Riverside Sewer Woes Echo Here

Perhaps of interest to some of us who have followed Riverside's sewer issues:

http://www.pe.com/articles/sewer-695737-city-audit.html

Several city critics have repeatedly alleged the city improperly spent earlier sewer bond money and illegally made loans from the sewer fund to other city funds.

To address that concern, council members voted Tuesday, June 3, to ask their new outside audit firm to do a special audit of sewer fund transactions between 2000 to 2014, including use of loans and bond money.

It looks to mirror what is coming to light here again in Los Osos with the books at long last being put in order by our finance-minded new GM, Kathy Kivley.

In my opinion, the truly poor management decisions by the Recall board starting in October of 2005, plus reduced staffing due to the resultant bankruptcy, has caused financial and water problems since late 2005. So much sewer Sturm und Drang* has blocked the District from moving forward to solve its problems in any significant way!

General Manager Kivley has discovered a board resolution from May 4, 2006 that transferred $410,000 out from Fund 500 Water to fund "wastewater project studies." That money was to have been paid back into the Water fund at the same interest rate that the district gets on its investment funds. Needless to say, that has NOT happened.

She also reports a transfer out of the Solid Waste Fund 650 of $220,000 in 2006 for "wastewater project studies." This loan may also require repayment; staff is looking into when and if the funds were transferred.

You can look at GM Kivley's comments in this year's CSD budget at this link (it is a large file and loads slowly):
http://www.losososcsd.org/Library/2014%20Agenda%20Packet/06.05.14%20Agenda%20Packet/Agenda%20Item%207B%20Fiscal%20Year%202014-2015%20Budget.pdf

Also in 2006, our tax funds from the County that had been given to the LOCSD and set aside in April of 2006 to pay the old 2002 sewer bond, some $714,267.50 of tax monies, were gone by July 2006, so that payment could only be made by in dipping into the forbidden-to-used-by-contract reserve fund, the de facto "last month's rent" so to speak, to be left alone as the last bond payment. It was by agreement with Bank of New York to be repaid within one year. Being broke and in bankruptcy however, that money is being repaid at the rate of $25,000 a year, seemingly forever.

A quote from then CSD Director Joe Sparks from 2007 (this was originally published in the Tribune, but as accessing this now would cost money, I will provide a link to the entire text as copied into Ann Calhoun's blog, dated 8-6-2007, link),

The District has no full-time or permanent General Manager, even though the LOCSD Board had the opportunity three months ago to hire from multiple qualified candidates. 

The District has yet to re-pay approximately $400,000 borrowed from the Water Quality Trust Fund to fund the 2006 Ripley report, and Ripley remains a major creditor in the District’s Bankruptcy proceedings. 

The District has yet to re-pay approximately $700,000 that was borrowed from the Bond Reserve Fund to make a Bond Redemption payment because the District had insufficient funds to make the payment on September 1, 2006. From the period of October 2005 until April 2006, approximately $1,100,000 in assessment revenue (District General Ledger 4061) was deposited in District accounts for the purpose of making the September 1, 2006 Bond Redemption payment, yet those funds were not available to make the payment.

One of the commenters on this blog posting, former LOCSD Director Richard LeGros, wrote on that missing bond money,

Why was this "loan" not reviewed and approved by the LOCSD board in public, as required by law? 

Where did all this money go? The one wastewater study that came out, the Ripley report, that contract was for only around $500,000 and $100,000 of that total was a claim in the bankruptcy. Was all this money really moved to fund "wastewater project studies," or did it really go to attorneys in an useless attempt to defend against the indefensible? When the financial entries are all found and entered, will the books finally balance?

So  here we are in 2014, getting to the bottom of the financial mess the Recall Election put into motion. No, it wasn't really the recall itself, it didn't have to come to this, but the bad, no terrible, terrible decisions by the newly composed board, made it impossible to avoid.


*French Neoclassicism, a movement beginning in the early Baroque, with its emphasis on the rational, was the principal target of rebellion for adherents of the Sturm und Drang movement. Sentimentality and an objective view of life gave way to emotional turbulence and individuality. Enlightenment ideals of rationalism, empiricism, and universalism no longer captured the human condition; emotional extremes and subjectivity became the vogue during the Counter-Enlightenment.
http://en.wikipedia.org/wiki/Sturm_und_Drang