Oceano CSD considering 30-year loan to itself
November 13, 2013
The 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.