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ADOPT RESPONSE TO THE 2014-2015 CIVIL GRAND JURY REPORT FOR STOCKTON MUNICIPAL UTILITIES DEPARTMENT: STRUGGLING IN THE MUD, CASE NO. 1412
recommended action
RECOMMENDATION
It is recommended that the City Council adopt by motion the City Council’s Response to the 2014-2015 Civil Grand Jury Report for Investigating Case No. 1412 relating to the operations of Municipal Utilities Department (MUD); direct the City Manager to sign the response on behalf of the City Council and to transmit the response to the Presiding Judge of the San Joaquin County Superior Court.
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Summary
The 2014-2015 Civil Grand Jury Report Investigation Case No. 1412 included findings and recommendations related to the MUD operations. The findings centered on three main issues including ground settlement at the Delta Water Supply Project Intake Pump Station, an issue reported to the City Council in October 2012; the negative impacts of hydrogen sulfide corrosion and its effects on the City’s sewer collection system; and how the City’s bankruptcy has affected the Department and its personnel. In general, the MUD has or is addressing the valid issues raised in the Grand Jury Report related to the management of utility assets and disagrees with some findings that were incomplete or inaccurately describes business practices.
The report was issued on April 29, 2015 (Attachment A). California Penal Code sections 933 and 933.05 requires a response to the Presiding Judge of San Joaquin County Superior Court by July 28, 2015 to comply with the 90-days allotted to the City as a response time.
The attached letter (Attachment B) is a response prepared for Investigation Case No. 1412 relating to the MUD operations and is recommended for transmittal to the Presiding Judge.
DISCUSSION
Background
Civil grand juries were established by the Constitution of the State of California. They conduct investigations and publish reports. Agencies cited in the reports are required to respond to the findings and recommendations of the report.
On September 10, 2014, the 2014-2015 Grand Jury (Grand Jury) received a complaint alleging mismanagement of the MUD assets and failure to comply with safety regulations or address infrastructure deficiencies. The Grand Jury conducted an investigation, which included tours of MUD facilities, staff interviews, and review of materials provided by the MUD and the City of Stockton Administrative Services department.
On April 23, 2015, the MUD received preliminary notice of the 2014-2015 Grand Jury report and the final report was published publicly on April 29, 2015. The MUD was given 90-days to address the findings and recommendations assigned by the Grand Jury for response.
Present Situation
Pursuant to California Penal Code sections 933 and 933.05, a written response to the Presiding Judge of the Superior Court is due within 90-days of receipt of the report. City staff investigated the issues and alternatives, which included an analysis of the various findings and recommendations of the Grand Jury. Staff then prepared the response that is included with this staff report as Attachment B.
The Grand Jury report cited three main findings from the investigation that include:
1. There is ground settling at the Intake Pump Station (IPS) on the San Joaquin River that has resulted in failure of electrical and plumbing fixtures;
2. Corrosive hydrogen sulfide (H2S), which builds up in sewer pipelines, has gone untreated for more than two years. This exacerbated infrastructure defects, resulting among other things, in the collapse of a 36-inch sewer pipeline under a community garden, ongoing residential complaints about odors, and raising concerns for MUD workers;
3. The City bankruptcy intensified staff turnover, including critical technical personnel and top management. Pay and benefit cuts have resulted in low staff morale.
The responses to each of these findings are summarized as follows:
1. MUD anticipated ground settlement in the design of certain non-critical areas of the Intake Pump Station site and has completed cost-effective repairs to affected facilities. Further, MUD has commissioned an engineering study to identify and anticipate future mitigation measures for budgeting repairs. At no time has the facility been out of service due to ground settlement issues.
2. Initial hydrogen sulfide gas reduction chemical treatment trials were inconclusive and if implemented would have potentially resulted in hundreds of thousands of dollars in wastewater utility operating costs. MUD re-evaluated moving forward with a chemical treatment program and has installed pilot chemical treatment systems on two industrial sewers. Permanent chemical treatment system effectiveness and cost considerations will follow at the conclusion of the pilot test.
3. MUD was not immune from the effects of bankruptcy; however, many of MUD’s management decisions to recruit highly qualified individuals coupled with cross-training and educational opportunities, have resulted in the upward mobility for a number of MUD employees, particularly in the treatment plant operator series.
The attached letter has been prepared as a response from the Stockton City Council as a governing body. This response does not preclude any individual member of the City Council from communicating directly to the Grand Jury on their own initiative.
FINANCIAL SUMMARY
It is anticipated that the City’s Implementation of the Grand Jury recommendation can be accommodated within existing resources and will not have a financial impact. The follow-up research will be conducted by the City Auditor under the established duties and responsibilities.
MUD is evaluating the effects of the mandatory water conservation measures implemented statewide in response to the drought. Many water agencies are concerned that significant reductions in water consumption will reduce the financial resources available to support ongoing operations with substantial fixed costs. The evaluation may result in the need for a rate adjustment. Should a rate adjustment prove necessary, Proposition 218 outlines specific procedures for doing so.
Proposition 218 is the initiative passed by California voters in November 1996 that establishes the process by which public agencies can raise fees for services after an analysis of the costs. It was designed to provide greater public involvement in the entire rate setting process. Proposition 218 requires agencies to mail a public notice to every single property owner regarding proposed rate increases and then to hold a public hearing. It also establishes a protest process for the public to follow if they wish to oppose the proposed rates.
Water and Wastewater rates were last set in 2009 and 2010 respectively through the use of the 218 voter process and many of the consumption presumptions in place at the time those rates were set are no longer applicable. The same is true regarding the availability of sufficient funds to implement any rate recommendations that support the stormwater facilities, as those rates have not been adjusted since the early 1990s. An effort to raise the rates in 2010 was defeated by protest vote.
Attachment A - 2014-2015 Grand Jury Report - Case No. 1214 - Stockton Municipal Utilities Department - Struggling in the MUD
Attachment B - Response Letter Grand Jury Case No. 1214