize that to continue any time within the "time out" period and nothing -- legally -- will have stopped. (The fact the SWB jumped this makes me believe they're more interested in threats and blackmail to see a particular project completed, than any real concern over contracts.)
Next, the original CSD set the time line, not the RWQCB, and they have amended it every year for years. The RWQCB has always granted them a waiver. Now, for some reason, they're threating fines even though something has come up that was beyond the control of the new Board (Measure B), just as other things had come up and they had honored past requests. That tells me the Briggs is more interested in getting a particular treatment plant built in a particular place, and will use threats and/or any means possible to get that particular plant built. Oddly, he appears unaware that requiriing that is legally forbidden. The RWQCB cannot dictate what or where a system is built.(You ask if the new CSD read the contracts, etc. I would ask the same of Briggs.)
As for not holding the old board responsible for wasting millions of your tax money, I find your lack of concern for all that waste curious for someone who constantly keeps expressing worry over "costs." The millions the previous board deliberately gambled with will cost you a bundle and also put this community in a bind that may end up costing you more than necessary. Worse yet, it was totally unnecessary (but deliberate) in order to manipulate the voters into voting a certain way. Personally, I find that totally unethical and unacceptable.
And to Anonymous, uh, please mind your manners. I will leave the public comment section on this blogsite up only so long as folks leaving comments remain civil to one another. Sorry, but blowing things out a cloaca doesn't qualify nor help further a discussion.
The contract between the CSD says that the CSD will notify the SWRCB in advance of and get approval for any changes in the project or else the state can turn off the spigot andn ask for the money back. The contract even goes so far as to say that if the CSD threatens to violate any term or provision of the contract, they money stops.
This means that if the CSD redesigns the collection system, moves the site or redesigns the plant, they money will be shut off.
Last night Lisa and Dan made it clear that they state would typically give an organization some 30 days to explain themselves before money would be shut off for such a reason. On the other hand, the contract says that the CSD should have contacted the SWRCB within 10 days of any change in circumstances that may affect the project. Did the CSD call up the SWRCB within 10 days of the election and tell them that Measure B put the project on hold? If not, the CSD was the first party in violation of the contract, not the state.
Are you asking us to believe that the current CSD is continuing work on the exact project funded by the SRF loan when the new board has told us repeatedly that they will be moving the plant?
Even if Measure B forces the plant out of town, don't you see that this changes the project and thus the CSD doesn't deserve the money they asked for to complete the other project? If a child asks for money to buy a textbook but uses the money for a novel instead, don't you think the parent has the right to ask for the money back? Even if the child drops the engineering finances class for which the text is required so the child doesn't need the text anymore, the money shouldn't be spent on another book without parental approval.
Even if Measure B prevents building a plant in town, I would argue that Measure B was not beyond the control of the community. We voted for it. We could have voted against it. If the community doesn't want to build the plant at TriW they shouldn't get to keep money given to them for building a TriW plant.
As to your other point .... why would I rail against the new board's poor choices that raise my costs when I am not railing about the choices of the past boards that have done the same? Partly because you and Ron have done such a good job of doing that for me already, but mostly because we can't change the past. Whether the previous board was chock full of liars or rather saintly doesn't matter. What matters is what this board will choose to do. Will they continue in the tradition of past CSD leadership by raising my monthly bills or will they make a wise decision to continue with the current project that at least fixes the costs?
Dear inlet: If I understand rightly, the Section 15 in the contract allowed for a stand down of 90 days with no reasons needed to be given. Until and unless the Board officially votes to actually STOP THE PROJECT, then it's clear to me the CSD hadn't violted anyting -- they were within the allowed 90 day stand down. I think the State jumped the gun within those 90 days. They made assumptions, that may or may not be correct,and jumped in anticipation. We'll have to see what Blakeslee and et al will come up with, i.e. whether the contact is all for one or one for all or whether it's proportional. ie. can spend X on the collection system, which has been approved, etc. then when you redesign the treatment plant, can reapply for that amount. etc. since it's a REVOLVING FUND.
And I'm still missing something here: You say the previous plan had fixed its costs. No, it didn't. Until the project goes on line and bills are in, what you've been told was estimated costs that may or may not turn out to be true. Add in unknown O&M costs and the previous plan's costs are in no way fixed. That's why it's a puzzle to me why you, of all people, weren't hollering about the in-town-site, if you're really concerned with real-time, real-world actual costs.
I was probably unclear. The contract I was talking about is the one on the tribune website:
http://www.sanluisobispo.com/multimedia/sanluisobispo/archive/SewerContract.pdf,
the contract between the CSD and the SWRCB.
As an example of why the board shouldn't have simply put the project on hold, even for 90 days would be found in Section 13(A). Items (1), (2) and (5) (see page 6 of the 51 page PDF file) says that the CSD promises to notify SRWCB and get approval before any change in design, stops work in any way which is likely to last more than 30 days and if they think the project will finish up any later than the originally scheduled date.
The actions of this recent board cannot be interpreted as anything but putting the project on hold. Did they call up the SWRCB and say "we're putting the construction on hold" as they were required? Did they tell the SWRCB that they were going to consider redesigning the collection system? Did they call the SWRCB and tell them that they are taking actions to move the site and design of the plant? If not, the CSD is the party which has acted in violation of the contract and the state is obliged to call in the loan immediately. If this were some other community, I would be downright angry if the state did not take action immediately. To do anything else would be unreasonable. Wouldn't you say it is two-faced at best to ask for money to start one project, then once the money is given to change the project in virtually every way?
Exhibit B, section 2.2 (page 10) says quite clearly that the project is owned by the SWRCB, not the CSD. The CSD does not have any legal power to change the project at all. Section 3 (page 13) says further that the money should stop if the CSD has violated any part of the contract or if the CSD fails to make "reasonable progress toward completion" of the TriW project.
Even though the State would typically give a 30 day notice to a group like the CSD asking for them to come into compliance before the money is shut off, it doesn't appear that they are under any obligation to do so. Furthermore, in a situation like this where the board is quickly and clearly taking actions designed to change the project, it seems very reasonable for the state to act promptly.
If I, as a non-lawyer and as someone who doesn't claim a specialty in running these sort of projects can see the writing on the wall, why didn't the new board? Why didn't their GM? Why didn't their lawyer? Seems like they're pretty clearly in over their heads and their paid help isn't worth what they're getting paid if they didn't see this coming a mile off and tell the board within a day of their employment.
I hope that Sam is able to talk some sense into the current knuckleheads at the CSD who, while well intentioned, are making choices that will likely cost us this loan as well as a future low-interest loan. (The word "revolving" aside, if we are known as the group that applied for a loan in the past that we didn't use for the intended project, future applications for money will be greeted with a nice "rejected" stamp.)
If the current CSD board is going to be pigheaded about the issue, I am hoping against hope that Sam is able to talk the SWRCB people into converting the current loan into one for a new project so that we can at least keep the cheap financing. This seems entirely unrealistic to me becuase the document is so full of language that is site and project specific.
In any case, Sam should get credit. I just wish the recall candidates had advertised honestly: "We promise to lose the low-interest loan and raise your monthly bills considerably."
As to your last point that the O&M would be higher by the TriW site. Probably a bit. Certainly if we were to take a lifecycle costing approach and going to wrap all costs over the life of the plant (having discounted for the inflation rate), the "new" site would have to be about $250k per month cheaper in terms of O&M to compensate for a change in the interest rate from 2.3% to 6%. Do you really think that we can save $50/household by simply having to truck less solid waste?
Speaking of puzzles ... why, Ann, do you not simply pick up a financial calculator and try out some of these scenarios to see whether your rosy optimism is affected? It is only in the best case (no fines, keep the current loan, small increases in inflation, no lawsuits, SWRCB liking the new proposed plant and having no requred changes) that we don't end up paying considerably more. How likely is it that any of these unlikely events will occur, let alone all of them?
Very good analysis Shark,
And unless the state AG knocks some sense into these guys, the District will implode.
All we'll have is 5 board members saying, not my fault, Measure B made me do it. And yet they were the ones campaigning for Measure B. Just can't wait to see their lawyer state, 'you must terminate contracts, even if it means financially ruining the district and property owners.'
I can already hear the recall apologists response. 'It's the old board's fault.'
No, it's the community's fault for once again, believing a bunch of 'empty promises', just like it did in '98.
But according to the recall apologists, it is never the voters fault, voters only have seem to rights according to them - but not responsibility.
If Inlet want to pick up his calculator, what numbers will he plug in? Worst case scenario? Middle case scenario? Best case? For example, I assume you're figuring the Board will assess the full $11 million fine. Suppose they don't? I assume you're calculating the redesign costs from ground zero, but suppose most of the desing is in the computer and can be reshuffled and will only cost X- amount? What then? And so forth. Ditto for O&M costs. From what you've said in the past, you're working from worst case scenario as if it were fact, not speculation.
Well, we'll have to see what comes out of negotiation. The paper today notes that Steve Hyland will be in the room (Watson Montgomery Harza's lead project engineer), so will be the New Guys, also engineers, and hopefully Mr. Miller, (the CSD's engineer) so let's see what those boys can come up with (doncha wish you could be a fly on the wall?
Any numbers you want, Ann ... as long as they are reasonable.
In my analysis above, I didn't include any fines, only a payoff for construction already done, four years of inflation while the thing goes through EIR/CCC/RWQCB and the associated redesigns required by such groups. Although my numbers are only ballpark, they make a good case that the increased monthly costs at TriW are much lower than the increased financing costs from the out of town site.
As to whether we could take the Ponds of Avalon design and use it out of town, I would suggest that it is not that simple. A redesign from the ground up would be necessary for any site.
I am certainly not working with a worst case scenario. I do want to point out, however, that it is only the best case scenario where we don't end up getting taken to the cleaners by our new board.
I am hopeful about the negotiation. I am hopeful that the current CSD board is willing be flexible becuase the situation mandates flexibility. So far they don't seem very willing to listen to reason at all. Along those lines, if they don't listen to reason, I hope that the SWRCB guy has been given permission to allow the CSD to keep the SRF loan even though they've already violated terms of the loan and have stated their intent to violate even more.
madeadecision raises a good point.
All but one of the current board supported Measure B. If they choose to fight measure B in the courts (as they should so that its legality can be clarified) they will irritate their supporters. On the other hand, if they don't fight B, they must cancel the current construction contract for TriW immediately rather than keep the contractor on hold, paying them to do no work. If this happens, we would owe this contractor more money than the CSD has in the bank. With the state demanding their money back as well (because we aren't doing what we promised to do), our CSD would go belly-up, not having any money to pay anyone for anything. Do you really think that Blesky will work for free just because he likes Lisa so much? Do you really think that the counsel would work for free? How about all those engineering studies necessary to put the plant out of town? Who pays? Will the staff even come to work if they know they won't be paid?
I would suggest that the board needs to fight Measure B quickly. If they don't they certainly can't even argue that the effects of Measure B were beyond their control.
Dear Inlet, If I understand correctly, the CSD cannot use tax money to fight a citizen's initiative in court. Instead, they must defend against an outside person bringing suit. I thought the pre-election appeal on the matter was supposed to be heard at the end of this month? So, I can only presume that if the appeals court voids the initiative, will the CSD be legally required to appeal the appeal? That's certainly a question for the New Guy at the next CSD meeting.
As for being beyond their control, I would presume that a citizen initiative would qualify. I'm sure the attorneys on all sides are looking at prescedent as regards to the RWQCB's "fines," and original time-line contract, etc. This may be a can of worms that may take time to sort out.
Ditto, "bankruptcy" of the CSD. You're assuming that a Notice To Pay delivered on Monday morning would deplete the bank account by Monday noon with everyone out on the street by Monday evening? I think not. I assume, like all "bankruptcy" matters, the whole mess would also end up in court?
In a funny way, if cooler heads don't prevaile in the negotiations, Los Osos may end up like Dicken's Bleak House.
Huh?
Why do you now want cooler heads on the part of the CSD when just a day or two ago you were one of the "rah, rah" group asking the CSD to play chicken with a freight train?
I do agree, though.
I want the CSD to be flexible and level-headed just like I want the state to be as flexible as possible. I just don't see the SRF contract allowing the state to be flexible at all, thus I would argue that the CSD needs to be open to listening to reason.
Let's suppose for a moment that some $100M in state money that was possibly going to go to Los Osos for a sewer plant outside town had instead been given to, say, Goleta for them to tie into State Water. If they chose to spend the money for a different purpose, say to develop a de-sal plant, I would expect the state to immediately stop payment and ask for the money back. If the state were to do anything else would be to allow local governments to write the rules and to give the state no oversight.
If for no other reason than to make sure that such bait-n-switch (aha, there's that phrase again) doesn't happen, the state should come down hard on the LOCSD.
Again, I want both the state and the LOCSD to be as flexible as possible ... I just don't have much hope for either group. Even if the SWRB wanted to be, their hands might be tied. If the LOCSD is flexible and breaks their promises to the electorate and/or chooses to fight Measure B, all hell will break loose again locally.
I do not envy the current board or their dilema.
There you go again. Speculation leading to dire conclusions. Why don't you wait and see what comes out of the negotiations now going on? None of us knows what will occur. And while making up stuff to scare ourselves with may be fun, it's ultimately a waste of time.
You are right. Speculation is not a good use of time.
Like I said before, I hope that the two sides can agree to do something to help us avoid this trainwreck. I hope that the CSD is willing to agree to build at TriW if they can't get something better and cheaper figured out soon. I hope that the SWRCB is willing to agree to let us keep the money they've given so far and that they will let us keep borrowing to study the possibility of an out-of-town plant.
One other point ... Ann, you've accused me of making too many pessimistic assumptions recently. I think you've made too many optimistic assumptions. Probably we're each simply reflecting our personal experiences and the information we have as well as our personalities.
Along those lines, don't you see why two different reasonable people might disagree strongly about whether TriW should continue or should be stopped? I certainly do.
I would hope that thoes who are support of the current CSD would stop simply blaming the past board for all evils in the world and that they could stop saying things like "we won, deal with it" and "sound thinking has finally triumphed over corporate development interests." Even if one feels this way, saying it outloud will tend to increase the divide between people on both sides of this issue.
Now, I would argue that continuing the TriW plant is likely cheaper than whatever the new group would come up with. I hope I am wrong! But I should not be insulted by supporters of the current CSD for simply arging that I care about the total costs and I haven't seen a plan from the new guys that would appear to lower those costs at all.
Along those lines, I hope to rein in my snippy nature somewhat and to attempt to be as polite as possible to those I disagree with.
Here are things where I am sure we agree:
We like Los Osos, the citizens of Los Osos and think it (whatever happens with the sewer) will continue to be one of the best places to live in this County.
We want a treatment plant and collection system (including lifetime O&M costs) that is as cheap as possible while still doing the job.
We think that an out of town plant would (all other things being equal) make more sense than an in-town plant.
We think that a park at TriW would be cool, but not necessarily a park next to a sewage treatment plant.
We think that the citizens should have some say in the decision about where to put the plant.
Where we disagree would appear to be the way that we individually think these goals should be achieved.
Dear Inlet, here's where things get wierd. All the things you listed were the very things the Move The Plant Out OF Towners were asking for for years. They got nowhere. If you felt that the majority of Los Ososians felt that way, then what went wrong that their CSD failed to listen to every thing you listed there?
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