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Oceano CSD demands cash from sanitation district

June 9, 2015

oceanoThe Oceano Community Services District is threatening to stop acting as a bill collector for the South San Luis Obispo County Sanitation District if the agency does not make an $11,000 payment to Oceano by the end of the month.

Last week, the sanitation district board refused to approve an $11,000 bill it received from Oceano. The sanitation board instead directed its staff to get an accounting from Oceano to determine how it justifies the expense. Because it is an enterprise fund, Oceano is not permitted to charge more than the cost of the added billing.

Oceano, like the cities of Arroyo Grande and Grover Beach, does bill collecting for the sanitation district by adding the cost of sewer bills to customers’ water bills. For more than a decade, Oceano charged the sanitation district $4,930 a year for bill collecting.

In 2013, Oceano began charging the sanitation district $22,000, or semi-annual payments of $11,000, for the same service it used to pay $4,930 without a contract or sanitation district approval. Oceano collects sewage bills for about 20 percent of the sanitation district’s customers.

Arroyo Grande, which has approximately 44 percent of the customers, charges the sanitation district $12,000 a year. Grover Beach collects bills from about 36 percent of sanitation district customers, and city officials say the annual cost of conducting the billing service is $22,000.

Paavo Ogren

Paavo Ogren

When the Oceano district board meets Wednesday, General Manager Paavo Ogren will ask board members to approve a delinquency notice he intends to deliver to the sanitation district, according to the agenda. The delinquency notice, which Ogren has already drafted, states the sanitation district must pay the OCSD $11,000 by July 1, or the Oceano district will stop serving as its bill collector.

Additionally, Ogren demands that the sanitation district sign a formal agreement which states it will make semi-annual payments of $11,000 to the OCSD for billing services.


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Sounds like on the sopranos when Johnny sac of the New York mafia would try to shake down tony soprano of the New Jersey mafia.


Lets hope they resolve it in court so we can pay all of the bills on both sides and overtime for the attorneys..


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If I’m reading the San District website correctly, the “board” is supposed to represent, in a non-partisan way (meaning not with their own political party in mind nor with any bias favoring their respective cities/districts, ie Arroyo, Grover or OCSD) the Sanitation District’s best interests.


From the the SSLOCSD website:


“The District Board makes bi-partisan decisions in the best interest of the District. The Board makes policy and operational decisions with advice from the General Manager, District Engineer and District staff. The District Board also establishes District policy, setting goals and objectives, approves the annual budget, approves expenditures and performs other related functions.”


If Matt Guerrero is supposed to be representing the SANITATION DISTRICT, and not the OCEANO COMMUNITY SERVICES DISTRICT, how was he the ONLY voting board member to want the San District to pay this unsubstantiated bill to the OCSD and voted as such?


Something smells very fishy in Oceano and it’s not the ocean! If only there was video to capture Matt’s body language when he made that vote. He couldn’t even be bothered to look up when he cast it. Sneak snake behavior and not any quality of a leader was exhibited.


That Mitch Cooney is here writing that nothing about this topic is important to the ratepayers shows us all that Oceano is way better off with the old OLD guard gone. Time for another housecleaning.


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April, you are correct. When someone serves on a board their fiduciary duty is to the entity governed by that board and not to any other narrower interest. It can be difficult sometimes to set aside one hat while wearing another but it is fundamental to the governance process.


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Just wait until we as Morro Bay residents see the impact that irons, christine johnson and smuckler have made with the decisions about our waste water treatment plant – not a water reclamation plant as they have stated. there will be NO reclamation without millions added to the 100 million price tag at this point.


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Hmmmm, does this sound like blackmail to anyone else?


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Why is this non-issue being so blown out of portion? Is there some personal agenda involved by someone (who has no real interest in either district) trying to exploit this for personal puffery. Look at the issue and you will see that it is an operational issue between two government agencies. Exploiting things like this will not give us better govermment, but putting issues like this in the forefront will only make those who live off this stuff more reason to move forward. Time for the public to ignore those who promote themselves through creating conflict and allow government officials to do their jobs without a lot of second guessing.


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Mitch would you threaten the San Dist with ceasing collection of their revenue with only 3 weeks notice?

Wouldn’t you simply provide the accounting for the service as asked?

It is Paavo who has blown this out of proportion.


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Hi again Julie. I wasn’t sure how to find you but for some reason I expected to see you in this thread about Oceano. While I have no dog in this fight, I was hoping to make a special request of you. Would you please write a piece on Los Osos and the unexpected 11% increase in their CalFire contract? As a property owner and tax payer, I am concerned for the future of our fire department and the overwhelming budget constraints. I have to say I have never heard of any agency, especially a fire department, putting together a budget proposal which included a 50% cut. I understand the board moved forward with budget that included a 20% reduction, still HUGE. Many on this newsfeed look to you to detail the truth of surrounding agencies and their mishaps/mistakes and I think it would only be fair for the residents of Los Osos and all of the other agencies that you have commented on, most notably the Five Cities Fire Authority regarding their budget proposal that included additional funding. Hopefully you would be able to provide some insight into how the CSD is going to continue to contract with CalFire if the price tag sees double digit increases every year.

http://www.losososcsd.org/Library/2015%20Agenda%20Packets/06.04.15/Agenda%20Item%207B%20Proposed%20Fiscal%20Year%202015-2016%20Budget%20Staff%20Report.pdf


I also found the following article of an agency cutting their CalFire contract, which saved them $780,000 in one year. I’d hate to see Los Osos get into a bind where they have to choose between other services or CalFire.

http://patch.com/california/lakeelsinore-wildomar/city-terminates-calfire-station-10-contract


I think I would be fair to everyone, to promote transparency, honesty, and fairness if you could educate the public on this issue here in our hometown of Los Osos. Thank you in advance.


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Hello SloBus,


I don’t know that I am the one to write the report on why the increase in the LO Cal Fire contract. CalFire can better explain.


I have been very critical of the LOCSD for robbing the fire funds for its own purposes. Are you aware that over $180,000 of general property tax, which should be allocated to a service that benefits all Los Ososans, is subsidizing their water department. This is part of the reason LOCSD water rates are lower than those of Golden State Water customers.


If you haven’t watched the meeting, you may not know, the LOCSD board refused to adopt the 2015-16 budget because they wanted the GM to rework how the cost increases throughout the district this year are to be paid, they aim to protect the fire department. Traditionally, LOCSD has been scalping from the fire fund and it absolutely should not be covering for other district increases. One such increase is the rental of a new office building for the LOCSD administration. The LOCSD GM is suggesting that she, herself will spend nearly 20% of her time administering the CalFire contract, which is insane.


There are bigger problems with the LOCSD than people know, I intend to write about it in the near term. As for FCFA, a free quote from CalFire hurts no one. FCFA owes it to the ratepayer to prove they are the lowest cost for the highest level of service.


I am proud to say that Los Osos has enjoyed considerable savings over where we were headed prior to CalFire coming on board in 2004.


We must always compare apples to apples!


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AG charges $12,000 and Oceano wants to charge $22,000 without any justification?


We’re in a real world of hurt, if it costs Oceano $22k to process sewer payments while they are collecting their water payments at the same time- – 6 times a year?


I’m sure the sanitation district will reimburse Oceano for legit expenses once they’re substantiated.


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California regulations allow Enterprise Districts (OCSD and SSLOCSD) to levy charges calculated only on the actual cost to perform the service. Ogren, a CPA contracted with the OCSD to fulfill its accounting function as part of his pay package. However, he refuses to provide the breakdown of costs to justify the charge. Instead of complying with State regulations to do so, he threatens to stop billing.


The Sanitation District board is right to require Ogren to comply with state regulations. Failing to do so would make the board complicit in this extortion attempt and unlawful demand. The board cannot sign off on a bill that is in violation of State code; nor can they abandon their fiduciary duty to the ratepayers. Hopefully the OCSD board will direct their wayward employee to operate within the law when they meet tomorrow evening.


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Not sure why this is a “featured story” at this point, and the issue is a little unclear the way that it is written. If the agreement says that OCSD will be able to charge $4,930 per year, then that is what should be charged for now. If the actual cost to perform the service has become more than that amount over the years, the agreement should be renegotiated. The actual cost should be fully reimbursed, whatever it is.


If OCSD presents its actual cost for billing, and that amount is not to the Sanitation District’s liking, the Sanitation district should do the billing itself, or contract with someone else. If $4,930 per year was the actual cost over a decade ago, it certainly is not the actual cost today.


This is not a major news story. It is just a business matter between the two districts that they need to work out.


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Yes, the two districts should be able to work it out, but not under threat of cutting off the service in a matter of just a few weeks. For the SSLOCSD to be able to collect on its own or contract with billing service or another agency (i.e. County of SLO) will take time to negotiate and implement. Paavo knows he’s got them in a bit of a pickle. Until the SSLOCSD realizes it can simply threaten to no longer treat OCSD’s sewage; then who will be looking for a new arrangement?


Oceano is only 20% of the SSLOCSD’s revenue, they could survive very well without that partnership.


I encourage you to read the staff report for tomorrow’s meeting. It might not be newsworthy unless you follow the sanitation district and Oceano’s politics, then it becomes quite fascinating — You can’t make this crap up.


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For the love of Pete…..how long do we have to live through this Los Osos Shit (literally) fiasco? Is there anyone in Los Osos competent to solve this issue once and for all? Maybe the dead end streets are a good analogy for Los Osos after all?


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Rich, step away from the keyboard. Los Osos is nowhere near Oceano (Although I do admit there is a creepy similarity)


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