Rate increases, debt levels and the long-term financial health of the El Dorado Irrigation District dominated a panel discussion last Wednesday by candidates running for two board positions at EID.
Sponsored by the Tea Party Patriots of El Dorado Hills, candidates Greg Prada, Dr. Dale Coco and Jake Flesher took turns fielding questions from the moderator as well as from the audience. Richard Englefield was absent due to another commitment.
Facing off in Division 4 are Coco and Flesher. In Division 2, it’s Englefield and Prada. All three candidates said this is their first time running for public office.
Flesher, who is the managing partner of a law firm in Folsom, said the election is about EID’s rates, debt and spending, saying his mission as a board member would be to focus on rates by looking at them through the lens of the ratepayers.
Twenty-five percent of EID’s budget is currently devoted to servicing its debt, he said, an amount similar to that paid by the Detroit before it declared bankruptcy. EID is over $400 million in debt and has $30 million in unfunded liabilities, but they think they are in pretty good shape. “Well I disagree,” he said. “When rates have gone up 102 percent in last five years, 11 percent this year and another 11 percent next year, then something is not right.” Flesher also wondered how long EID could stay in business when in 2012, for example, it overshot its budget by $4 million and only cut $940,000 from expenses.
Flesher went on to say that 73 percent of EID’s rate (revenue) comes from Shingle Springs, Cameron Park and El Dorado Hills and he wanted to end that. He also advocated for a moratorium on new debt, saying that portion of the budget devoted to debt service will increase once interest rates start going up again.
Largely agreeing with Flesher was Prada, a retired chief executive and the second candidate to speak. Claiming EID was financially broken and needs fixing, he went on to say that “EID is financial irresponsibility on steroids” with runaway rate hikes of 102 percent from 2010 to 2015, including 11 percent next year. They also have mushrooming debt levels approaching a half billion dollars, including unfunded pensions and health benefits and $60 million of debt. With ongoing deficit spending of $15 million a year, if it was business, it would be out of business, he claimed.
Prada went on to say that the district has some ticking financial time bombs including unfunded pensions, covering health cost for retirees, deferred debt repayment and looming interest rates, which he predicted would result in a 20 percent rate hike in the future regardless of any cuts.
Prada asserted that EID sells less than half of its water and it already has plenty of water for all the development projects approved plus others being proposed. The capacity being added is being done for developers, he said. As far as trimming costs, Prada said overhead at EID had increased from $7.5 million to over $18 million over the last dozen years and one-third of rates go to pay overhead. That’s too much staffing on Mosquito Road, he added.
Accusing the present board of rubber-stamping everything put before them, he said factors driving the rise in water rates next year are the $60 million in additional debt, a 7 percent wage hike next year for most employees and a 6 percent this year, plus additional benefit costs.
“We need to stop increasing debt, slash overhead and stop the accounting gimmickry,” he said. “I’ve previously been a CEO, CFO and COO and am used to turning around companies that are in the red. EID needs that kind of attention and that’s why I’m running.”
The third candidate to speak was Dr. Coco, who is a retired physician. He said it was time EID focused on “real solutions to the $370 million debt and stop runaway rate increases.” We need a long-term strategy that secures the district’s water at reasonable rates, and we need leaders with solid management experience to make that happen. EID’s management has been managing the board for years and it is time for the board to take control, he claimed.
Touting his management experience, Coco said he previously was the chief of staff at Barton Memorial Hospital and served on several oversight committees at Marshall Medical Center. “I was a project manager who saved hundreds of millions of dollars and increased efficiency. I can do the same as an EID director,” he promised. “There are sewer rate increases every year. Our water rates have nearly doubled. We just had a 11 percent water rate increase and we will have another one next year. When does it stop?” he asked. “We need to get the rates under control. At best, EID has a $370 million debt with one-third of every dollar paid going to service that debt. We also need to get our debt under control.”
Coco went on to discuss outside interests that covet EID’s water, including Sacramento politicians, Central Valley agricultural interests, and those in Southern California. We need to keep our water under local control, he said. He added that nearly half of EID’s debt results from regulatory measures imposed by state bureaucracies. “I have spent over two years studying water issues and since I’m retired, I have the time to lobby and attend meetings to protect our interests.”
Coco continued by saying that if operating costs were brought under control it would stop escalating rate increases, adding that projects were sometimes approved and built without a cost-benefit analysis being done. EID has spent money on things that might happen instead of what will happen, he claimed. He also advocated for increased efficiency in all departments saying, “I have a methodology that can solve those problems.”
With the moderator’s questions completed, the audience then took turns asking the candidates questions. One had to do with protecting agricultural water rates. Prada noted that such users only pay one-seventeenth what others pay and there is a mismatch in rates, while Coco and Flesher advocated lower rates for everyone.
The audience also asked about salary increases. Prada said most staff got a 6 percent increase this year and will get a 7 percent increase next year. Coco said there should be no salary increases for anyone as long as rates are increasing. He added that board members currently receive a monthly stipend of $1,250 for serving plus health insurance, at which Flesher — who said he was offended at hearing this information — promised not to accept a stipend if elected.
Asked about priorities, Flesher said EID needs to prioritize what will affect water and sewer rates. Prada responded by saying there are too many priorities and they should be limited by what the district has to spend. Coco advocated doing more than just cutting when setting priorities.
In closing statements, Coco referenced his health care and project background and said he would cut the debt, cut rates and help protect EID’s water supply. He referred people to his Website coco4eid.com for additional information.
Prada said EID is supposed to be for ratepayers, but its board acts more like it’s there for special interests, naming bond salesmen and developers as examples. EID is not for employees either. “I’m not a politician, but I want to make a difference,” he said. “Either I will have a mandate to go in and do what I want to try and do, or you’ll send me home.”
Flesher said things would improve if there were fiscally responsible people on the board. “What’s needed,” he said, “are people who had real world business experience and I think I’m that man.”
Contact Dawn Hodson at 530-344-5071 or [email protected] Follow @DHodsonMtDemo on Twitter.