So you see, these bonds were out in public view the whole time (not to mention they were passed in 1998 and 2003, do you think they were passed without the public knowing anything about it?) No secrets. They weren't mentioned, I assume, because having been around as many years as they had been, they were just part of the everyday cost of doing business for the water business, at least for the people who were paying attention. The fact that some people hadn't been paying attention, and became aware of them several years after the fact, doesn't mean anybody else was lying or misleading anyone.
Below is an article that first appeared on this site on August 2nd, 2011. In it we carefully laid out, step by painful step, just how the City's deceptive water rate increase claims were presented to the public. Despite Bill's claims that those who disagreed with the City (and him) in this matter were merely ignorant of what was really going on, I believe the case made here shows something quite different.
In an informal Tattler poll conducted last year, we asked residents if they favored a water rate hike and if so why. Needless to say, most of the residents we polled said that they were opposed to a water rate increase. This is hardly surprising when you consider that the City of Sierra Madre received upwards of 1,600 to 1,800 written protests against the water rate increase.
Those residents who favored a water rate hike told us they favored such an increase because of statements made by City officials that such an increase was necessary to fund capital improvements and repairs to the City's water infrastructure. Sadly, there are still residents in our little town who believe that "Big Lie." Those misinformed residents still reject the real reason that the City was determined to raise water rates -- satisfying bond obligations.
So for their edification I thought it would be useful to include a generous quotation from our Verified Petition below, as well as quotations from the City's Demurrer (objection) to that Petition. As I hope they will see, the City's water rate increase had everything to do with water bonds, and nothing to do with capital improvements and the repair of rusty pipes.
First the quotation from the petition. Please note that for the most part the statements cited therein are supported with documents generated by either the City or the non-Tattler press, and reflect actual facts rather than my opinions.
44. Compounding the City's refusal to comply with the detailed procedural requirements of Proposition 218 and its failed "educational outreach" program were the City's frequent and misleading pronouncements that the proposed water rate increase would be used primarily for infrastructure repairs and particularly the replacement of older water mains, instead of the service of water bond and other debt obligations.
45. Upon information and belief, the City Manager stated that, "payments routinely made on outstanding bond debt and associated interest are part of the city's ongoing water costs, but that the proposed rate hike is needed primarily to fund improvements to water infrastructure." (See true and accurate copy of online article by J. Stephens, "City Announces Special Water Meeting," Sierra Madre Patch (Oct. 7, 2010) attached as Exhibit 15; emphasis supplied).
46. The City Manager also addressed the City Council at its meeting on June 22, 2010, wherein the proposed water rate increase was being discussed, stating "the water mains (need to be) replaced." (See Minutes of Sierra Madre Council meeting, June 22, 2010, at p. 14 attached as Exhibit 9).
47. At that same City Council meeting on June 22, 2010, wherein the proposed water rate increase was being discussed, the City's Director of Public Works stated "we need to address water main replacement. We need funds for water mains." (Id. at p. 18).
48. At a later City Council meeting City Council Member Moran even claimed that the water rate increase would provide "$500,000 for water mains and capital projects." (See Minutes of Sierra Madre Council Meeting (Nov. 9, 2010) at p. 15 attached as Exhibit 12).
49. Moreover, upon information and belief, at the City Council meeting where the Ordinance was adopted by second reading, former Mayor JoeMosca stated before casting his vote in favor of adopting the Ordinance that "a lot of the water mains need to be fixed up." (See streaming videotape of Sierra Madre City Council meeting - Jan. 11, 2011 - at http://kgem.tv/2011/01/sierra-madre-city-council-january-11-2011/).
50. Then too, a story about a broken water main and the need for a water rate increase to effect infrastructural repairs appeared in a local newspaper while the proposed water rate increase was under consideration by the City Council (See true and accurate copy by T. Miller, "Water Rate Increase on Hold Thanks to Resident Outcry," SierraMadre Weekly, Oct. 9, 2010, attached as Exhibit 16).
51. The City's own documents, however, belie its repeated claims that it ever intended the proposed water rate increase to address aging infrastructure and replace water mains.
52. For example, in a letter addressed to a resident and dated August 26, 2010, the City Manager conceded that the money generated from the water rate increase, if approved, would be insufficient to make capital improvements including water main replacement. In her own words:
"The proposed rate increase is enough to meet the requirements of the City's existing debt obligations and to begin rebuilding the water fund reserve. It is not enough to fund a pay-as-you-go capital improvement program. Funding a capital improvement program to begin immediate replacement of deteriorated water mains (for example) would require a rate increase significantly higher than what was proposed earlier this year. (A true and accurate copy of Letter from City Manager E. Aguilar to Resident E. Richey (Aug. 26, 2010) attached as Exhibit 17).
53. Further, upon information and belief, the City made a PowerPoint presentation to interested residents in October 2010 entitled "The 411 on H20." A PowerPoint slide in that presentation corroborated with the City Manager wrote in her letter to the resident. The first "bullet point" in the slide stated "the proposed rate increase did not provide for a pay-as-you-go capital improvement program." The second bullet point stated "the proposed rate increased (sic) covered only the bond requirements and projected increases in operational expenses." (A true and accurate copy of the slides from the presentation, which appear on p. 9, is attached as Exhibit 18).
54. More recently, the City Council took action indicating that it did not intend to use the revenue from the water rate increase monies to replace water mains. At the City Council meeting of April 12, 2011, the City Council by a vote of five to zero approved a proposal in the amount of $38,300 from an engineering firm to design a water main replacement project. The Minutes of that Meeting reflect that the City had already allocated $750,000 of redevelopment funds (i.e. not funding from the approved water rate increase) for the water main replacement project. (See Minutes of Sierra Madre Council Meeting, April 12, 2011, at pp. 22-23 attached as Exhibit 19).
55. Upon information and belief, many residents were mislead into believing that the revenue from the water rate increase would be used primarily to replace the water mains instead of satisfying water bond and other debt obligations. Indeed, as the City Council's November 9, 2010 meeting, former Mayor and Council Member MacGillivray observed that with respect to the City's handling of the water rate increase process, "people felt misled." (See Minutes of Sierra Madre Council Meeting, Nov. 9, 2010) at p. 15 attached as Exhibit 12).
Surprisingly, rather than repudiating the factual allegations quoted above, the City chose in its Demurrer (objection) to concede that I was right and the water rate increase was driven by complying with bond obligations. Lest I be accused of misstating the City's position regarding the reason for a water rate increase, here are quotes from its Demurrer:
"The petition ... threatens the City's ability to abide by its promises and the bondholders' ability to rely upon the bonds." (Demurrer at p. 2; lines 12-14). "
"Bond agreements require the City to fix adequate water rates to pay off the bond debt because the City's water rate revenue is the source of payments to the bondholders (Demurrer at p. 4; lines 18-20).
"The City adopted the challenged Ordinance to preserve the 2003 water revenue bonds and comply with its obligation under those bonds ..." (Demurrer at p. 8; lines 12-13).
"The City Council passed the challenged Ordinance to comply with the rate covenant in the installment Sale Agreement in the 2003 bond issuance and to preserve the validity and marketability of bonds." (Demurrer at p. 9; lines 9-10)
"The Petition seeks to invalidate the actions required to comply with the rate covenants and promises to bondholders and, if successful, would render the City in default under the bonds." (Demurrer at p. 10; lines 3-5).
"The Ordinance (providing a rate increase) ... directly relates to the City's bonds ... The revenue derived from the rate increase is directly linked to the financing mechanism of the bond issuance. (Demurrer at p. 11; lines 22-23).
Conspicuously absent in the Demurrer is any mention of using the water rate increase for the replacement of water mains. Which, as we have clearly seen here, was the stated reason for raising rates at the beginning of the process.
So why did the City choose to justify a water rate increase based on a false tale about rusty pipes and aging infrastructure? Rather than basing their claims on the actual cause, which were out of compliance water bonds?
The only answer that I can come up with is that the City Council believed that water rate paying residents would accept an increase to fix water mains, but not repair old bond debt. In other words, they chose to lie rather than deal with rate paying residents in a forthright and honorable manner.
Which should raise this question for you. Having lied in order to get their hands on more of your money, are these people still worthy of serving as your elected leaders?