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Oceano facing insolvency

April 19, 2011

By KAREN VELIE

Oceano district leaders are grappling with possible solutions to ward off the looming threat of insolvency.

Oceano Community Services District (OCSD) general manager, Raffaele Montemurro, says the solution to the district’s financial problems is a combination of selling water rights, procuring loans and grants, and raising water rates.

The district, responsible for serving about 7,600 residents and business owners in Oceano and Halcyon with fire protection, street lighting, and sewer and water services, has been running about $25,000 in the red for more than a year depleting its reserve account down to a precariously low $1.5 million.

In a February 2011 report dubbed “Financial Challenges,” Montemurro contends the district has about four years before insolvency under the current budget, which only allows for $20,000 in capital improvement expenditures for the 2011/2012 fiscal year.

If spending exceeds the budget before a solution to the community’s financial crisis is found, the district could face insolvency even sooner than Montemurro’s four year projection.

Unexpected and needed repairs could put the OCSD further in the red. For example, at an April 13 meeting the board discussed putting a new roof on the district offices building. In addition, the OCSD needs about $1.2 million to provide necessary repairs to five water mains, according to district reports.

In his report, Montemurro suggests that another water rate increase could help ward off insolvency. This is in addition to a board decision earlier this year that hikes customer’s water bills 25 percent over the next five years.

Montemurro also said the district needs to apply for loans and grants. However, refuting his own suggestion, Montemurro’s report also notes that during this “time of challenging federal and state budget issues these programs are highly competitive and decreasing in availability.”

Regardless of competition, the OCSD may find itself disqualified by the fact that most loans and grants require that communities have audits and accounting records available, and the district has yet to complete its 2008/2009 audit.

Last month, former directors Jim Hill and Carole Henson tendered their resignations, citing disagreements with Montemurro over his accounting practices and failure to follow the board’s direction that asked him to complete the past few years of audits.

For months Montemurro has attempted to get the board to approve the sale of a portion of the district’s water rights noting that the water pipes are in dire need of repair. After his first proposal to sell water to Pismo Beach was denied, Montemurro turned his sights on selling water to Arroyo Grande.

Some Oceano residents are pressuring the board to consider other possible remedies to resolve the district’s financial woes such as spending reductions or a merger with either Grover Beach or Arroyo Grande.

Former director Hill contends there should be a public discussion on the idea of joining a neighboring city. The marriage would lower administration costs while bringing either Arroyo Grande or Grover Beach additional water rights.

“If the district was properly managed with audits done on time,” insolvency would not be an issue, Hill added.


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FYI, The report titled “Financial Challenges” was written by Jim Hill, not Montemurro. Montemurro can not write, as evidenced by no staff reports on agenda items for board members and citizens.


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Catnip, you seem to be in the know. Perhaps you know something about these issues?


What did Montemurro do at SMV Child and Family Center?


I mean, what did he actually DO?


Who was it sitting on the interview panel who interviewed Montemurro for the job? Was it just OCSD insiders or did they have people from local CSDs sitting in?


Do you have any guess as to why the interview panel didn’t pick up on the lack of background info on Montemurro?


These are things that are kind of puzzling to me. Thought you might know.


Thanks.


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Excellent questions. Unfortunately I can’t answer many of them. Here is my recollection.


The first panel was made up of John Wallace, someone from A.G, someone from G.B. They rated Montemurro near the bottom.


The second panel was the OCSD directors. Montemurro was at the bottom of their list too. The people at the top ended up refusing to work for OCSD after they found out more about the district. Montemurro was chosen because they ran out of candidates. It was not known until later that Montemurro was a longtme friend of former director Rick Searcy (the guy arrested during the prostitution sting) who is also best friends with Lori and Dave Angello.


Jim Hill was the person who refused to spend the money to do a full background check on Montemurro.


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Very interesting background. It clearly explains how Monetmurro got the job. I feel this vindicates those on the panels since he was at the bottom, but the others wisely discovered the history and make-up of the OCSD. One has to wonder how difficult it was to attain new legal representation as well. The friendships you describe make sense, and Hill should be embarrassed to have skimped on such an important matter. I guess it came back to haunt him.


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A panel made up by Wallace and friends rating anybody at the bottom of the heap is the proverbial kettle calling the pot black.


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LOL! You’re absolutely right!


When it comes to Wallace and his cronies, it’s like living in OppositeLand. Whatever they recommend, a good bet is you should do the opposite.


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Interesting. I think I remember reading somewhere that there were two interim GMs while all of this was going on?


What a mess. This has to have been so hard on the OCSD office employees, with the interim GMs and having to settle for the bottom-of-the-barrel applicant, Montemurro.


If the BOD asks for community questions for their interview when they look for their next GM, I would submit, “Have you ever bought pink shirts for yourself and staff as a team-building tactic?” That has to be one of the dumbest things I’ve ever heard of. Of course, the financial skulduggery should have been the deal-breaker…


…Oh, that’s right. They didn’t know about it because their hotshot district counsel didn’t do it as part of the search.


What I would like to know is why none of the BOD did a media/news search on Montemurro, on their own? Or any of the people who sat in on the interviews?


Good heavens, anyone who saw that such a limited background search was done should have been at least curious as to what else was out there.


Anyway, thanks for the info.


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Catnip’s statements are 100% accurate.


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Whatever. A microcosm of the county, the State and the Nation.


They are all upside down. And, of course, they are all trying to steal the next generation’s money to support their over indulged, selfish, near socialist desires.


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One must remember that when Montemurro was hired, OCSD accounting records and finances were already a HUGE mess. The problem stems from way before he was hired.


One question is how he would react if he discovered any wrong-doing by any of the people who have the power to hire and fire him. Does he report it, ignore it, or try to cover it up? Who is he working for?


And why did Hill quit the board, complaining about Montemurro, when Hill was in the position to vote to fire or discipline Montemurro? The public is certainly missing some of the pieces of this puzzle and it’s obvious there are forces that want to keep those pieces hidden or destroy them altogether.


I maintain that many employees and directors of the OCSD for the past two decades should be questioed and required to testify under oath as to what they know of how the OCSD ended up with this mess.


These people are not all stupid. SOMEONE has to know SOMETHING and Montemurro shouldn’t be the scapegoat on this while others remain at large.


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One must remember that when Montemurro was hired, OCSD accounting records and finances were already a HUGE mess. The problem stems from way before he was hired.


TRUE STATEMENT


One question is how he would react if he discovered any wrong-doing by any of the people who have the power to hire and fire him. Does he report it, ignore it, or try to cover it up? Who is he working for?


HE IS WORKING FOR THREE DIRECTORS AT PRESENT. I DON’T THINK GUERRERO IS INVOLVED, AND LUCEY IS BRAIN DEAD, SO WHO?


And why did Hill quit the board, complaining about Montemurro, when Hill was in the position to vote to fire or discipline Montemurro? The public is certainly missing some of the pieces of this puzzle and it’s obvious there are forces that want to keep those pieces hidden or destroy them altogether.


MONTEMURRO WAS GOING TO EXPOSE THE ILLEGAL OR AT LEAST UNETHICAL ACTIONS THE “HILL’S” WERE INVOLVED IN.


I maintain that many employees and directors of the OCSD for the past two decades should be questioed and required to testify under oath as to what they know of how the OCSD ended up with this mess.


MOST DIRECTORS AND EMPLOYEES WERE KEPT OUT OF THE LOOP. ASK YOURSELF WHO HAS CONTROLLED OCSD POLITICS FOR THE LAST 20+ YEARS. DAVIS’ ARE GUILTY TO A LIMITED EXTENT ONLY. WHO HAS THE MOST TO GAIN? (REAL ESTATE, BUSINESS) WHO HAS THE BIGGEST STAKE IN OCEANO? THAT IS WHO IT IS.


These people are not all stupid. SOMEONE has to know SOMETHING and Montemurro shouldn’t be the scapegoat on this while others remain at large.


MONTEMURRO SHOULDN’T BE A SCAPEGOAT, BUT HE SHOULD BE ACCOUNTABLE FOR HIS DISMAL PERFORMANCE TO DATE. HE IS ALSO IN LEAGUE WITH THE MAJOR PLAYERS, AND THAT IS WHY HE HAS BEEN GIVEN A FREE PASS. HE IS NOTHING MORE THAN AN ERRAND BOY.


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What are the Davis’ “guilty” of?? That is quite an inflammatory statement. You need to provide some backup before posting suspicions and theories.


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Slo, maybe they are only “suspicions” and “theories” to YOU. The author may see it differently.

So, SloRider, since you don’t even live in Oceano, and never have, why are you so passionate about trying to protect the reputations of certain local officials? What is in it for you? There has to be SOMETHING. Please do us all the favor of explaining your stake in this.


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I would like that question answered too. Why is SLORider interested? Could it be his relationship with the Angello’s? Montemurro? How does he know there are three people that have put in paperwork to be appointed as directors? You can’t know that unless you talked with one of the above people mentioned. (BTW, his statement is correct)


You know you are asking him the right questions when he doesn’t answer, and his favorite trick is to redirect instead of answering. He has a lot in common with Montemurro.


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Is it confidential at this point as to who has returned paperwork as an applicant for the open positions? I was afraid no one would be willing to jump in, and am glad to hear that’s not so. I was thinking it would be nice if a Halcyonite was on the board. Also an impartial, independent person. I guess I’ll have to wait and see, as I’m not connected to Oceano other than concern for its welfare.


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Call Montemurro and ask. His number is 473-4511 (OCSD number) . You raise a good point. I would think this is public record, yet have not heard a word from the media on the candidates.


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I would ask people to look at the article CCN article “D.A. investigating Oceano CSD”. It was a loosely veiled attempt to blame the Davis’ for a supposed unknown account which held over $300,000. Look at SLORider’s comments. He was full on board with blaming the Davis’ for everything wrong with OCSD until just recently. Why the change?


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I’m posting comments, not suspicions or theories. The comments I make are however based in fact, and first hand experience. Oceano is an oppressed community. A handful of individuals control everything. I want to break these chains. Why are you commenting? You don’t live in Oceano. Tell us why you are interested. Your credibility is nonexistent. We know about you.


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Please quote the rules which indicate only Oceano residents may post in this folder.


If not, as the moderator says, focus on the opinion, not the poster.


Catnip, I understand your frustration, but if someone’s opinion is not valid, it is really easy to tear it apart.


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Thank you for the interesting and relevant feedback, Catnip.


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You can’t just force people to testify. You need to find evidence of a crime first. Work on that. Finish the financial audits for goodness sake!


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Sorry, the Grand Jury can call you in to testify without you being a suspect in anything.


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Let me makes things clear for you: We DO NOT have a grand jury that investigates crimes in this county. The D.A. can impanel one, but again, YOU NEED EVIDENCE OF A CRIME FIRST!!! There is no criminal grand jury that exists to help you, and you need to convince the D.A. to create one. That requires EVIDENCE OF A CRIME.


It’s not that difficult to understand. The criminal system does not set out on witch hunts. Finish the financial audits, then–if there is evidence–hand it to the D.A. and see what happens.


In the alternative, submit a complaint to the Civil Grand Jury who can investigate the CSD for mismanagement. But know that the Civil Grand Jury has NO TEETH. All they can do is RECOMMEND CHANGES. Know that the Civil Grand Jury is not obligated to undertake a complaint and that their reports don’t come out until a year later, and having no teeth, won’t get anywhere.


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Calm thee down, SloRider.


This is what you posted:


“You can’t just force people to testify. You need to find evidence of a crime first. Work on that. Finish the financial audits for goodness sake!”


I pointed out that you can be called to a Grand Jury to testify, and you must go. I have no idea if they had evidence of a crime first or not. As far as I know, they could have been trying to while away a boring Thursday afternoon.


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And I pointed out to you that there is no criminal Grand Jury, and to get one is going to require evidence of a crime. You can’t just force people to testify… it requires cause.


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“One question is how he would react if he discovered any wrong-doing by any of the people who have the power to hire and fire him. Does he report it, ignore it, or try to cover it up? Who is he working for?”


—


Wiseguy, Montemurro’s refusal to submit financial records for 2009-2010 for an independent audit, and the reaction by the 5 board members, may be showing us who he really works for:.


In other words, the Remaining Three may be who he is working for because, despite Montemurro’s blocking an independent audit, especially in a CSD that had such a big history of financial nincompoopery, they still say he’s doing a great job and are working to keep him on as GM.


This reaction by the Remaining Three is very similar to the reaction of the four City-of-Bell council members, and one administrator.


These Bell folks were co-conspirators in committing massive financial fraud against Bell. There were so many complaints from Bell residents about city management, with the head of the city council and the head administrator being the two most frequently mentioned bad guys. Yet the three other council-member co-conspirators did nothing to investigate it or get rid of the administrator or head of the city council. Instead, they actually worked to protect them. That’s because the three other council members were also involved in the financial fraud.


I know I keep returning to the scandal at the City of Bell, but it is the best example of extreme financial skulduggery by a small local government (in Bell’s case, a City Council), and how the members of the council reacted when investigators started poking around, looking for answers.


All but the one council member (who actually was not involved in any of the financial fraud and, really, did not know it was going on) supported Rizzo (the council’s leader and fraud mastermind, and the administrator who helped implement the fraud, and stood behind him. However, when the one council member who was not in on the fraud finally understood what had been going on, he immediately offered to help put them behind bars.


Unfortunately, because he really didn’t know much, he couldn’t help much. He had only been a council member for a few years and he had no way of knowing how much the others were getting paid.


The other members were getting paid around $100,000 a year (plus other hidden payments), and the one innocent guy was getting only about $10,000 a year.


Anyway, it makes no sense for the OCSD Remaining Three to not want to get rid of Montemurro, considering his lack of implementing board orders, the financial issues it had already caused for the OCSD, and the fact that Montemurro had demonstrated the same behavior (which also caused a lot of problems and financial loss) for his prior employer in Kenosh.


So there must be a reason not yet revealed. The most likely one, IMO, is that there is something in an independent audit they don’t want to be revealed, and financial fraud or impropriety seems to be the likely think they want to keep hidden.


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The way to solve Oceano’s problem in the CSD is not to sell water or increase water rates. The way to solve the problem is to change the management. Get rid of Montemurro and at least 2 of the remaining board members.


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Its too bad Hill couldn’t have woke up to how incompetent Montemurro is earlier, while there were the votes on the board to remove him. Dahl and Deen saw how bad Montemurro is early on and would have removed him. Hill and Lucey gave him a raise larger than he was asking for and a 5 year contract. Now Hill finally realizes that the insolvency is a result of improper management. Does he realize he was a major part of that improper management? Now we are left with this mess of incompetence in Montemurro.


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To anyone that hasn’t listened to the Congalton 4/14 podcast where Karen Velie discusses the OCSD, it’s very interesting. My blood boils when I hear about Montemurro’s past, the indifference about him from Lucey & Angello, and the raw deal Oceano is getting.


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Just to share: at the last OCSD meeting, Monte told me that he was viewed as a “Super Hero” in Wisconsin. He said his incompetence and poor decisions were vindicated because after 7 years the FBI sent his boss to jail because of taking bribes from the Indians. He has a history of blaming others for his incompetence.


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Perhaps the next time you speak with Monte, you can ask him for the specific reasons why he could not get the financial accounting required for both his prior position and for the OCSD position.


That was the red flag that brought the State Controller down on the City of Montebello.


Ultimately, it comes down to the Board. They can hire and they can fire the general managers.


If the State Controller comes knocking on OCSD’s doors, the Board will have some ‘splainin to do about how they allowed OCSD to get into such a mess without taking steps to get rid of someone who was not performing his job.


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Oceano’s late audits and other troubles existed prior to Montemurro. You have to go much farther than one person.


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I’m aware of the issues with the Davises. I’ve been around the pumpkin patch once or twice, you know =)


What I’m not aware of is if there is any connection between Mr. Montemurro’s zeal for selling Oceano’s water and … anything else, including the large raise and 5-year contract.


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Some people have survived a long time with their fingers deep in the OCSD pie. They survived because they professional B.Sers, well practiced over the years. You might think, “surely, THEY wouldn’t be ripping off the OCSD….”


Don’t be fooled.


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WiseGuy, There is way too much corruption with ALL the CSD’s & they all keep getting away with it. Over paid General Managers, employees, bloated expence accounts, etc. The list goes on…& to solve their “problems”, they keep raising water rates! That’s just crazy! How many times do we need the water rates increased? I know in Los Osos, people are conserving water to the extent, that the CSD will do STILL ANOTHER rate increase! That’s the only answer they have & the only way they can justify their very existance. It’s time to DISSOLVE ALL COMMUNITY SERVICE DISTRICTS…They are NOT cost effective & clearly are NOT working…Let the County handle the un-incorporated areas like they did before we had CSD’s.


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Hint for inquiring reporter: GINA AND PHIL DAVIS. GINA DAVIS, PHil DAVIS, Gina Davis, Phil Davis.


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Really!!!! PHIL AND GINA!!!! I wish people would quit blaming Phil and Gina for all the past problems with OCSD! Isn’t the 5 member Board their boss? Everyone is quick to point the finger at Phil and Gina, Why because they are the only two that stuck around and put up with all the BS Politics! If they are so guilty why didn’t the board get rid of them along time ago???????? BECAUSE THEY AREN’T GUILTY! THE ONLY THING THEY ARE GUILTY OF IS WORKING HARD AND CARING ABOUT THE COMMUNITY IN WHICH THEY LIVE!

Everyone has their hands in the candy dish…That’s Politics!!!! That’s reality! So stop blaming Phil and Gina for something they haven’t been convicted of and never will be convicted of!!!!


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No, the Board wasn’t their boss. They are hired/fired by the G.M.


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This is a shame, especially knowing that Oceano residents on average use less water per person than the residents of every other community in SLO County.


Oceano residents should be commended for this and rewarded. But instead they get ripped off and the future development and betterment of the community based on their water reserves is being stolen from them and their children.


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