Commentary: Mesa Water has not made it clear why it’s interested in merger

When Mesa Water District President Shawn Dewane contacted me to consider performing a collaborative study for an optimal government structure, I believed it was worth exploring cost-saving measures and enhanced operational efficiencies.

After all, our residents deserve the best from their local governments. Performing a collaborative study that has meaningful results requires both agencies to be at the table from the start, but it appears that the Costa Mesa Sanitary District is on the menu.

This is evident when you look at the scope of work in the Mesa Water request for proposal (RFP). Nowhere in the scope does it require the consultant to review salaries and benefits to determine if savings might be realized. The consultant is not reviewing the financial stability of either agency. Since both agencies operate as enterprise funds, whose resources legally cannot be utilized to finance activities other than they were originally collected for (water for water, sewer for sewer and trash for trash), where would savings from consolidation be realized?

The consultant is required to review previously contracted services that have recently been brought in-house, such as CMSD’s sewer-cleaning and lift station maintenance services.

Join the conversation on Facebook >>

About 80% of CMSD’s operations are currently outsourced, but because sewer maintenance is attributed to protecting the environment and the public’s health we have found there is more accountability by performing these services in-house. Instead of looking at outsourcing, the RFP should require a rate study to determine how both agency’s current rates compare to other Orange County agencies. This would ensure that the constituents of the separate agencies are getting the best services for a reasonable price and that rates would not increase after consolidation.

These issues, and many more, were addressed in my June 2, 2016 letter to President Dewane. Please read my letter in the CMSD’s June 11 and June 23 board of directors agenda packet at cmsdca.gov.

In addition, I requested Mesa Water postpone its June 16 special meeting to award a consultant contract for the study until we can meet together and discuss the issues collaboratively and in an open and transparent manner. My request fell on deaf ears, and Mesa Water proceeded with its special meeting by awarding a contract to Arcadis for nearly $30,000 without any input from the Costa Mesa Sanitary District.

Now it wants us to pay half of the cost for a product we had no say in. Who would do such a thing?

Arcadis specializes in engineering and infrastructure improvements, such as buildings and water supply, not financial and operational analysis. Arcadis said in its proposal it can complete the study in four weeks! Four weeks to analyze the benefits of combining two multi-million dollar agencies that provide very different services.

Interesting, Mesa approved a compensation and classification study in April with a completion date of December! Why complete a compensation and classification study for approximately $55,000, if we are looking at consolidation?

According to Mesa’s 2016-17 budget, cash on hand has increased from $26 million in 2012-13 to $40.7 million in 2015-16. That is approximately a 57%, or a $14.7 million, increase in four years. It is also increasing our rates for potable water and meter service through fiscal year 2019.

Is Mesa Water socking away all this cash to cover almost two years of operating expenses just to obtain a better credit rating? A better credit rating is important only if you are going to be issuing more debt! Is Mesa Water going to issue more debt? Why? It has already refinanced its existing debt. Why not pay down the $27 million bonded debt or $6.3 million of unfunded pension liability or just lower our water rates? Why keep increasing rates?

So, the question I am asking is, why? Why is Mesa Water pushing so hard to complete the study as soon as possible?

In the three correspondences I received from President Dewane he never said why Mesa Water needs to approve the contract in June. If Mesa Water wants CMSD to be fully committed and actively participate in the study then there needs to be trust between our two agencies because without trust we cannot have open and honest dialogue on probably one of the most important and everlasting decisions we will make for the future of our constituents.

Mesa Water says it remains committed to an open and transparent process for this project, but I guess its definition of transparency is different than mine.

--

MICHAEL SCHEAFER is president of the board of directors for the Costa Mesa Sanitary District.