New Water Tax: 6.7%? Not a Freakin’ Chance!


Apparently the much-anticipated Joe Felz Water Study is in, and it says that the illegal 10% water tax is…drum roll, please…illegal. But get this: rather than an honest study, the consultants were clearly told to gin up as much plausible reason to keep as much of the 10% as they could. The result? It’s only 6.7%. Yay!

The only problem is that to reach 6.7%, the consultant cooked up the idea that the Water Fund owed the City rent on land where water reservoirs are located! According to Ad Hoc Water Committee member Greg Sebourn, the total annual rent was figured at $1,374,000 – well-over half of the existing tax.

Of course this scam raises all sorts of new issues, as scams generally do. Such as: the reservoir in Hillcrest Park supports a play field on its deck. Does the City rent this back from the Water Fund? Bet not! The reservoir up at the top of Euclid is situated in a cactus patch patrolled by goats. What’s the rental or development value of a nature park? I dunno, but it’s not much. Has the Water Fund been paying for maintenance on these properties that should have been the responsibility of the General Fund? Bet so.

Then of course there’s the issue of whether the waterworks itself paid for fee title to any of these properties in the first place, a way back when. I wonder if the consultant even bothered to check. Bet not.

And there’s the embarrassing fact that there is no arm’s length relationship between the people that impose the rent and the people that pay it. The City Council can demand any amount of rent they want – then agree to pay it. Why not? The proceeds go to pay their own pensions! Now, that’s not very good, is it?

In any case, the public may find it a bit confusing and unseemly that at the eleventh hour the bureaucrats and their hand-picked consultant are burning the near-midnight oil to drum up ways to charge as much for water as they can that they can keep siphoning money into the General Fund.

Will you please shut up.

Will the city Council buy into this load? Well, of course they will. The vote will be 4-1, and it will be up to the citizens and voters to rectify the scam at the ballot box.

Our job is to continue to expose the fraud for what it is.

 

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  1. #1 by Vernon Dozier on March 16, 2012

    As much as I detest the “rent” concept, why didn’t the consultant suggest the water department “buy” the land from the City? They pointed out that the land’s market value sums to $17 million. Rent payments at $1.37 million annually could buy that land in a little over 12 years.

    Of course they didn’t suggest that option because it’s all about generating revenue in the first place.

    • #2 by Greg Sebourn on March 16, 2012

      That’s another foolish option. The “City” and the water utility are one and the same. There is no difference or distinction between them.

      • #3 by Mr. Peabody on March 16, 2012

        No, they are not. See other comment.

        • #4 by Greg Sebourn on March 16, 2012

          Back up…

          First, the report addresses, or is supposed to address, TWO issues- 1) how much rent CAN the City collect going forward and 2) how much did the City over charge the Water Fund over the past 3 years.

          Second, the consultant/staff offer an “asset exchange option” to deal with the $2.5-million overcharge. That is, they propose erasing the debt by taking $2.5-million in real property and the subsequent future rents off the table by somehow transferring it to…who? The water utility? That’s the City. The Water Fund? That’s a super fund, not an entity.

          Again, for this to work you have to believe that somehow the utility infrastructure is NOT owned by the City of Fullerton. That is false. ALL of the water system is owned by the City. Maintenance and repair obligations are paid for through the Water Fund and the Water Fund is operated by…the City.

          This is not like the old Fullerton Redevelopment Agency which was a distinctly different agency that answered to the State.

          In order to make the land swap and rents legitimate, the water utility would have to be re-established as a separate utility district with it’s own board of directors. This would GROW government instead of reducing it. Backwards instead of forward.

          • #5 by Mr. Peabody on March 16, 2012

            The comparison to Redevelopment is apt. True, the Redevelopment Agency was a separate entity – but it was inextricably tied up in City-related decisions with both entities run by the same crowd.

            Redevelopment swiped property tax and gave it to people like Ackerman. The Water Fund is used as a cash cow by the City bureaucracy.

            Absent honest council persons, i think you have to have a separate decision making body. That’s not a step backwards if the result is honesty and transparency. It’s not like any new people have to be hired.

            What I find insulting is not that the taxpayers already own the property, but that the10% in-lieu rip off has more than paid for these sites already, way, way more in fact. To fix the mess the first thing the City needs to do is recognize that the Water users paid off the City for these properties and that there is no more “rent.”

            • #6 by The Fullerton Harpoon on March 16, 2012

              “To fix the mess the first thing the City needs to do is recognize that the Water users paid off the City for these properties and that there is no more “rent.””

              Agreed.

      • #7 by Vernon Dozier on March 16, 2012

        I wasn’t suggesting that as a good option, merely pointing out the flaws in their own proposal.

    • #8 by Mr. Peabody on March 16, 2012

      Vernon, that was exactly one of my points. From a business standpoint it would have made sense for a separate entity to buy these properties years ago for peanuts.

      In any case there is no arm’s length relationship to protect the water rate payers – who are not the same class of people as the citizens of Fullerton. And that’s an impossibly subtle concept for the grifters on the city council to grasp.

      And I think it would be interesting to find out if the Water Fund fronted any of the money to acquire these sites in the first place.

      • #9 by Greg Sebourn on March 16, 2012

        Peabody,
        I brought that up to Felz who said that all land purchased AFTER the Water Fund was created was purchased using water funds or bonds paid for through the water fund’s debt service.

        • #10 by Mr. Peabody on March 16, 2012

          Presumably the report documents which fund paid for what.

          I was serious about the reservoir in Hillcrest Park. When it was rebuilt they put a play filed on top of it. Felz should know that better than anything. Rent = $0.

  2. #11 by Anonymous on March 16, 2012

    Interesting, I am wondering about public roads and highways; who owns them and can they be sold to operate as toll roads in the future?

    • #12 by Private Works Director on March 17, 2012

      The underlying “fee” of the streets and alleys are generally owned by the property owners of the adjacent properties. Usually from the centerline to the outside of the right of way, which is often the sidewalk. Someday in the not to distant future, when the cities are destitute, they will let the average Joe know this by requiring the adjacent property owners to maintain the right-of-ways at all times, not just when the properties get developed or redeveloped. Yet, I can asssure you the cities will maintain all use rights to those r o w’s. You see, the public sector unions have crafted laws such that Public employees pension contracts cannot be broken but the government’s contracts with the people are invalid once they do not serve to enrich the “public servants”.

  3. #13 by Greg Sebourn on March 16, 2012

    We (the City) are willing to subsidize the bars who use the public right-of-way by not charging “market rate rent” and yet we charge water ratepayers rent for the use of public property… The idiocy must end.

    • #14 by Chris Thompson on March 16, 2012

      Great point Greg. I may vote for you twice.

  4. #15 by Johnny Donut on March 16, 2012

    I love the visual. Complex subject, simple conclusion: scam.

  5. #16 by New Voice on March 16, 2012

    So does anybody know what happens going forward regarding utility bills? Will the “illegal tax” be removed from water bills or just a portion 3.3% (10%-6.7)?

    • #17 by Anonymous on March 16, 2012

      refunds with interest accrued?

  6. #18 by Travis on March 16, 2012

    The idea of the city renting land from itself that was previously free for the sole purpose of proping up an illegal tax is ludicrous to me.

  7. #19 by Age of Anonymity on March 16, 2012

    I’ve got to thank you for the great work this blog does! Thank you, FFFF! I’d be curious too if the water paid for a fee simple purchase to the land also. Of course they didn’t check.

    • #20 by New Voice on March 16, 2012

      I second that!

    • #21 by Greg Sebourn on March 16, 2012

      After the Water Fund was established, it paid for real property acquired and, in some cases, easements.

  8. #22 by Vernon Dozier on March 16, 2012

    Another thing, if the water department and “City” are somehow different entities, and thus rent should be paid to the City, shouldn’t the water department have oversight from its own separate elected body?

  9. #24 by Greg Sebourn on March 16, 2012

    If the water system and the City were somehow different entities, then the water system could condemn the City’s property through imminent domain and not have to pay rent.

  10. #25 by Fullerton Lover on March 16, 2012

    If any of you think that the city is going to willingly refund our money you are delusional.
    The one and only way that this will ever be settled equitably will be in court in the form of a class action suit filed by the residents of Fullerton.
    Municipalities have basically become business entities, and the only thing that gets a business “to come to Jesus”, is to spank them in the court system where transparency and accountability can be found in spades.

    • #26 by Anonymous on March 16, 2012

      If it is finally and mutually agreed upon that the tax was an error then why not simply reduce the rate until the taxpayer and the “overcharge amount” is settled, like a bond owed and is paid off in “X” amount of years?

      • #27 by Anonymous on March 16, 2012

        That would be correct, care to ellaborate?

        • #28 by Anonymous on March 16, 2012

          sorry,…elaborate

    • #29 by The Fullerton Watcher on March 16, 2012

      You must unfamiliar the 9th Circuit Court of Appeals.

      • #30 by Anonymous on March 16, 2012

        My “reply” post is in the wrong place above…can you elaborate on the 9Th Circuit Court of Appeals.

        • #31 by Vernon Dozier on March 16, 2012

          You mean the 9th CIRCUS Court of Appeals?

          • #32 by Anonymous on March 16, 2012

            Isn’t that the court that ruled that women can legally strip search men in jails and prisons but men cannot do the same to women?

            • #33 by Vernon Dozier on March 16, 2012

              I wouldn’t be surprised. The 9th CIRCUS is overturned by the Supreme Court more often than any other circuit. That should tell you something.

          • #34 by Anonymous on March 16, 2012

            Vernon you are a endless source of comedy :)

  11. #35 by Is Officer Albert Rincon the CSU Fullerton Rapist? on March 16, 2012

    I can’t wait until Fullerton City council is cleaned from top to bottom. Everything they’ve put forth fattens their own pockets while royally screwing us.

    Joe needs to go.

  12. #36 by just a guy on March 16, 2012

    Why did they only go back 3 years? The ripoff has been going on for a decade and a half.

  13. #37 by Chris Thompson on March 16, 2012

    So let me get this straight.

    1. The city acknowledges that they’ve violated the law for 15 years.

    2. They make up a lease on taxpayer owned assets that they were not and should not be charging for, say they should have charged for them and therefore some of the illegal tax was actually justified.

    3. 4/5ths of the council will likely pat themselves on the back for only returning 3/15ths of what’s been stolen because a statute of limitations allows them to screw the taxpayers that they represent out of 12 of those years.

    4. They claim that they’re going to come up with a fee schedule which effectively refunds what they’ve stolen instead of just actually returning the money to the specific people they’ve stolen it from.

    Do I have this right?

  14. #38 by David Bailey on March 16, 2012

    1. Find out how much money was illegally “taxed” since inception (not JUST 3 years!).

    2. Return all the money that was illegally taken from the water fund for illegal activities (general fund, etc).

    3. Use the money for water infrastructure development. We need it.

    4. Consider a Water governing body….

  15. #39 by Citizen M on March 16, 2012

    Chris Thompson :So let me get this straight.
    1. The city acknowledges that they’ve violated the law for 15 years.
    2. They make up a lease on taxpayer owned assets that they were not and should not be charging for, say they should have charged for them and therefore some of the illegal tax was actually justified.
    3. 4/5ths of the council will likely pat themselves on the back for only returning 3/15ths of what’s been stolen because a statute of limitations allows them to screw the taxpayers that they represent out of 12 of those years.
    4. They claim that they’re going to come up with a fee schedule which effectively refunds what they’ve stolen instead of just actually returning the money to the specific people they’ve stolen it from.
    Do I have this right?

    Chris- they are apparently trying to do what my sister did in 1st grade, she stole something and my mom busted her but and made her give it back to the store all shamed, asking for forgiveness…Guess who is mom in this scenario? That would be me and you. ( citizens) These guys are incredible, arent they? If I didnt live here I woudnt believe it.

  16. #40 by Anonymous on March 16, 2012

    Are there any attorneys out there that could answer if small claims court could be a venue for settling this for individual households that want a refund if they are found to have overpayed?

    • #41 by New Voice on March 16, 2012

      I wondered about this too. Anybody have an answer?

    • #42 by merijoe on March 16, 2012

      Im not an attorney but I did ask one who is very familiar with the issue and was told that it wouldn’t do any good.

      • #43 by Anonymous on March 16, 2012

        Thanks for checking Merijoe

  17. #44 by BREAKING! on March 16, 2012

    Hearing for officers in Kelly Thomas death delayed

    http://www.ocregister.com/news/ramos-344976-thomas-charged.html

    • #45 by Reality Is on March 16, 2012

      As expected. Prelim in May, narrow the charges down after dumping a few, then trial in 2013. Long process.

      • #46 by Jane H on March 16, 2012

        Go play with your dog.

  18. #47 by Fullerton Lover on March 16, 2012

    Anonymous :
    Are there any attorneys out there that could answer if small claims court could be a venue for settling this for individual households that want a refund if they are found to have overpayed?

    I like where your going with this. I heard that a woman recently sued Toyota Motor Corporation in Small Claims Court in Southern California.
    Her claim was that the MPG was mis-stated and asked for and received a refund, which subsequently opened up the floodgates for any other Toyota car owner to follow suit and they would prevail based on this woman’s precedent.

    I honestly don’t see why this wouldn’t work for Fullerton tax/rate payers?

  19. #48 by Fullerton Lover on March 16, 2012

    BREAKING! :
    Hearing for officers in Kelly Thomas death delayed
    http://www.ocregister.com/news/ramos-344976-thomas-charged.html

    What that article by the Regurgitator fails to mention, is that John Barnett will be tied up in court defending a cop who was terrorizing his wife 24/7.

    I just don’t understand why the good officers within the police unions choose to spend their hard earned money defending scum that preys on innocence?

    Where are your moral boundaries in subsidizing and perpetuating evil on the rest of us?

    • #49 by Anonymous on March 16, 2012

      May 7th …July 15 …October 3rd …February 3rd 2013?

      I give up.

    • #50 by truthseeker on March 16, 2012

      It is a religion and a bad one at that-the blue code is their dogma and it is without moral boundaries as evidenced as of recently.

    • #51 by Wrong Guy on March 16, 2012

      Fulleton Lover, are you referring to that Huntington Beach cop that someone posted a link to the other day?

  20. #52 by buttonh00k on March 16, 2012

    That is just… WOW.

    FFFF has brought alot of corruption from these guys that really need to go. You obviously have some candidates that you endorse. But here is the real problem that I see but that depends what is really going on and how much that is really costing the city which is really hard for an outsider looking in even though I live in Fullerton.
    So they are doing things like the illegal water tax to create revenue so that they can increase their pensions and such. But let’s say, all three get recalled and your candidates make it to change these things. Here’s the question: What are you going to replace “corrupt” revenue with? Obviously, the city will need revenue. Will stopping the “corrupt” spending be enough?

    • #53 by The Fullerton Harpoon on March 16, 2012

      I would suggest negotiating union contracts according to the “total compensation” philosophy.

      Plus public safety pays the fill freight for employee contribution to PERS.

  21. #54 by Fullerton Lover on March 16, 2012

    Wrong Guy :
    Fulleton Lover, are you referring to that Huntington Beach cop that someone posted a link to the other day?

    …good memory mi amigo. I posted this URL the other day about John Barnett being in court in Santa Ana on the 20th of April to defend Officer Roberts of the Huntington Beach police department for non-stop harassment and intimidation of his wife.
    http://www.ocweekly.com/2012-03-08/news/moxley-confidential-shannon-james-roberts-huntington-beach-police/

  22. #55 by Vernon Dozier on March 16, 2012

    Hey Greg, does the City Council get the final word regardless of what you guys recommend to them?

    Felz indicated a decision needs to be made by July 1, so I presume this gets voted on when the three idiots are still on the council. If they vote “yes” for the 6.7% in-lieu tax, can this vote be set aside or rescinded by a newly seated council before the fiscal year begins July 1?

    • #56 by Greg Sebourn on March 19, 2012

      Vernon,
      Sorry for the late response; I just saw your question…

      Council has the final say. A new council majority can come to new conclusions and may act accordingly.

    • #57 by Mr. Peabody on March 19, 2012

      The decision needs to be approved by 7/1/12 so that the 12-13 budget can be finalized. Of course this should have been done last year; and the year before, and the year before etc.

      Felz has deliberately wasted a year solving the budget implications of simply obeying the law. And he bought himself another year in the statute of limitations. Really borderline criminal if you ask me.

  23. #58 by SherBear on March 16, 2012

    FYI Attempted jewel store heist on Commonwealth a few hours ago. The brainiacs not only chose a place close to the FPD but their get away route took them back towards the station. They crashed their get away vehicle at Amerige and Malden and several are still at large and armed. Fullerton High was put on lock down.

    • #59 by Vernon Dozier on March 16, 2012

      Sounds pretty similar to the water tax proposal offered by City Hall.

    • #60 by Mr. Peabody on March 16, 2012

      I wonder if the FPD will hunt the crooks or make a bee-line to the jewelry store.

    • #61 by SherBear on March 16, 2012

      At least we weren’t subjected to Goodwipe as the PIO. I did see where two cops paraded one of the suspects in a full circle, appeared to be for the benefit of news cameras. Eerie thoughts about an empty ambulance leaving on one end while a police car leaves on the other.

    • #62 by Fullerton Lover on March 16, 2012

      Looks like they came in seeking Gold dust in their pockets, and ended up leaving with lead in their ass instead ; )
      http://www.ocregister.com/news/suspects-344997-siko-store.html

    • #63 by Fullerton Lover on March 16, 2012

  24. #64 by fullerton streets on March 16, 2012

    More mayhem at fullerton jail. Suspects recently taken into custudy seen walking into police station. Ambulance shows up. attendents walk out with empty stretcher. police car seen leaving from other side. http://s18.postimage.org/expsj47p5/IMG_5195.jpg

    • #65 by Anonymous on March 16, 2012

      Ok how much is Tony Bushala paying you for stalking the police department. Get a life.

      • #66 by karma on March 17, 2012

        apply for the position and you might find out. I seriously doubt it has the lifetime pension benefits for corrupt lazy fat asses though.

        can’t you come up with some new material? The “How much did TOny pay” song is really old and boring.

        At least he isn’t playing the “shell game” with my water fees.

  25. #67 by fullerton streets on March 16, 2012

    more pictures from the streets.
    http://postimage.org/gallery/h6wn1zi/

  26. #68 by havegunwilltravel on March 16, 2012

    Sell the water utility to a private water company regulated by the PUC, then take the proceeds of the sale, and fix the streets. Can’t believe the water rates would be any higher, but they could.

    • #69 by Tuco Ramirez on March 16, 2012

      Paladin, thats a great idea but what makes you think the proceeds will go to fix the streets instead of funding the pension bloat?

  27. #70 by fullerton streets on March 16, 2012

    OC register reporting kelly Thomas trial pushed back to friday May 7? or is it monday? http://www.ocregister.com/news/ramos-344976-thomas-charged.html?utm_source=dlvr.it&utm_medium=twitter

  28. #71 by Tuco Ramirez on March 16, 2012

    The 6.7% should be used to pay the bloated pensions of Pat McPension and Don Blankhead. That is why they will vote yes for accepting the consultant’s report!
    Now do you see why they are on city council even though they are getting up there in age? No disrespect, but its time for a change to end the self serving attitudes.

  29. #72 by truthseeker on March 16, 2012

    The water scam reminds me of of some of the 990 forms I have perused over the years in this town. Yeah the coyotes over in the Ward preserve are probably expensed out as a security system. Oops, maybe I have given these Hazard County officials some free advice.

  30. #73 by Steve Schell on March 16, 2012

    The stenographers over at the Fullerton Snories site have duly published the Water Study without a word of analysis or insight. Perhaps some Fullerton residents may wish to leave a few comments and fill the void.

    http://fullertonstories.com/water-study-available-for-review/

    • #74 by Osama Debt Laden on March 16, 2012

      Not even stenography. Just pussy cut and paste.

      Davis Barber is a spineless turd. But I guess that’s redundant.

  31. #75 by Barry Levinson on March 16, 2012

    This is certainly one big mess!

    First from an accounting standpoint, any allocation is only as good as its underlying assumptions and the consistent application of those assumptions. If the former are wrong and/or the latter is not applied consistently, you get a totally distorted answer.

    After all this time and the dollars spent for this consultant service, it seems that we still have much more work to do to ensure that going forward that the rate payers are not overcharged again.

    Since water rate movement has little or no relationship to the costs of the city administering the water fund, the suggestion that any static rate, whether it be 10%, 6.7% or 5% is the right answer makes no sense whatsoever.

    Any static rate to be acceptable must show that the rate payers will be the winners all of the time, (i.e. a rate that will not overcharge the rate payers). If not, the administrative costs should be calculated annually and a rate based on that calculation charged for the next year. If the city does not want to perform this exercise yearly, I think the Howard Jarvis group have a good argument that no fee whatsoever should be charged to the taxpayers. After all the law is that any fee added to our bill must be based on actual costs of administration not a overestimated percentage that benefits the city twice. First by overcharging the taxpayers and second by allowing them not to do the necessary due diligence to come up with the right amount yearly.
    As far as the details, I need to study them more closely.

  32. #76 by karma on March 17, 2012

    They finally speak on the ILLEGAL tax and this is what they come up with? This is disgustinger, per usual.

    You can make statistics say whatever you want them to say. Figures don’t lie, but Liars figure.

  33. #77 by levelthefield on March 17, 2012

    The basis for the ACTUAL COSTS OF ADMINISTRATION means exactly as stated.
    Any other claims may be misappropriation and is fraudulent if done intentionally.
    But then again, the entire 10% added tax is fraudulent.

  34. #78 by Jack on March 19, 2012

    What about Proposition 26?

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