Category: General

The drought and ensuing government response have brought water related issues to the forefront in communities across California. Here in Torrance tensions are beginning to rise as more and more residents deal with the impacts of governmental decisions and begin to ask more probing questions.

Whether one might characterize it at this point as an all-out war or something more akin to a borderland skirmish, there is no doubt that consumers are getting squeezed as they continue to get hit on several fronts.

Drought Related Fines

For those in Torrance that are Cal Water customers (about 20% of Torrance residents) drought related fines are already taking effect as Cal Water has implemented its “Water Shortage Contingency Plan.”  As explained in a recent mailer, all Cal Water customers as of June 1^st have been given individualized “water budgets” based on a 16% reduction in the units of water each consumer used for the same month in 2013. For every 1 Ccf (~748 gallons) that the consumer exceeds their allotted budget they will be fined a drought surcharge of at least $6.99.

Water Use Restrictions

Torrance Municipal Water (TMW) has not yet enacted a similar allocation and fine Program to Cal Water, but TMW customers should not be surprised if Torrance follows Cal Water’s lead in the near future. Torrance has, however, responded to Governor Brown’s mandate to reduce water use by 25% by recently enacting Level 2 water restrictions.  Some of the restrictions include:

• Outside watering prohibited from 8 a.m. to 6 p.m
• Limit on watering to 2 days/week; 10 minutes per area
• Requirement that leaks be fixed within 4 days
• Restrictions on filling or refilling of pools, spas, and ponds

These restrictions are of special concern to homeowners located in what is deemed the “expansive soils” district.  In these areas, the soil expands and contracts based on moisture content.  That movement ultimately could cause damage to homes or property.  At the behest of several HOA leaders, the City agreed to include a provision in the ordinance that would allow for those impacted by expansive soils to pursue a “hardship” waiver of the water use restrictions.  The Ordinance states that the waivers will be granted in accordance with “administrative procedures established by the City.”  As this is a new process, however, it is unclear how the waiver process will work and how cooperative the City will be in working with affected residents.

Rate Increases

The potential fines come on top of water rate increases already enacted by the City. These rate adjustments were approved in February 2011 and slowly took effect with the final adjustment occurring at the onset of 2015. Prior to enactment of the increase, over two thousand residents submitted protests despite the notification from the City about their right to protest being sent between the Christmas and New Year’s Holiday of 2010.

With regard to the adjustment, Mayor Scotto is quoted in the minutes from the February 2011 meeting as noting “that the average residential customer will experience an increase of approximately $1.50 per month and in some cases their bills will be reduced.”

Despite that assurance from Mayor Scotto, it would appear that the rate increases have been much more substantial. The table below shows revenues earned from the water fund since 2011. Prior to the increase, projections forecasted steady revenues of about $24M a year. After the increase, revenues ballooned to an astonishing $40.7M in 2014. This revenue increase is indicative of an approximate 70% rate increase to the average consumer. The fund also showed a $5.36M surplus in 2014 up from a minimal surplus of $177K in 2008.

Fiscal Year Ending June	2011	2012	2013	2014	2015
Water Fund Forecasted Revenues Prior to Rate Adjustment (as reflected at 15 Feb 2011 Council meeting)	$24.3M	$24.4M	$24.5M	$24.2M	$24.1M
Actual Water Fund Revenues	$30.1M	$34.0M	$36.1M	$40.7M	N/A

Such numbers may leave some taxpayers wondering where all of the additional revenue is going. On that point, one resident has presented convincing evidence that some of the money was siphoned off to pay City debt versus being used for capital projects like building additional wells as was promised by the City when the rate hike went into effect.

Meter Readers

On another front, the agenda for the upcoming Council meeting includes approval to award a $750K sole-source purchase order for new Neptune brand water meters. The new fully automated radio-based (AMR) meters speed up the meter reading process as the readings can be picked up by a passing vehicle. They are also supposed to improve data accuracy. Despite the potential benefits, the matter warrants further attention due to serious concerns raised about the Neptune meters from other consumers.

The Neptune meters have been linked to increased security risks from hackers, health risks due to the constant emittance of radio waves, fire hazards, and skyrocketing rate increases. One Torrance resident I spoke with claims that their water bill increased three-fold after their new meter was installed. After several calls to the TMW customer service office in Phoenix AZ, which she described as extremely incompetent, she was eventually told that the increase must have been due to her old meter reading incorrectly. Such interactions leave residents feeling frustrated and helpless and contribute to the rising tension and dissatisfaction many are beginning to feel each time they turn on their faucet.

Other communities have successfully fought back against some of these water-related issues.  Is it time for Torrance to do the same?

Reflecting upon the recently passed budget there were some clear winners and losers:

Winner: McCormick Ambulance        Loser: Gerber Ambulance

The City Manager revealed that they were notified by McCormick that it was not appropriate to charge paramedic fees that they had been charging Gerber.  Such fees resulted in $2.2 Million in revenue in FY 13/14 and the City had budgeted nearly $2 Million for such fees in FY 14/15.  This revelation has to feel like “pouring salt in the wound” for Gerber after they lost the emergency transport contract to McCormick in controversial fashion and subsequently went out of business shortly thereafter despite having better ambulance response times than McCormick has had in the first few months of their performance.

Winner: City Attorney        Loser: Legal Secretaries 

City Attorney John Fellows recently received a $20K raise boosting what was already the second highest salary for a City Attorney in the state to $280K a year from $260K.  Four Legal Secretaries that support Fellows were not as fortunate.  Despite a salary survey showing the secretaries made 12.8% less than their peers, a pay raise for them was removed from the budget.  The secretaries current pay range is approximately $50K to $60K a year.  The money for Fellows raise alone would have been enough to provide each of the four legal secretaries about a 10% raise.

Winner: Arthur Plourde        Loser: Library Services

The Library’s plea for $40K in order to purchase more materials was nixed by the City Manager.  That move may feel like vindication for Arthur Plourde who was ousted from his volunteer post on the Library Commission after only 3 months for advocating against the purchase by the library of more foreign language materials.  No word yet on whether the City Manager will be hauled before the Council to explain why he is curtailing the Library’s ability to purchase those needed foreign language materials.

Winner: Transit Operations        Loser: Road and Sidewalk Repairs

The budget included an astounding $1.6 Million for new transit positions ($850K of which will go toward manning the Transit Center).  The budget also added a fleet administrative analyst ($124K) and a fleet mechanic ($88K).  Not included in the budget were a requested streetscape crew ($470K) and concrete crew ($397K) to fix roads and sidewalks.

Winner: City Public Relations        Loser: Tree Ordinance

The City added a public relations position ($139K) to help with community outreach and media relations.  The City has done considerable outreach over the past 4 months to gather community input about a proposed Tree Ordinance.  Despite an overwhelming majority of people that have voiced support for such a measure during the outreach process, the Tree Ordinance was sent back to a Council sub-committee where it will likely languish for at least another year according to City officials.  To add insult to injury, the City also denied a request to increase tree trimming from every 8 years to every 4.7 years ($77K).   The lack of tree trimming on City owned trees was perhaps the number one complaint offered by those seeking a Tree Ordinance.

Winner: Torrance Cultural Arts Foundation        Loser: Torrance Art Museum

The City increased the annual donation to the Torrance Cultural Arts Foundation from $109K to $169K.  Axed from the budget, however, was a request to provide $51K in funds for a Museum Director/Curator.  No mention was made of the fact that Councilwoman Ashcraft’s husband Dan serves on the Board of Directors for the Torrance Cultural Arts Foundation or that Ashcraft herself and Mayor Furey serve on the Advisory Board.  The board and advisory committee to the Torrance Cultural Arts Foundation includes a host of other City luminaries.

Winner: Rose Float        Loser: Fireworks

The City found a way to provide $125K to the Rose Float for the next two years.  The often referred to 4^th of July Fireworks show was not so lucky despite a scaled back proposal for the show in the amount of $75K.

Winner: Community Services Commission        Loser: Donations to Community Services Non-Profits

The Council approved the establishment of a Community Services Commission ($5K to $30K) to help tackle social issues like homelessness and supporting veterans.  Removed from the budget was a line item to increase the amount of non-profit social services grants to $40K from $20K.

Winner: Water Services         Loser: The Public

After recent water rate increases the Water Enterprise Fund continues to show large surpluses ($5.4 Million in FY13/14 and projected $3.3 Million in FY 14/15).  The surplus is supposedly going to fund capital projects.  The budget also included a new water apprenticeship/intern program ($109K).  The public will pay for these measures through continued tiered rate increases and drought related fines.

Winner: Farmer’s Market        Loser: Crossing Guards

The Council recently allocated $178K to purchase new bollards for the Farmer’s Market.  The budget also included a new staff position to help move those bollards as well as a Security Guard for the market ($28K). No money was in the budget to fund crossing guards for sites that were recently proposed to be removed. Is the safety of revenue generating shoppers at the market more important than the safety of kids on their way to school?

Winner: Bocce Ball        Loser: Playground Equipment

The Council recently allocated $80K to build a Bocce Ball court at Columbia Park.  Removed from the budget was a $30K proposal to upgrade aging playground equipment at public parks.

Winner: City Council        Loser: Transparency

The City Council travel budget was increased from $12.2K to $31.5K. With the increase, the Public will have less insight into how these travel funds are used by City officials as the low budget forced the Council to seek permission at Council meetings for many of their trips.  As Mayor Brown in Hawthorne has reminded us, things can quickly get out of control when there is a lack of scrutiny and public oversight.

Below is a summary of the 411 page proposed operating budget for 2015-2017.  The Council held the 1st Budget Workshop and Public Hearing last Tuesday and will hold the final Budget Workshop and Public Hearing at the upcoming Council meeting next Tuesday.

Good News

• After major revenue shortfalls in the years following the recession, the City is now seeing modest revenue growth
• Expected general fund revenue for FY 14/15 is $172.3M, FY 15/16 forecast is $185.3M, with FY 16/17 forecasted at $189.3M
• City is anticipating significant positive impact in revenue due to expected completion of Del Amo Mall just in time for the holiday season as well as new car dealerships on Hawthorne Blvd
• Revenue increases allowed the City to provide employees with recent pay increases and offer a budget with no reductions

Bad News

• City had to curtail hoped for enhancements to the budget due to unexpected revenue losses
• City is currently experiences revenue losses of $500 to $700K a month due to ExxonMobil shutdown and resultant decrease in Utility Users’ Tax (UUT) receipts
• Revenue was further impacted by restrictions in paramedic fees (budgeted $1.96M, forecast of $977K – revenues for FY 13/14 were $2.2M)
• City also facing unknown monetary impact of drought mitigation measures
• RDA Loan repayment yet to be resolved with state and the City could be ordered to pay $2.5M
• The City may need to tap into $14.5M Economic Anomaly Reserve to cover shortfalls due to unexpected revenue losses

Proposed Budget Increases (expected to be approved)

• One-time $2 Million increase for FY 15/16 and additional $300K increase for FY 16/17 in Self-Insurance reserve (probably due to increased lawsuits against the City)
• Increase of $100K annually in building maintenance costs
• New Medical Director services position ($30K) and patient care reporting position($42K) for TFD
• Add Police Services Officer for the City Jail ($90K)
• Upgrade computing capacity at Madrona Marsh ($7.2K)
• Add Farmer’s market site leader as well as Security Guard ($28K)
• Increase City Council annual travel budget from $12,208 to $31,500 (mayor’s budget to increase from $2,224 to $7,500)
• New community relations management associate position ($139K)
• Add Administrative Analyst ($124K) and Mechanic ($88K) for Fleet Services
• New Water Apprenticeship/Intern Program ($109K)
• Add several transit positions funded through measure R and Prop C local return ($1.62M in total – $850K for Transit Center positions)

Proposed Budget Increases Still Under Consideration

• Torrance Rose Float donation ($125K)
• Increase annual Torrance Cultural Arts Foundation donation from$109K to $169K

Some Items removed from Proposed Budget by City Manager

• Increase library budget in order to purchase additional library materials ($40K)
• Addition of three firefighter positions ($572)
• Add Streetscape crew ($470K) and concrete crew ($397K)
• Increase tree trimming from every 8 years to every 4.7 years ($77K)
• Increase non-profit donations from $20K to $40K
• Add Special Investigations Analyst ($124K) and admin analyst ($62K)
• 12.5% raise to 4 Legal Secretaries ($40K) and increase training/travel for City Attorney office ($15K)
• Add Accountant and Administrative Assistant to City Treasurer Office ($147K)
• Laser leveling of softball fields ($20K)
• Park equipment replacement ($30K)
• Addition of Museum Director/Curator ($51K)

On the Radar, but not being Considered at this Time

• Return of fireworks to Wilson Park
• Veteran’s Commission and Community Services Commission
• Veteran’s Day Program in conjunction with Armed Forces Day

Items of Interest

• No mention in budget of possible revenue losses due to major business relocations (i.e. Toyota, Kubota, Farmer Brothers, Panasonic, Hello Kitty)
• Actual FY 2014/15 general fund revenues $4M less than projected (budgeted forecast of $176.4M, current forecast of $172.3M)
• No mention of providing money for additional crossing guards
• Water Fund continues to show revenue surplus with FY 14/15 revenues of $39M and expenses of $35.8M (possibly due to recent rate increases – is this a sneaky tax?)
• Expenditure forecasts incorporated recent PERS changes including: decreasing return on investments by 0.25%, limiting amortization to no greater than 30 years, increasing the mortality rates, and accounting for lower than expected return on investments for the current fiscal year
• Budget shows $114K FY 14/15 budgeted amount for City Council salaries and benefits (not including travel reimbursements) amounting to $16,285 in annual salary and benefits per councilmember (not a ton, but still worth mentioning next time you hear one of them say they only get $100 per month for their volunteer job).