October 31, 2012

What Were They Thinking?

The election is just a week away. There are 2 seats on PUSD board up for grabs and 2 seats on the Poway Council. I thought the biggest issue this election season, especially for council candidates, would have been, "How will the end of redevelopment affect our budget?" A little less than a year ago, the California Supreme Court decided that Governor Brown and the legislature can dissolve redevelopment agencies and end that state program. The City of Poway had been diverting $40 million in property taxes from local schools, the county and our own general fund, to subsidize developers to clean up blight  and now they won't be able to do that anymore. Unfortunately, the full $40 million/yr in diverted property taxes won't be available for distribution for many years, as Poway's Redevelopment Agency has a large bonded indebtedness and other obligations that must be paid off first. So, the schools won't be made whole right away. And neither will the county or Poway's own general fund.

The council candidates haven't talked too much about how they would deal with the budget shortfall. Mostly, they seem to collectively shake their fists at Sacramento and whine. Two council candidates, Steve Vaus and Jeff Mangum were on the City's Citizen Budget Review Committee. That committee didn't even consider the impact the California Supreme Court's decision could have on Poway's budget during their budget review meetings. I guess they were afraid to plan for all possibilities. After the court decision was made public, the Budget Committee returned to make some adjustments and to add a little "We hate you, Sacramento" to their report.

I've heard very little budget on the campaign trail. This year's buzz is all about the "Billion Dollar" PUSD bonds. That may be due to political opportunism more than anything else. Jim Cunningham will likely be re-elected. Merrilee Boyack is not running again. There are 3 other candidates hoping to grab her seat: Steve Vaus, Jeff Mangum and Gary Vineyard. The school bond has become the "hot" issue between Steve Vaus and former school board member Jeff Mangum. Vaus contends that Mangum is responsible for the bond debacle and Mangum says he isn't because he wasn't on the PUSD board when the last issuance of Prop C bonds were approved.

Personally, I think Mangum should have stood with his fellow PUSD Board members and owned his role in the bonds. Yeah, yeah, I know...he left the board in 2010 and did not vote to issue the last Prop C bonds, but Mangum was very much a part of the whole sequence of events that led up to the bond issuance in 2011 for $105 million in bonds that would cost taxpayers a billion dollars to pay back over the next 40 yrs.

For both Prop U and Prop C bonds, the district first issued "bridge loans" and got started right away on the building projects. When the bridge loans came due, the district needed to issue Prop U or Prop C bonds to pay them back. The plan worked well for Prop U. The complication for issuing Prop C bonds was that the taxpayers were still paying off the Prop U bonds when the Prop C bonds would be issued. In order to keep the tax rate below the promised $55/$100,000AV, PUSD decided to use higher risk CAB(capital appreciation bonds) that wouldn't have to be paid off for 20 yrs or so, although they accrued interest during that time period.

When Prop C's bridge loan came due in 2011, PUSD had to pay them off. PUSD had planned for a best case scenario, with the real estate bubble growing for at least 7 more years. Unfortunately, the housing market collapsed and the bond market tightened up when the loan came due.  I don't know what Mangum could have done differently if he had still been on the board when the bridge loans became due. There were not a lot of choices. Bridge loans are a gamble, if conditions are not too good when they come due, the district still must issue bonds to pay them off.

There is some irony in that Steve Vaus is the most vocal critic of Mangum's role with regard to the bonds. Vaus's supporters have repeatedly said online comments, media interviews and at a school board meeting,  that Mangum should sit out the election for his role in the bonds. Yet, several of Vaus's supporters played key roles in getting Prop C passed. Sabrina Butler, who endorsed Vaus, ran the "Yes on C" campaign. Laura Tyne, was another "core" volunteer. She now says she was "fooled" by the board and that they withheld "details"about the bond, in particular, how much the bond would cost. In my opinion, that is a pretty lame whine because nobody knows what the interest rates will be for a  bond until they are issued. If Laura read Prop C before she tried to get everyone to vote for it, she might have noticed that we voted for bonds that could take up to 40 yrs. to repay after the last bond was issued at up to 12 % interest. PUSD didn't have to issue the bonds for many years, at least not until the bridge loans came due, and even then they could have (and did) stagger the issuance of the bonds for several years. If you repay back a loan over a 50 yr period, it will cost a lot in interest. Those terms were in Prop C and not hidden from the voters. What wasn't revealed was that PUSD planned to use CAB bonds, which accrue interest for many years before payments are made. But without using CAB bonds, there was no way PUSD could have issued the Prop C bonds and still have kept rates below $55/$100,000AV. That is why I questioned what the Yes on C committee was telling the voters in 2008. It certainly did not seem mathematically reasonable, and it wasn't.

PUSD did tell the San Diego Taxpayer's Association that they planned to use CAB bonds. And they told them that they expected assessed valuation to grow from 5-8% per year from 2008-2015. They gambled on that real estate bubble growing for 7 more years. I would expect that a group that is so devoted to taxpayer concerns would have questioned those "wildly optimistic" assessed valuation projections, but SDCTA didn't. SDCTA seems to frown upon spending taxpayer money on frivoulous things like teacher salaries or pensions, but they are pretty gung- ho about spending tax dollars on school construction projects. SDCTA gave PUSD an award for using that bridge loans scenario with Prop U. They endorsed Prop C, knowing that PUSD was going to use bridge loans and the riskier CAB bonds. What were they thinking? Perhaps of lining their pockets.

Here is where more irony comes in. Steve Vaus received the endorsement of the Lincoln Club of San Diego County and he got  $500 in cash and $300 in video services from them. They are a very conservative group, nominally non-partisan, and pro-development. There are several key members who are on both the SDCTA and the Lincoln Club. One name in particular pops out. April Boling.  Boling is an accountant who is often the treasurer for Republican campaign candidates and issues. April Boling was Vaus's campaign treasurer for the recall campaign against Betty Rexford. And April Boling was  the "contact person" (treasurer?) for the 527 campaign organizations ("citizen groups") who pushed for passage of both Prop U and Prop C.

So, yeah, Mangum may "lit the fuse" that led to the billion dollar bond deal, but there are quite a few members of Vaus's posse who were instrumental in pushing to get Prop C passed. Prop C was actually the rope to the sticks of billion dollar dynamite. Once that thing was lit, we were stuck.

There is a silver lining to the bond fiasco. PUSD had plans to get us voters to approve a parcel tax. Prop U and Prop C money can only be used for school buildings and some technology improvements. A parcel tax could be used to pay teacher's salaries. I'm not opposed to paying teachers a salary or  pensions. I am opposed to parcel taxes, in particular, to flat parcel taxes that charge each property the same amount. It seems unfairly burdensome that a small house on a tiny lot would pay the same parcel tax as an $8 million estate. Wikipedia has a list of parcel tax measures that have been on the ballot in other California cities.  They vary considerably, but some are for $300/yr and $400/yr per parcel.  They can be for a set number of years or they can continue indefinitely. Some parcel taxes are based on
square footage of the property or lot sizes. That seems much fairer and would be the only parcel tax I would consider voting for.

The billion dollar bond measure put the kabosh on talk about a PUSD parcel tax. But it may be back after things simmer down. I plan to vote for Prop 30, Governor Brown's sales tax + income tax measure to raise funds for schools. That measure is limited to a set number of years, and it is not an excessive amount of money for the purpose. If it doesn't pass, school funding will be cut, and you can bet that somebody will revive talk of a parcel tax. So, even if you are not inclined to vote for tax measures, you might consider this one a preventive measure and vote Yes on Prop 30.

Sometimes I really do not understand the thinking of the PUSD Board members. They don't seem too excited about Prop 30 or the end of redevelopment. I guess they figure the state owes them money and they have no concerns as to how the state is supposed to get that money. The board members seem pretty satisfied with saddling PUSD taxpayers with a billion dollars of debt that won't be paid off for generations, and they would have added a parcel tax on top of that, if they could have. So I found it kind of odd when I saw Brian Maienschein's campaign literature and on the front,  Linda Vanderveen, PUSD board member, claimed that the entire PUSD board "unanimously endorsed Brian." Do they know that Brian Maienschein signed a "no new taxes" pledge? Most of the funding for schools comes from state money.  I realize that Maienschein went to PUSD schools, and he is probably a nice guy and all, but, geez, what kind of message does it send when the Board unanimously endorses someone who signed a "no new taxes" pledge.

The "no new taxes" pledge is part of Grover Norquist's campaign to shrink government spending to the same level it was around the turn of the century (from 19th to 20th). In the early 1900s, most people did not finish grade school, much less graduate from high school or go to college. Is that what we want for our kids? For our country? For the generation that is going to have to pay off the school bonds? What is the PUSD Board thinking?

Fortunately, there is a challenger running for the PUSD Board. I am going to vote for Kimberley Beatty.  I've been impressed by her understanding of the bonds and support for school funding. Paying taxes to support the schools is not the problem. Paying a billion dollars to borrow a little over $100 million is a problem, but in order to avoid that situation, you have to at least ponder different possibilities when a deal is proposed. That takes critical thinking and sound reasoning, not an anti-tax pledge.

October 15, 2012

Water Rate Increase on the Agenda in Poway

It's that time of the year again. On Tuesday, the Poway City Council is poised to raise both the fixed water fees and water rates. Last year, the council voted to abandon their tiered conservation water for a more uniform rate, thereby increasing rates significantly for lower volume water users. This year's little surprise is that the council intends to relieve the folks in High Valley, Old Coach, the Industrial Park and other high places from having to pay those pesky pumping fees. The City will fold the pumping fees into the regular water fees of ALL the water users.

The new water rates for single family residential customers will be $3.96/ unit. That is up 13 cents a unit. The fixed water service charge will go up almost a buck, from $28.00 to $28.98 for each 2-month billing period.

These increases aren't the most severe we've had, but the pattern of dumping any and every possible charge, fee and rate increase disproportionately onto those who use less of something or onto those who don't even use something (e.g. pumping) is onerous.

In addition to getting stung for somebody else's pumping charges, Poway water customers are also paying for the costs to administer a backflow device inspection service. Only people with wells or on reclaimed water require the yearly inspection, yet the costs to administer this service is dumped on all of us. Is that fair?  Remember, this is the City that charges higher sewer rates to people who use less water. This City is all about who is being advantaged.

If you want to formally protest the increase of rates, and in particular, getting stung with all future pumping fees of the high landers, you need to submit a written notification to the City Clerk containing your address or assessor's parcel number and your signature by 4 pm Tuesday, October 16th. You can also drop it off before the 7pm meeting in the Council chambers. If a majority of Poway water customers sent an official protest, the new water rates won't take effect.  That is a very high bar to reach, and not likely to happen even when a lot of people are upset with the rates. If you want to unofficially complain, but don't have time to drop off a letter at City Hall, you can send an email to the council before Tuesday's meeting. If you send an email it won't count in the official protest numbers but it will put the City on notice that you are paying attention, which is the first step toward any change.

October 2, 2012

Poway's 47%

Dear Poway Homeowners,
You are getting screwed. Bigtime. And no, I am no referring to the PUSD bond fiasco. It's your sewer bills.

OK, you are not ALL getting screwed. Around 47- 50% of you are are paying substantially higher sewer rates than other Poway sewer users pay. It's been that way for more than 30 years. Maybe 40.

It is kind of a well kept secret. If you were to search The City of Poway's website, you would find a link to the City's water/sewer rates and fees , but you won't be able to find the real sewer rates for single family residential listed anywhere on the City's webpage.

Poway water/sewer customers have 4 line items on their bills: 1) water basic service, 2) water consumption, 3) sewer basic service and 4) sewer consumption.  The basic service fees are a fixed fee, based on the size of your water pipe and/or your type of service (residential, commercial, industrial, etc). The water consumption charge is based on how many units of water you consume. The sewer consumption charge is much more complex. And convoluted.

Most properties in Poway don't have sewer meters. The sewer consumption is calculated a bit differently for each category of user ( residential, multi-family, commercial, etc.) For example, multi-family housing are pegged for sewer flow equal to 85% of their water use for that period. Commercial properties sewer consumption is figured at 90% of their water consumption. Single family residential properties sewer use is calculated at 85% of the average from the lowest use during the 3 previous winter periods.

In the charts below you can see that the sewer rate is $3.16/unit  for apartment houses, churches and schools. It varies from $3.16 to $6.40/ unit  for commercial and industrial customers.

For single family residential customers, the City actually uses a tiered charge pricing format instead of a rate. The charges increase as use increases, sortof. Look at Tier 2. The house that uses 6 units, and the house that uses 12 units both are charged $40.98. There was twice as much flushing and showering going on in the house that used 12 units, but they paid the same fee as the house poured half as much water down the drain.

For some reason, the city calculates everyone's sewer commodity fee as a rate, except for the single family residential category. The true rates you pay are hidden in the City's chart. I've calculated the actual rates in the chart below. The results are a bit surprising.

The rates in the chart vary from $1.76/unit to $23.23/unit. If someone uses more than 57 units, their rates are even lower. If someone uses 0 units of water, they still have to pay a sewer charge of $23.23.
My sewer use is calculated at about 10 units.  I pay $40.98, which comes to about $4.00/unit. The person who uses 51 units pays just under $2.00/unit. How can it be fair to charge higher rates to those who use less? What a nice break for those who consume a lot of water!

How did it happen that almost half of the residential single family homes are subsidizing the other half? Originally, everybody paid the same fixed sewer charge. Then, the fixed sewer charge was tiered to make it more fair. Then, a fixed charge was separated from the tiered charge. So now, we pay a fixed charge (basic service fee) and a tiered charge (consumption fee). As sewer charges increased, people who used very little winter water, got hit with large, disproportionate bills. In 2006, the City paid a consultant to study the sewer rates. The consultant (RFC) found that if the City used a uniform rate, ratepayers in Tiers 1, 2 and 3 would enjoy a savings of 22% to 44%. Those in Tiers 4 through 7 would pay 2% to 51% more. Guess who complained and convinced the council not to charge a uniform rate for the sewer?

Funny thing,  those very same folks went apoplectic about 2 years ago when the city imposed a multi-tiered  conservation water rate. The difference between that water rate structure and the current sewer charge structure is that with the conservation water rate structure, everyone paid the same rate for their first x number of units of water, and the same rate for their next y units of water, etc. People were only charged higher rates for the water usage beyond each tier.  The people who used a lot of water said it was unfair. The council heard them, and changed the water rates back to a uniform rate. Well, almost uniform. Now, everybody pays the same rate for their first 199 units and more for their next z units. I never really got why everyone screamed that it was unfair  if we did not all pay the same rate, but then they were OK with charging people more for their 200th unit and beyond. Was it about fairness or advantage?

Speaking of advantage, at a council meting and at the recent candidate's forum, Councilmember Cunningham proposed that the excess money in the sewer fund be used to lower water rates. Really? First the City overcharges the low water user on their sewer bills and then the City wants to take the extra money to lower the water bills of the big water users who are no longer paying conservation rates. Freaking unbelievable.

I have been complaining about the unfair sewer rates for years. Every councilmember is aware that the low water users are being screwed. All of the councilmembers are OK with it, including the one who puts a quote from Ghandi on her emails. Not one councilmember has made any effort to change the way Poway charges for the sewer.  It certainly says something about the way "they serve the community" to me.  I have no respect for those who would charge the low water users more per unit just because they can, and because it pleases their more advantaged friends.  The situation will not change until enough of the low water users become more aware and make enough of a ruckus to demand the change. Will you help make a ruckus?