I want to begin this post by telling you that people in council think you’re in love with the water deal since they moved from American Water to more local control. They claim that I am the only one upset and asking questions on all the money changing hands and the great secrecy that has gone into drafting this deal. I would invite everyone to email and call their council and Mayor and tell them good or bad what you think of this deal and whether you believe there needs to be more transparency. I will include the contact info for everyone in city government so that you may more easily reach them.
I was contacted a couple of weeks by someone telling me that American Water is still in the deal with the city of Rialto. This person thought it might be something worth looking into, so I did. What I found wasn’t where my caller expected me to end up but I find it all the more interesting.
It appears that Rialto Water Services (RWS) and American Water are in the same region and RWS was formed about the time American Water began its move on the city’s water system. Although from all my research and digging, so far it looks like American Water is out of the deal, but what I did find stinks from where I sit.
I called American Water and spoke to Maureen Duffy Vice President, Corporate Communications and External Affairs she said that American Water had been removed and she couldn’t speak to any ensuing penalties from this action. Which is funny because we heard there were penalties even if the community voted against the rate increases with prop 218 vote.
Officials from West Valley Water District (WVWD) are not jumping at the chance to take the contract because of all the financial implications that reside there. No one wants to take on this deal that is full of bad looks and dirty dealings. After some digging we find why WVWD is leery.
I placed a call to West Valley Water District and spoke to Mr. Ariza their General Manager:
West Valley Water District is looking to operate the city’s water department. The person controlling the financial side of the deal is Table Rock Financial based out of San Francisco. The total deal is now a 170 million dollar loan, up from 130 million dollars. Who has heard what the 30 million dollars is purposed for? According to Mr. Ariza the 30 million dollars is needed to service the debt on the 170 million dollar loan the city is taking out with Goldman Sachs. So instead of it being a way to replace the loss of our RDA and attract new business to Rialto, here is what it is going for:
- Service the Debt on 170 Million Dollar loan.
- Give the city a way to have money on deck in a capital improvement fund so they can further pay for development costs that should be the responsibility of the developer.
- Ed Scott made a point to ask staff if the Lytle Creek Development was in any way involved in the necessity of the water deal, staff said NO. So explain who is going to pay the 5 million dollars in needed improvements to existing county properties within the city when we have no more money to give? Maybe the 30 million payoff in the water deal? Ron Pharrise and the city both have a strong vested interest in this deal happening because the county won’t allow Rialto to annex the county parts of Lytle Creek to the city without taking over the rest of the County areas in the city. City staff estimated that this would cost in the realm of 5 million.
- Rialto paid 40-50 million fighting the perchlorate cloud contaminate in our water. No more talks have happened on where the settlement is or who is going to get it.
Also the way Mr. Ariza said it breaks down is:
- 40 million for the infrastructure upgrades to water and waste water.
- 30 million for RDA funds/capital improvement funds.
That leaves 100 million dollars left over where is that going? There is a company called Table Rock financial that is BROKERING the deal, their company web site is super basic, they operate out of San Francisco and no one answers their phones and there is no voice mail. I was able to get someone on city staff to give me the lead negotiators cell phone number Lynn Smull. Mr. Smull took one call that lasted less than a minute. He told me to text him my info and he would reach me the following day, when he didn’t call I texted again. He said he was busy in negotiations and his staff would call me. I have yet to receive a call.
Mr. Ariza has concerns on how the city council has operated through the entire process. He and his board are taking such a long time to even give the city the thumbs up on the deal because they are combing over the 161 page concession agreement. Mr. Ariza said he is doing his due diligence to protect existing WVWD customers and rate payers and to make sure this agreement won’t force them to raise existing rates. Mr. Ariza said he would be treating the water deal with Rialto as a sub-section of WVWD because they will only be operating the system not have overall control. Normally one would be happy about this except the people who waited this long to get things in order are the same ones with the control.
I always liked the idea of WVWD running the water here, heck the first time I had to pay my bill in person I went there to find out that a city of our size is so split. After talking with Mr. Ariza I was more at ease with the idea of working with him and his people on our utility. He was very personable and hid nothing. He offered to sit down with me and take my calls anytime. He even alluded to the fact that if we did things right in reference to the upgrades the fourth year of 25% rate increase may be much lower. I called both GM’s of EVWD & WVWD both were very nice and told me everything they knew and if they didn’t have direct knowledge they pointed me in the right direction.
I met with Councilman Ed Scott & Ed Palmer today and in reference to the water deal they said:
They told me some things I will believe until I get my own copy of the water deal. They said the 30 million will go into a capital improvement fund not the general fund. They disputed that the 30 million was going to be used to service the loan debt. I don’t believe this one because at this point we will be in deficit spending next year. The way it was explained by them and verified by someone I trust is you must have half your total budget in reserves so if we spend 10 million annually we must have 5 million in reserves. Rialto will be in what’s referred to as deficit spending by 5 million which means our reserves will go 5 million dollars below half the cities operating budget. How can we afford to service a new debt if we can’t pay our bills as they stand today?
I have yet to get in contact with Table Rock, Deborah Robertson or George Harris. Updates will be comming.
*************** Sources of Reference*********************************
All Council Members can be reached at 909-820-2525
Joe Baca Jr
Contact Anthony W. Araiza General Manager
Table Rock Finacial:
Megan – 415-497-2320
Lynn Smull – 510-326-3209
855 W. Base Line Road P.O. Box 920 Rialto, CA 92377
Ph: (909) 875-1804 ext. 703 Fx: (909) 875-7284
American Water Corporate Offices 1025 Laurel Oak Road Voorhees, NJ 08043 856.346.8200
Or is it:
Rialto Water Services L P (856) 359-0965 Mt Laurel, NJ
Street Address: 330 Fellowship Road
City: Mt Laurel
Zip Code: 08054
License Number: 948662
License Held: General Engineering Contractor
License Status: Active As Of 1/20/2010 Update
Date License Issued: June 12th, 2010
Years in business: 2
Bond Company: Travelers Casualty And Surety Company Of America
Bond Number: 105448107
San Bernardino and Riverside Counties B.C.T.C
William Perez, Executive Secretary, EW
1074 East La Cadena Drive, Suite 15
Riverside, CA 92507
Office: (951) 684-1040
Fax: (951) 684-6410