Is Oceano attempting to blackmail the sanitation district?
June 5, 2015
OPINION By JULIE TACKER
Einstein’s definition of insanity is, “doing the same thing over and over again and expecting different results.” I don’t know who is insane; the Oceano Community Services District (OCSD) for using bully tactics to get their way, or me, for writing about it.
In 2012, when Oceano CSD General Manager Tom Geaslen was struggling to find money to pay his overpriced salary of $126,000 plus the $45,000 he “overpaid himself,” he attempted to extort revenue from the South San Luis Obispo County Sanitation District for billing services the OCSD provides.
The district serves the residents of the Oceano Community Service District, Arroyo Grande and Grover Beach. Sewer charges are included in the water bills for each of the three communities served by sanitation district; funds are collected and passed through to the sanitation district.
The sanitation district is supposed to pay each community the cost for sanitation district billing. Oceano should have the smallest cost because it has only 20 percent of the sanitation district’s customers.
In 2012, Geaslen demanded $60,000 annually for a longtime service that had been $4,930 for over a decade. To drive the sanitation district to renegotiate, Geaslen stated “we hold the check.”
Geaslen was successful in sending the member agencies to the table, the finance directors from Arroyo Grande and Grover Beach met with Geaslen. They calculated actual costs, using the same methodology for the cost of billing for the sanitation district each month. These collection fees are defined as “enterprise” and the agencies cannot charge more than it reasonably costs to perform the service.
The actual cost for Grover Beach, based on time, salary and benefits and supplies used for billing was calculated at about $22,000 for billing 36 percent of the district’s customers. As an aside, for some unknown reason, Grover Beach hasn’t billed or been paid since the formula was derived; district staff will be looking into why and resolve this snafu promptly.
Arroyo Grande has 44 percent of the districts connections and charges $0.37 per billed account and $1.50 for new hookups each month. Costing sanitation district roughly $1,000 per month for administering the billing, their justification is that the sewer charge is a flat fee for each property and adding it to the water bill is a fairly minimal cost. Acknowledging there is some work involved in passing through the revenue collected for the sanitation district. Arroyo Grande has been billing approximately $12,000 a year since the Geaslen round table discussion.
To date, no cost breakdown for Oceano’s 20 percent of the district’s service area has been presented to justify their invoice for service. The amount morphed up to $22,000 during the management transition after sanitation district administrator John Wallace resigned and Geaslen was fired. No one appears to know how or why, but the assumption can be made that $22,000 was a placeholder for the following year’s budget.
The matter lay dormant until the sanitation district budget hearings this past week wherein former OCSD board member, now Mayor of Arroyo Grande, Jim Hill, questioned the OCSD’s $22,000 line item and why it differed so from the other agencies. Hill asked for justification and equity among the billing practices, suggesting the ratepayers in Arroyo Grande and Grover Beach were subsidizing those in Oceano.
Additionally, Oceano currently has an outstanding $11,000 installment for these services waiting to be approved by the sanitation district. Predictably, Matthew Guerrero, who is Oceano’s representative on the sanitation district board, responded, “I think we should just pay it.”
While, Grover Beach Mayor, John Shoals, requested the invoice be held for a month, to allow for an analysis. Sanitation district manager, Rick Sweet, was visibly shaken and explained that it would be a shame if the service was interrupted. His statement implied that the overpriced Oceano General Manager, Paavo Ogren, had suggested if no payment is received billing services would cease.
Ogren’s only justification for the charge is that it’s been paid as a “past practice.” Since fiscal year 2013 just three installments have been made.
Complicating the matter, none of the agencies have formal agreements in place to reflect any of these methodologies for the charges.
Between Geaslen’s extortion and Paavo’s blackmail; even Einstein would be embarrassed for the ratepayers of Oceano where it seems “past practice”, right or wrong, is expected to be status quo.