Council Forum: Cost of new water recycling plant sparks comments

By Peggy Kelly
Santa Paula City Council
Published: October 15, 2010 – Used by Permission

Santa Paula voters heard different takes on the cost of the city’s new water recycling plant from City Council candidates at the October 5 League of Women Voters Ventura County Forum held at the Community Center. On the panel were council incumbents Ralph Fernandez and Bob Gonzales, who are seeking their second four-year terms, former councilman Rick Cook, who served two terms before losing his bid for a third in 2006, and newcomers Duane Ashby and Rita Stafford.

Moderator David Maron asked the written questions submitted by audience members, and he noted he had several concerning true costs of the new water recycling plant. Specifically, candidates were asked for a breakdown of the $500,000 payment the city is now paying Santa Paula Water, the partnership formed by PERC and Alinda Capital that designed, built, operates and financed the $58 million facility, the first DBOF plant in the state.

Citizens will see their sewer bills climb to about $77 a month starting in November, after several rates increases. City users were paying approximately $42 a month into 2009.

Stafford noted it is “essential to go back where it all started,” and the bidding process might not have been as extensive as it should have been. “I don’t know how this came about, but it seems to me it would not have gotten to this point it at its inception if it had been taken care of very carefully.” And, Stafford said, she understands “another bill is coming through for the same project.”

Ashby said citizens must remember the plant “was a requirement. The city was facing some consider financial pain” from state imposed fines for illegal discharges from the aging plant.

He said initial plant planning was for an $80 million facility, but the “council was able to bring it down to $50 million. That’s a big payment,” but “we all voted on a lot of aspects” and now “the piper has come calling.” Ashby challenged the council to help find a solution, especially for seniors on a fixed income, but “from what I’ve seen that number is not going to change a lot.”

Gonzales said one of the reasons he ran for the council in 2006 was “because the way the city was spending money,” and he claimed that from 2000 to 2006 about $18 million was spent on “planning, designing and working on a plant we never had.” Once elected, new council members “took action” and seven firms competed for the job.
“We did something different” using the DBOF process, considered, said Gonzales, a leader in innovation. “We gave them the deal, they came in” and met all requirements and “delivered a new plant seven months ahead of schedule.”
The plant, said Fernandez, was an “unfunded mandate given to us by the state, we had nothing” and the new council “put a stop to it and said” the more conventional design-build process “is crazy.” As the council examined other options the “price started to drop,” but because they were taking an alternate path “that money would not be for free... we stopped the process” for DBOF. Fernandez said if the council “had gone the other way it would have cost far more.”

No one, said Cook, knows what interest the city is paying for the new plant, and he disputed early plant figures given by other candidates. “We spent $750,000 on the design, not millions,” and the price of the plant - which at council order underwent a Value Engineering Study - had dropped to about $75 million, including construction contingency.

“We would have been paying for it no matter what,” but he questioned the new plant “not taking chlorides, salt in the water. Once I was off the council they elected to go another way.” The new facility “looks like a castle but it’s a sewer plant,” and Cook said four years ago the city could have financed the plant with bonds at 3.5 percent interest.

“Today bonds are at 5 percent... I called city hall today at noon,” and no one could tell him the interest rate now being paid for the plant. Said Cook, “It’s going to cost $180 million” at the end of the 30-year-payoff, and he claimed that more than $100,000 a month is now being paid by the city for some sort of loan and/or interest guarantee.

“Lottery tickets,” said moderator Maron, “would have been the way to go.”

The issue came up again later in the forum when Fernandez said the plant had a starting price tag of $89 million: “That was only a cost estimate and we brought that down to a number we could afford as best as we could.... We did the best with what we were given.”

Cook said that if elected he wants the council “and others to take a look at this big, white elephant,” and he again disputed past construction estimates given by Fernandez. “We don’t know what our interest rate is and we’re paying $100,000 a month just to guarantee the loan... I want to find out,” said Cook, “what the interest rate is.”

Fernandez is an architect and Ventura College instructor and Cook is a retired Santa Paula Police sergeant and former Public Defender’s Office investigator now working part-time in real estate. Stafford is a language professor at a Los Angeles based college and holds a Doctorate degree, Ashby serves on the city’s Economic Development Advisory Board and is involved in financial planning, and Gonzales retired as the city’s police chief and is now working for a private security firm.