It’s Not About Water Rights.

Recent OCR articles by both Chris Haire and Terri Daxon have addressed Brea’s recent acquisition of Cal Domestic water rights. The question regarding who has the authority to spend Brea’s money and what the real issue is in acquiring water rights seems to have gotten overlooked in the swarm of facts and figures.

The acquisition of water rights and preferred stock, from Cal Domestic and the Metropolitan Water District, has long appeared to be complicated, if for no other reason than to dissuade the public from taking a closer look at the process. While both writers got the essentials correct, here’s an executive summary.

Water rights – distilled.

December 2011 – Council approves an $8.1 million purchase of rights for 665 acre feet of water. Pay once, get the water every year in perpetuity. Cost for water is locked in, cost to deliver can and does rise annually.

This purchase is made by transferring $5.6 million from Brea’s General and Risk Management Funds to the Water Fund. This is called a “loan” – at an interest rate of 2.17% for seven years. So far we’ve paid back about $1 million. I don’t know why it’s called a loan. The balance, $2.5 million, was already available in the Water Fund.

bill_gallardoJune 2013 – Jim Byerumm, Cal Domestic’s General Manager alerts Charlie View and Bill Gallardo of the availability of rights for an additional 225 acre feet.

Internal discussions ensue, excluding Council. Brea’s bid of $3.4 million, made without Council authorization, by Charlie View and Bill Gallardo is accepted by Cal Domestic.

Believing that there were still Water Funds available from the original transfer (loan) and approval given in 2011, View and Gallardo completed the transaction without giving Council so much as a courtesy heads-up.

After their oversight was discovered, the Cal Domestic invoice was ultimately paid using a $1.2 million credit from Cal Domestic’s terminated Capital Improvement Fund (accrued because we’d overpaid for almost 18 months) and $2.2 million from the Water Fund.

The error on the parts of View and Gallardo, in memory and judgement, involves $3.4 million, not $2.2 million as reported. Also, the fact that we paid Cal Domestic’s Capital Improvement Fund $70 thousand a month for a year and a half after they terminated the fund deserves some discussion, too. How many errors like this are going on? Why aren’t audits catching this sort of blunder?

The whole affair was discovered by Council member Simonoff, who set in motion the process that brought the matter into Council study session. Apparently Garcia and Murdock believe that being in the room is sufficient to allow them partial credit.

I disagree, but that’s another blog.

Now having retroactively covered their assets and having called in independent auditors to review both purchases to ensure there are no further problems, plus doubling the staff required to closely oversee transactions of this sort in the future, Gallardo suggests that Brea is pretty much out of the woods.

I wouldn’t be too sure about that.

No data trail, the real problem.

According to Bill Gallardo, none of this process is documented in any fashion prior to Cal Domestic submitting their invoice!

Not the notification of availability. Not the confirmation of interest. Not the details of negotiation, i.e. bids, counter bids, stipulations and contracts. Nothing. Not who was involved. Not how business was transacted. Nothing.

No other purchase or financial commitment made by the city, to the best of my knowledge, is conducted in such an unacceptable, loosey goosey manner. You know why? Because we’re in charge! We make the rules.

CA_SealWhen it comes to water rights apparently there are no rules. We can’t even demand a paper trail from Cal Domestic because we have no authority over them. Only the State of California does.

Instead of sending a representative to Washington to wade in on immigration issues, instead of sending an entourage half way around the world to watch a folkloric event and do a lot of sightseeing, maybe we should send someone to Sacramento to rattle Governor Brown’s cage on this.

falls_640tim_2aIf Brea is really a corporation, how about asking our “CEO” to start acting like he’s running a corporation.

After all, every glitch in this whole water rights matter circles right back to his office.

Where was he in this process? On vacation… again?


Too little, too late? You decide.

Breaking today in an article by Terri Daxon in the OC Register, it would seem that public pressure has accomplished what conscience and common sense could not. Council members Schweitzer, Garcia and Murdock have, reluctantly I’ll bet,  joined Mayor Moore and Council member Marty Simonoff in rescinding that surprise windfall they inadvertently voted themselves a couple of months ago.

Of course, having done so individually and without taking any official action, the door has been left open to slip it back in whenever it suits them. Personally, I think they should all agree to put the matter on the agenda for a general session, so the public would have the opportunity to share their opinion, and take a serious look at Council compensation from the ground up.

Not just the small portion they’ve always talked about, but the thousands of health and “flex” benefit dollars received each year… and they need to clarify exactly what their retirement benefits are as well. I doubt if that will happen as it would lead to the discussion of whether part time jobs should produce retirement benefits at all.

After all the soundbites, what’s left?

Remove all the pre-election bickering and pandering, and this boils down to the simple issue of meeting their responsibilities managing our city’s budget and providing a decent array of public services… none the least of which is Fire protection and Law Enforcement.

As most of city funds come from sales tax revenue, and the lion’s share of that comes from folks who don’t live here (they just work, play and shop), it’s inaccurate to characterize this as a misuse of our taxes. It is still probably our greatest area of need when it comes to honesty, accuracy and accountability.

Pay no attention to the man behind the curtain!

This isn’t Oz and it shouldn’t be run like it is. The Wizard needs to keep his nose out of it and let Council stop acting like the Lollipop Guild and take the lead for once. Keep a very close eye on what happens at city hall in the coming months. I promise you it will likely have a profound effect on how you fill out your ballot next November.

You are registered to vote aren’t you?