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Oceano CSD considering 30-year loan to itself

November 13, 2013

oceanoThe Oceano Community Services District Board of Directors will consider issuing itself a 30-year loan Wednesday to back-fill expenses in its general fund.

The Oceano general fund has already leant nearly $800,000 to the district water fund to cover its portion of administrative expenses. The Oceano water fund has not been paying its portion of the district’s administrative expenses since early 2011, despite a water rate hike taking effect at approximately the same time.

At the board meeting Wednesday, directors will discuss how the water fund should repay the money.

District staff is recommending a $770,686.84 loan at a 3.25 percent interest rate. If the board approves the loan, the district water fund will pay the district general fund $3,535.51 every month until July 2043.

“Water fund expenses should be paid for the users of the service, and should not be paid with property taxes,” the district staff report states.

Government code does not mandate the terms of inter-fund transfers.

The debt in the Oceano water fund accumulated primarily under the oversight of recently fired general manager Tom Geaslen. The board of directors fired Geaslen in April after an audit revealed that he paid himself more than $45,000 extra in salary.

 


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The OCSD board took action tonight. Committing the water fund to pay for the next 30 years for damage done by Montemurro and Geaslen. Ultimately the Board is to blame. They didn’t want to hear or see through the lies of Geaslen — I personally told them repeatedly they were deficit spending, but they wouldn’t do their homework and compare the budgets next to the expenses they were approving (or in some cases approving after the funds had been spent).

Geaslen was masterful at convincing them their financial house was in ship shape, but their ship was sinking and still is.

The accountant’s logic behind the terms of the loan were somewhat interesting, she convinced the Board that the Fire Fund had been robbed and that the taxpayers of those funds should not only be repaid, but paid back at the prime rate.

What she and the board failed to recognize is that the fire taxpayers ARE the same as water ratepayers (renters will foot the bill for homeowners). That interest rate for that duration punishment to be paid by the customers for the Board’s failure to see through the lies and act on them.

In this case, Geaslen’s incompetence will cost the ratepayers $458K over the next 30 years. Ten times $45,242 he had to pay the district back for “overpaying” himself.

The collateral damage continues. Tonight the new GM suggested selling their brand new $125K sewer jetter bought by Geaslen, who failed to realize that the district didn’t have a truck rated heavy enough to tow it, nor was anyone on staff licensed to drive it. They since bought a truck and all the guy$ have gone to driving $chool to get Cla$$ A licen$e$.

Board member White suggested the $3500 monthly payment would equate to fewer infrastructure improvements, what she fails to recognize is the salaries of the staff and how much those are keeping the infrastructure from being improved. The 2011 water/sewer rate increase has been spent on staff and legal, very little on services.


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QUOTING JULIE: “Ultimately the Board is to blame.”


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I agree 100%.


The Board of Directors tasks include providing oversight for the performance of the General Manager. The BOD is the only intra-agency oversight that is provided.


The OCSD BOD provided less than zero oversight. I say “less than zero” because, not only was the BOD negligent in its oversight of the GMs, but the BOD constantly sided with the crooks they hired as GMs against political activists who spent considerable time, effort and resources doing the research necessary to catch these GMs in their fiscal improprieties.


In effect, the BOD ended up being like co-conspirators with the GMs by using the power of the BOD to help the GMs cover up their self-serving financial schemes.


IMO, this goes beyond BOD negligence, especially because they continued their negligent oversight of GMs when Geaslen became GM, replacing GM Montemurrow.


Clearly, it is the BOD that needs to be replaced because, based on their track record, we can expect the BOD to fail in its duties of selecting and oversight of OCSD’s GMs.


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CSD’s simply don’t work in this county. Here is a classic example of robbing Peter to pay Paul.


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Aren’t the feds still loaning money at .1% or something, why can’t they get that money if it’s really needed?


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I just do not even know where to begin with all the problems that have been created by poor board oversight over many years, lack of administrative leadership, district waste,

fiscal mismanagement, and now all the promises that were made regarding increasing water rates with an illegal protest vote election.


Moving forward, it is time to disband the Oceano Community Services District, and have the county takeover and restore order and trust for local residents.


Next we need CalFire to provide fire services for Oceano and get as far away from the New Fire Tax as possible. We just cannot afford paying $50,000 for Health and Pensions benefits each year for fire department employees and then provide 90% pensions between the ages of 50-55.


It is time for the State Controller, Treasurer, Senate/Assembly Joint Audit Committee, State Attorney General, SLO Grand Jury, and most important SLO District Attorney to get involved.


We have turned our backs on the problems in Oceano for much to long and we need legal action and accountability for those individuals who are responsible for these problems.


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There have been a lot of problems as you point out. But given the recent history of decisions by the BOS, would they be any better? As for the DA, expecting action from him against anyone with any political influence is laughable unless it is a slam dunk case for murder or child molestation.


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I just really feel that the county is better equipped to provide direct and support staff to do a much better job in providing services for the residents of Oceano.

Is the county any better ?

Certainly better than what has been happening in the OCSD.


I agree with your comments on the DA. It is just really hard for me to understand how we can allow theft, fraud, and no audits to go on for years without any action.


We need to place disbanding the OCSD and contracting with CalFire on the ballot.


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After the OCSD’s BOD’s repeated negligence in carrying out its duties in hiring and providing oversight for the performance of their GMs, the County BOS would not have to try that hard to significantly raise the bar of GM performance at OCSD, compared to what it has been under the OCSD BOD’s oversight.


The County BOS has its problems, as does any governmental body.


However, they are not outright consistently negligent.


As long as we can keep the BOS from having a paramour who gains from County contracts for Oceano, the BOS would do a better job than the BOD.


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falconbh,


You mention CalFire, I too think CalFire should be given an opportunity to propose services for the tri-communities. While they may still need a rate increase to provide the services FCFA is proposing, what would it cost to provide the current level of service…as the “Costco of Firefighting” CalFire could come in less. Why won’t they simply ask for a quote?


Bringing CalFire to Los Osos in 2004 was the best thing we ever did.


At the very end of last nights OCSD meeting Guerrero brought a Pismo Beach CalFire report up, comparing its per capita with Oceano, Pismo is quite similar, but Pismo pays much more for service yet uses CalFire. Per capita is not the test in which to compare level of service (LOS). Pismo Beach fire mans two stations (Oceano has one) and has an extensive Life Guard program (oceano has none) — having many more calls to the beach than Oceano (who no longer has a response contract to the beach and is often beat by CalFire to dune incidents by the Nipomo CalFire crew responding from the south, through the Phillips Refinery property).


Pismo also has higher property values, brings in higher property tax, allowing for more service. A community that likely needs more service, imagine how many tourist incidents they have to respond to. Pismo is a bustling city, Oceano is a relatively quiet community for emergency calls (having just 61 calls from that station last month).


Guerrero is clearly out of touch with the ratepayers of Oceano. He supports high salaries and hasn’t cut costs for the district ever. Last budget cycle, Mary, Lori and Karen supporting cutting the half-time position Geaslen added to the water yard staff, but Matt voted “no.” He gets too friendly with staff, even working in the field a bit (where he shouldn’t be) he has made friends. This is not recommended, objectivity is lost when decisions that effect the community have to be made. His support for the FCFA benefit assessment district over asking for a quote for CalFire and moves like this 30 year loan to the water fund are also indicative of his thinking.


I don’t know if dissolution is the right move, I do know it’s VERY difficult. It would easier to change the board. Three seats are up in November 2014; White, Blackburn and Angello, Oceano residents need to come up to speed on the issues and vie for those seats in order to effectuate change.


Get involved!


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I appreciate your comments and respect the detailed insights that you provide on many complex issues.

Just thinking back to all the points that you have made regarding the fiscal management of the district over the past couple of years. Well as we review the latest action by the board it turned out to be a much bigger problem.


Hopefully, in the future will bring improved leadership, the new fire tax will be rejected by the voters, and that the Oceano Community Services District and Five Cities Fire Authority will begin to make the cuts/adjustments to balance the budgets.


Thank You


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All three communities need to be asking for a CalFire quote…now, before you are saddled with a high tax.


Feel free to give me a call if you want to know more, I’m in the book.


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I agree with seeking a quote for services from CalFire. I have worked with CalFire on projects in the past, and they are very efficient in using their resources.


In addition, any fire-protection service contracting with OCSD will hopefully be aware of the lack of OCSD’s negligence in basic infrastructure maintenance for infrastructure the fire-protection service will provide.


I am concerned specifically about the lack of required maintenance of fire hydrants. OCSD has fallen far, far behind in doing even basic (but vitally important) procedures like exercising the hydrant valves, at which time the hydrant is flushed, and flow and pressure levels are assessed. A stuck or poor-flowing hydrant, or a valve that breaks when the fire crew attempts to access the hydrant, could literally make the difference between life and death in an emergency situation.


The American Water Works Association recommends inspection and testing fire hydrants at least once a year.


Some of the OCSD hydrants have not been exercised in 10 years.


At the time of hydrant inspection and testing, assessment is made for leaks, and need to replace seals and other parts. The hydrant undergoes a full pressure test.


Whomever is going to provide fire protection services, they are going to inherit the problems caused by lack of infrastructure maintenance.


To ensure the safety of the OCSD customers, infrastructure maintenance is vitally important. It is due to the lack of OCSD board of directors’ oversight that has allowed vital maintenance procedures to be ignored.


What makes it more disgusting is the fact that, while the BOD let vital maintenance procedures go undone, at least two of OCSD’s general managers were stealing money, hand-over-fist, from OCSD’s customers.


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I believe that residents should have the opportunity to vote on having CalFire as the service provider in Oceano, Grover Beach, and Arroyo Grande.


Have a real problem with the Fire District scheduling a costly special election and wasting taxpayers money. Why not on a regular election date?


Then you have the Fire District hiring “consultants” with funds designated to providing direct fire service to help them push this New Tax Increase.


I can recall when we were all told that this would save money!


Why are our elected officals afraid to give the citizens a democratic vote on this issue ?


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I really respect and support both fire and police in our area.


What I do not respect is using a page from the old tax and spend handbook to scare people into voting in a “undemocratic process” that does not allow all residents a vote to Increase Taxes on working families,

sniors, and renters, who will Not even be allowed to Vote.


If you look at the facts; the median income for Oceano is about $ 35,000,

unfortunately Grover Beach is not much better.


With a proposed New Fire Tax + plus 5% a year Water Increases to the OCSD+ 30 year loan payments=Tax Increase, this is a Major Problem for residents.


After receiving my Super Sized Property Tax Bill, we just cannot afford another Tax Increase, when our own wages have been standing still for so many years.


When is someone going to stand up and Question the actions of our local elected government represenatives, where is the Free Press ?,

the Grand Jury ?, the District Attorney?, local State Represenatives?


Julie, Edwards, Malone, and Cal Coast have been the only voices fighting the good fight.


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Amen!


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There never should have been these large amounts of money in the Administrative Fund to cover this type of debt incurred over the Geaslen years. Funds from property tax are expressly intended to cover Fire Services and Streetlighting.


Ironically, the Fire Authority will be at the OCSD meeting tonight with its hand out to ratepayers asking them to support a benefit assessment district to cover shortfalls of the JPA. These funds should be passed through to fire as they came in, that’s what they were collected for. Admin. should have very little reserve/contingency; it operates only from contributions of the other funds. It’s not a bank and it can’t expect a revenue stream from interest payments.


The Streetlight budget is minimal since there are only a half-dozen or so lights maintained by the OCSD.


The terms of this “Loan Agreement” are punishment to a disadvantaged community already paying high water rates. This loan is for 30 years at the prime rate is $458,626 over the life of the loan.


This idea should be floated through a committee before it comes to the Board of Directors, alternative scenarios should be presented and the Board, aided by community input, should then chose how best to handle this continued Geaslen collateral damage.


The real question is what will they do to change the practice of over spending? They, a district half the size of Los Osos (who budget only $90K a year for a GM), just hired a new General Manager at $126K (they can’t afford that salary without cutting service, i.e. repairing/maintaining infrastructure). When the rate increase was implemented in 2011 Montemurro had staff costs down below $200K, now they exceed $700K. From a $1.5M operating budget not much else gets done but paying staff to run in place, the rest of their $4M annual budget goes to buying State and Lopez Water and paying the Fire Authority.


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Julie,


Where was all this business acumen when reserves (well over $1 million) were disappearing left and right in 2005 at the LOCSD? Why was the Board not aware and why was the bad GM never called out on it or fired?


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Pot, have you met kettle?


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The other participants in the proposed assessment district will end up having higher costs because OCSD’s negligence in infrastructure maintenance will result in problems which will be born by all members of the assessment district.


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Clearly, we need to reduce staff in the office. Develop a balanced budget with a emergency reserve. Get back to providing basic water services.


We need to make some really difficult decisions on reducing salaries, pension contributions, and employees are going to have to pay more for health insurance.


Ratepayers are already paying more for water each year for a 25% increase and the proposed new fire tax will not help.


Making a new 30 year loan to cover shortages, after big rate increases, indicates how really a big budget problem we have in Oceano.


Without this costly loan [tax increase] we would be facing “bankruptcy”.


The time for talk is over, we need a budget reduction action plan.


The State needs to step in and provide someone to takeover the district.


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If the district can “loan” itself money, can the district also forgive the loan? This is crazy! It only works at the federal level because they can print more greenbacks.


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This “loan” is not a good idea. OCSD should seek a qualified fiscal manager to give them direction and guidance. The principal plus interest payment is the beginning of a slippery slope.


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Great. Let the hilarity begin…


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When a fire engine is called out to a fire within OCSD’s boundaries, attempt to access the hydrant only to have it break off, there won’t be much “hilarity.”


It will mostly be tragedy.


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