A recent Del Norte County Grand Jury report has Crescent City officials
reflecting on a subject that divided the community and resulted in a
fog of public mistrust that lingers over City Hall even today.
The report, released last Saturday, focuses mainly on the city’s new $42.5 million wastewater treatment plant, and details what the jurors found to be a haphazard approach to approving and constructing an expensive, state-of-the-art project that will be paid for largely by ratepayers.
The Grand Jury questioned whether City Council members did their due
diligence in understanding the scope of the project, or if they simply
went along with staff recommendations without comprehending the
technicalities and ramifications.
To read the 2009 Grand Jury Report(PDF) click here.
Crescent City Manager Rod Butler, who was hired well after all these issues were born, said he is now trying to digest all the findings in the Grand Jury report so the municipality can write its official response that is required by California law.
“It appears to have been a very well written and well investigated piece of work by the Grand Jury and we appreciate the work they did,” Butler said. “I think there’s a lot of valuable commentary and some suggestions about the way we can not only operate internally, but also communicate better with the public.”
Wildly fluctuating estimates
A previous Grand Jury started the investigation into the wastewater treatment plant two years ago after it received several citizen complaints about increasing sewer rates.
At that time, there was public concern that the city had obtained a multi-million dollar loan from the state and started work on the project before securing funding to pay back the debt partially through increased user fees. There were also questions about whether such a costly sewer system upgrade was needed in a community that was economically depressed and experiencing little growth.
The old plant, which is now undergoing the massive overhaul, was built nearly 50 years ago, and according to city public works officials, couldn’t handle the loads that were coming in.
During winter months, when the rains were heavy, excess runoff would flow into the system. This extra water, combined with normal use, overburdened the plant, causing backups and making geysers out of manholes.
The dry season posed its own challenges to the treatment facility. Without rain, and therefore less water coming into the plant, the concentration of waste in the system was higher because it wasn’t diluted.
When this high-concentrate sewage entered the facility, the equipment couldn’t always filter out enough of the waste before ejecting it into the ocean to comply with state mandates. This resulted in fines from the California Regional Water Quality Control Board and a lawsuit from a non-profit environmental group over discharging pollutants into the ocean.
The Grand Jury found the municipality went through a couple different design phases starting in 2002 that were accompanied by ever-changing cost estimates.
The original estimate was $48 million, but this figure fluctuated wildly, with the lowest estimate coming in at $10 million-$13 million for a piecemeal approach that would provide interim relief to the ailing treatment plant.
It wasn’t until after the City Council approved submitting an application to the state for $19.6 million and soliciting bids on the project that it became aware of what the Grand Jury called the “Wahlund surprise.”
Wahlund Construction, which is currently doing work on the treatment plant, was the sole bidder on the project. At that time, the company estimated a cost of $37 million.
The Grand Jury called this a “surprising development,” yet in its investigation found limited documentation of the City Council or other staff questioning the price escalation.
“A number of questions regarding the adequacy of City processes arise,” the report states. “Most of them relate to the quality of Staff work and the intellectual curiosity of the various City Councils.”
Within the council meeting minutes, the Grand Jury was unable to find instances where council members or citizens questioned the facts and figures that were presented to them by city staff. The jurors also found little evidence that “senior” city staff tried to help the council by putting the various figures into perspective.
“It appears that, on most occasions, neither Council questions nor Public comment were at all critical of what was happening,” the Grand Jury report states. “The lack of meaningful Council or Public critique of the evolving and escalating (wastewater treatment plant) cost estimates — at least as far as it is indicated on the written record — allowed the process to unfold almost without serious challenge or review.”
Mayor questions jury’s approach
Mayor Kelly Schellong, who has only been on the City Council since 2006, admitted that making decisions on technical matters was difficult. But she also said the Grand Jury report had some “apparent inaccuracies” within its pages.
“I think a lot of the minutes are really generalized and I wished they went back to the tapes,” Schellong said. “I can’t speak for the past councils but I’m assuming there were a lot of questions asked.”
She pointed to the number of public workshops the City Council held in order to help citizens understand what was going on with the wastewater treatment plant, as well as to an ad-hoc committee made up of residents to allow the municipality to receive more input from the populace.
However, those meetings and the formation of the committee came well after the City Council accepted the bid from Wahlund construction, and took form when ratepayers became upset during the actual process for increasing sewer rates.
Schellong also noted that it’s common to rely on city staff for proper recommendations, especially concerning matters outside the realm of common knowledge.
“It’s really hard to take a big project like that and understand all the in-depth details,” Schellong said. “We’re just everyday people. We’re not attorneys, engineers or wastewater treatment plant operators.”
One of Schellong’s colleagues disagrees. In fact, Councilwoman Donna Westfall is leading a recall effort against the mayor, and cites the lack of tough questions about the wastewater treatment plant as one reason.
Westfall was elected to the City Council in November.
“In my opinion, I think a great injustice was perpetrated against the public,” Westfall said. “I think we still need to deal with it and correct it.”
During the months leading up to the City Council’s approval of increased sewer fees in 2007, Westfall spearheaded a campaign to halt higher rates from being established. She organized petition drives to collect protest votes from users who could stop the city from imposing the increased rates.
The protest vote failed — something Westfall attributed to city fraud. But the Grand Jury found no wrongdoing in how it was handled, only disorganization and confusion that further contributed to public’s “deep suspicion and resentment.”
Now that the Grand Jury report is out, Westfall said she wants to hold a public meeting to allow for an open discussion about the wastewater treatment plant.
“We really need a special meeting so the public can make comments on that report,” Westfall said. “I think it would be very wise.”
‘Appearance’ of a conflict
The final segment of the Grand Jury’s lengthy investigation into the wastewater treatment plant revolves around the city’s public works director, Jim Barnts, who was the point man on the project.
Shortly after taking his position with the city in 2003, Barnts formed a limited liability company with two other partners called RBS Washington Boulevard/Summer Lane.
That company bought 50 acres of land behind Wal-Mart and Ace Hardware on Washington Boulevard for the purposes of development.
According to the Grand Jury report, Barnts was intimately involved in securing access to the city’s sewer system for a future apartment complex.
While the property was outside the city limits, the Grand Jury concluded Barnts still should probably have reported his economic interest in it to both the city and the Fair Political Practices Commission because it was within the municipality’s jurisdiction for providing water and sewer service.
For several years Barnts failed to mention on his Fair Political Practices Commission “Statement of Economic Interests” form — also known as a CA Form 700 — that he had any reportable interests.
In its report, the Grand Jury states that Barnts “indicated that he omitted listing his RBS-related interests on his CA Form 700’s because he interpreted the applicable geographic area as bounded by the City limits.”
Several phone calls made to Barnts for comment after the Grand Jury report was released were not returned.
The report also notes that city officials did not monitor the Fair Political Practices Forms for any deficiencies, and that they were “simply checked off a list, forwarded as appropriate, and filed.”
Though the Grand Jury did not find that Barnts had an “actual” conflict of interest — due mainly to ambiguities surrounding the written guidelines for reporting economic interest outside city limits and the lack of staff oversight — it did find an “appearance of conflict.”
City officials ignored the public’s concern that Barnts had a conflict of interest, according to the Grand Jury, and on several occasions dismissed complaints that were made by citizens. Some of the responses included in the Grand Jury report include city officials quoted as saying, “it’s beyond the City limits,” and “as long as his project is treated the same as others, it’s okay.” There was even one council member who during a meeting said that what Barnts does is “his own business.”
“Both the available written record and testimony before the Grand Jury indicate that the Public certainly perceived a conflict of interest,” the report states. “Additionally, they indicate clearly that the Council and City Leadership’s unwillingness to take on the question and resolve it contributed to an atmosphere of distrust that colored the entire (wastewater treatment plant) contract acceptance and sewer rate increase process.”
Crescent City has since updated its conflict of interest code. In March 2009, the council approved a measure that forced officials to disclose all their economic interests throughout Del Norte County.
City Manager Rod Butler said the Grand Jury’s investigation into Barnts’ perceived conflict of interest serves as good reminder to public officials to avoid these types of scenarios, even in appearance.
“I think that the biggest take-away for me is that they did not appear to find any legal conflict of interest,” Butler said. “They made some valuable comments about the appearance of conflict of interest that we need to be aware of as public employees.”
By law, the city has 90 days from the time the Grand Jury report is released to form its official response.
