La Habra Heights, despite being a small city of just over 5,300, has a history of city officials embroiling themselves in big time controversy. This time, two elected officials have blamed two local journalists for obstructing and delaying a controversial water wheeling agreement. An agreement that the officials say would have offset the upcoming water rate increase but which boils down to reasons that are far more complicated than what the finger pointing would lead some to believe.
The La Habra Heights County Water District (LHHCWD) board agreed last month on a plan to increase rates and fees anywhere from 31% up to 1050% over a 4-year-period. According to California Assembly Bill 3030, which came into law in 2009, water districts are allowed to set rates for 5 years at a time, suggesting a new study must be implemented every 5 years. However, the law does not say that the districts must set rates for exactly 5 years, only that it must not exceed.
California Proposition 218 requires that water districts notify their ratepayers of any new rate increases and that they hold a public hearing. LHHCWD plans to hold its public hearing at 6pm on June 19 at City Hall. The board is accepting written protests from those who would be affected by the increase. Ratepayers may also submit a letter of protest on the day of the hearing.
In a written statement, McVicar stated the planned rate increase will be in the single digits. However, based on the notice mailed to the public by LHHCWD, a ratepayer on a 1” meter will increase a total of 59% or $251.76 each year after the 4-year plan is fully implemented. Ratepayers with 6” meters will see the highest increase, a total of 131% or $10,819.56. Address label costs will be raised 1050% from $12.17 to $140. In the first year alone, 1” meter ratepayers will see an 11.98% or $51.48 increase.
District Board Vice President Pam McVicar, says that while the district is a non-profit organization that does not aim for a profit, it has struggled to balance the budget and has had negative income for the last two years.
In November of last year, McVicar ran for re-election on a platform that suggested that if she stayed on the board, LHHCWD would remain one of the few districts to have managed to stave off a rate increase. In strong red lettering, a campaign flyer for her re-election clearly read, “No Rate Increases for 5 Years”.
When asked why she ran on such a bold campaign, only to agree on a rate study a few months later that suggested a phased rate increase over a 4-year-period, which according to Raftelis Financial Consultants was designed to prevent “rate shock” among ratepayers, McVicar responded, “at the time we thought the water agreement would fix the issue.”
The issue she is referring to is money. Reduced assessed property values in La Habra Heights have led to a loss of $60,000 in property tax revenue for the district, with no sign of improvement over the new fiscal year. The board is facing another financial burden, as part of the agreement for pulling water from the Central Basin Municipal Water District, the LHHCWD is required to pay a water replenishment fee. This year, Central Basin increased this fee by 18%.
However, the Los Angeles Times reported last month that the Water Replenishment District announced that it would freeze any rate increases for the first time since 2003. Central Basin announced a rate increase freeze in April and is currently the focus of a government audit backed by California state Assemblyman Richardo Lara (D-Bell).
The La Habra Heights County Water District’s 2011-12 budget shows total revenue of about $3.6 million.
But the board made a financial miscalculation. In the 2011-2012 budget, the board decided to include the revenue they predicted would come from a water wheeling agreement between LHHCWD and Rowland Water District despite neither party signing onto the plan. The agreement was delayed, and as a result, the budget inaccurate.
The board claims that the increases described in the rate study conducted by Raftelis will offset the $200,000 a year loss of revenue from the delayed deal for the 2012-2013 budget. The board spent $39,830 on the rate study and the water wheeling agreement was signed earlier this month. Revenue will not begin until January 2013, if it is not legally challenged.
The controversial water agreement between Rowland Water and LHHCWD has been called by some as a “trafficking” agreement between the two districts that would lead to water being siphoned out of the Central Basin through LHHCWD wells and pipes. A new pipeline is proposed to be built that would move water to Rowland Water.
Yet, while the deal is between LHHCWD and Rowland Water, an agenda for a Puente Basin Water Agency (PBWA) meeting dated May 17, 2012, lists the water deal in the updates section. PBWA consists of both the Rowland Water District and the Walnut Valley Water District and during the same meeting, members of the agency noted that Rowland Water and Walnut Valley share projects evenly. Walnut Valley provides water to the city of Industry and portions of Diamond Bar.
The lack of clarity over which agencies are actually involved in this deal, as well as the question raised by LHHCWD attorney about a small agency like LHHCWD using half its capacity to move water for the deal is what makes this such a controversial plan.
Howard Vipperman, a member of the La Habra Heights city council, has blamed investigative journalists, Stephen Blagden and George Edwardz for the delay. However, it is unclear whether he supports the rate increase or not.
According to the 2011 Water District Master Plan, Vipperman was ranked as the number eight water user in La Habra Heights. Vipperman has a 2” meter at his residence and will see an 89% or $1,017.36 annual rate increase under the new 4-year rate plan.
Vipperman called out the journalists by name during a recent council meeting saying, “I think when the time comes to pay your increased bill, you can actually thank those two gentlemen.”
In a phone interview, McVicar echoed Vipperman’s sentiments, “it was delayed because certain citizens were going to both meetings protesting and the attorneys had to go through and take extra time to review.” McVicar refused to give specific names, but referred to an online video dated October 5, 2011 of a Rowland Water District meeting where Blagden and Edwardz are present as well as Judy Hathaway Francis, wife of La Habra Heights council member Roy Francis.
Edwardz counters Vipperman’s finger pointing, “I’m surprised he doesn’t also blame me for the $500 road assessment tax when I was present at all the city council meetings.”
Edwardz also points out that the water rate increase is just one in a series of increased costs for La Habra Heights taxpayers. He says the $500 road assessment tax will be mailed out in June to property owners and a local school district bond measure will “unfairly target La Habra Heights property owners since it is based on assessed value”. The bond measure will be on the ballot in November.
LHHCWD President, Brad Cooke, was also contacted for comment on the rate increase but did not return multiple calls.
Stephen Blagden, an investigative journalist for LaHabraHeights.net and longtime resident of La Habra Heights, has been reporting on city issues since 1999. On September 13, 2011, Blagden stumbled into what was a special water board meeting. Blagden says his intention was to find out if “anything had changed” after discovering in 2009 that the board had been, “wining and dining on” Chivas Regal and filet mignon at the expense of ratepayers. He indicated he was unaware of any type of agreement until he sat in on the September meeting.
After hearing the attorney for the La Habra Heights County Water District express concern that, “such a small agency using almost half their capacity for another agency” could lead to a resident legally challenging the deal, Blagden decided to find out more about the agreement.
George Edwardz has been covering local city issues for several years and is also a long time resident of the city. His outlet, The Avocado Express, makes its mission quite clear, “Use excess capacity to report and educate with an emphasis towards protecting the public’s right to know.” After learning about the wheeling agreement from Blagden, Edwardz began to investigate as well.
Both men have attended water board meetings for Rowland Water District, Orchard Dale Water District and La Habra Heights County Water District. Edwardz says that LHHCWD has been particularly hostile, regularly threatening and calling the Sheriffs and Fire Department to intimidate the two.
Vipperman also says that he has heard that the board has called police and fire departments, but says that the journalists were creating situations that were “hostile”, although he did not elaborate on what made these situations hostile.
Edwardz disagrees. “Brad Cooke at one meeting took issue with the placement of a camera. He then summoned the fire marshall who noted there was no occupancy sign posted. The following meeting an occupancy sign was posted for a maximum of 13 people. The new limit means there is often only room for two observers.”
After some digging, Blagden unearthed a series of memos from Rowland Water District’s general manager, Ken Deck, that date to a time before his mid-September visit, showing serious delays in the agreement proceedings that pre-date not only the presence of either journalist at these meetings (and thus questioning the validity of claims that they delayed the agreement), but also McVicar’s campaign promises.
In a memo dated from September 1, 2011, Deck writes that proposed changes by LHHCWD were “unfavorable” and that, “due to the lengthy time period devoted to trying to develop a mutually acceptable agreement, other projects and agreements have come to fruition. If this project were to move forward, it could create some cash flow constraints.”
In a separate memo from LHHCWD General Manager Mike Gualtieri, dated September 9, 2011, Gualtieri stresses his board’s determination to keep the dying negotiations alive, “I talked with Ken Deck, and stated that the deal is not completely dead, yet.”
McVicar contends that when she ran for election, she was under the assumption that the plan would go through within 30 days and within another month or so, revenues would begin flowing in. She began campaigning on a no rate increase platform as early as October 13, 2011 and was elected in a November 8, 2011 election.
Contradicting McVicar’s claims, new budgets are approved before the start of the new fiscal year, which according to McVicar, begin July 1 of each year. As a result, the board approved a budget that would include income from the unsigned wheeling agreement at least 2 months before any reporter picked up the story. Furthermore, the three memos from Gualtieri that were acquired by Blagden date back to November 18, 2010 and not one shows signs of an agreement that was within a month of being signed either when the budget was approved or when McVicar ran for election.
A lack of transparency is a growing concern for Edwardz and Blagden. They do not believe that the board has done its job of making ratepayers aware of the increases. However, the board says that they sent out a mailer about the increase and have planned to send a second one.
When asked if the hearing notification would be published in the Improvement Association’s monthly magazine, The Heights Life, McVicar, an Improvement Association Board member and past President, whose husband is The Heights Life editor, said it would not appear in the June issue since the magazine believes the rate increase has become a “political issue and it tries to stay out” of politics.
Edwardz alleges that the new website for lhhcwd.com was launched on May 1 (An employee of the water district staff denies an official launch date ever being set), but then taken down a few weeks later after the announced rate increase. Backing Edwardz claim, an online video from the April 24, 2012 water board meeting shows members of the board approving a May 1 launch date. A recent Google search shows that the website was still fully accessible as late as May 17, 2012. The site was taken down on May 18th.
McVicar says that the website was taken down because of some web design issues and would be up within the week, but no later than June 1 leaving only 19 days to review the rate study and submit a written protest.
Access to clear information from the district has been a difficult task, not just for Edwardz and Blagden, but for other journalists and the community at large.
When contacting the district’s office for further clarification on the upcoming hearing, an employee of the district, Tammy Wagstaff, refused to answer any questions. She initially stated she was the Treasurer for the district, but refused to explain what her job entails. She also denied reports that the board had recently voted for a staff pay raise and bonus for General Manager Gualtieri. Pay raises that McVicar confirmed over the phone, did in fact happen. According to the District, Ms. Wagstaff is one of three employees who drives an unmarked District vehicle.
Furthermore, members of the community who have begun turning in protest letters have been told by Gualtieri that protesters should include account numbers. The official notice does not set this as a requirement and California law does not, either. Gualtieri was unavailable for comment at time of publication.
The targeting of these two journalists by La Habra Heights officials is nothing new. Members of various city groups, such as the city council, the water board, and the La Habra Heights Improvement Association, have all been subjects of reports published by Blagden’s and Edwardz’s respective news outlets. In 2010, Edwardz was attacked by members of the city’s Improvement Association who were displeased with his presence at their public meeting, the incident was covered by multiple news outlets and video of the incident clearly shows Edwardz trying to protect his equipment while he was physically assaulted.
Blagden has been the subject of some controversy as well. A few years ago, he anonymously mailed out election-time flyers to residents of La Habra Heights questioning the close association of council members and a council candidate. The city investigated the flyers, going so far as having residents drop off the flyers in bags so that the California Fair Political Practices Commission could reportedly dust for fingerprints. Election officials concluded that Blagden had not violated any laws.
Vipperman recalls the mailings, saying that Blagden’s flyers “lacked civility.”
This tender relationship may explain why some see both journalists as a way out for avoiding blame for who really caused a delay in the signing of the water agreement. It also seems that simply blaming the rate increase on the delay of the agreement is unqualified. Based on the memos, and the timing for finalizing yearly budgets, it can be concluded that that the board was well aware that the agreement was on the rocks and that it was not possible that the water wheeling agreement would come through in time to cover the new budget.
Furthermore, the water wheeling agreement between Rowland Water and La Habra Heights County Water District will ultimately bring in a purported $200,000 in yearly revenue while, according to calculations based on the released rate increase table, the board will have a yearly revenue, after full implementation, of $750,000 per year. This is more than triple the revenue from the wheeling agreement.
If only $200,000 is needed to offset the lost wheeling revenue, why ask for over half a million more? What was the real reason for the delay in the water agreement? Why is the La Habra Heights County Water District using half of its water capacity to serve another district, as its attorney suggested and who really benefits from the deal, ratepayers or board members? These are all questions that Blagden and Edwardz have raised and continue to investigate, but rather than being met with straight-forward answers, have instead been met with false accusations, intimidation and finger pointing.