Editor’s Note: Below please find the City of Milpitas’ response to comments made by Robert Marini, a candidate for City Council, in a recent interview.
“They issued $55 million in bonds, and didn’t disclose it to the public,” Marini told The Beat in an interview. He went on to say that the bonds were allocated for water and sewage without the city notifying the public by written notice.
Information about the amount and need for the water and sewer bonds was disclosed to residents on many occasions during the development of the water and sewer rates studies, which were approved by Council at the February 19, 2019 City Council meeting. The water and sewer rates studies were completed in November 2018 and these documents contain information about the water and sewer bonds. Both document were posted on the City’s webpage and continue to be available for review by the public.
At the November 29, 2018 Council meeting, staff presented the results of the updated water and sewer rates study and received approval from Council to begin community engagement and initiate the Prop 218 process, which consisted of mailing notices to all residents with information about the proposed water and sewer rates, explaining the need for the new rates, and setting a date, time, and location for a public hearing. In addition, to using the Prop 218 process to disclose the need for the water and sewer bonds, staff also held community meetings in an effort to educate residents on the City’s water system and provide information to residents on the proposed rates, including the bonds. The community meetings were held on the dates and at the locations below:
- January 8, 2019 – Pearl Zanker Elementary School
- January 12, 2019 – Milpitas Community Center
- January 23, 2019 – Sunnyhills Neighborhood Association at the San Jose Evergreen Community College Milpitas College Extension
- January 24, 2019 – Milpitas Community Center
- January 30, 2019 – Pioneer Mobile Home Park
Disclosure of the issuance of the water and sewer bonds also occurred as part of the City’s Fiscal Year Annual budget process and at various City Council study sessions and meetings leading up to the authorization to issue the bonds on October 15, 2019.
“There’s a water issue…where 2.7 million dollars was transferred out of the water fund to the general fund. Prop 218, by law, you’re supposed to use the money you get for utilities on the utilities…these people [the City]…they’re charging accounting fees, management fees…the city manager and city attorney are all charging fees to the water fund. So basically, residents are paying for services from other departments, but when it comes to the water fund basically they get charged again. That’s not fair.”
The City has provided responses to Mr. Marini regarding this issue on numerous occasions dating back to Summer 2018 following post by Mr. Marini in the Mercury News and Milpitas Beat.
On the issue of the water utility paying the Milpitas General Fund for support and services. This is a common and valid practice for municipal utilities to pay overhead charges for their fair share of the costs of administrative support, such as facilities, personnel, finance and accounting, management, legal, and other similar services. If the water utility were a standalone enterprise, it would have to provide these services all by itself, which would be more costly, and these support services would also be added into the water rates.
In October 2017, the citizen Milpitas Water Rate Task Force recommended that the city conduct a new cost allocation study to validate the elements and amounts of the regular payments from the water fund to the General Fund. The Task Force spent nine months learning about the complexity of water supplies, operations, and finances, and issued a public and unanimous report to the Milpitas City Council. Council reviewed the recommendation of a cost allocation study at its September 18, 2018 Council meeting. The recommendations of the cost allocation plan was also presented to the City’s Finance subcommittee meeting on September 24, 2018 and Council formally adopted the Cost allocation plan at its November 29, 2018 Council meeting. The results of the Cost allocation plan were used to update the water and sewer rates studies.
The claim the City is mischarging residents for water is false as our practice continues to base rates on accurate and validated information, both as a matter of fairness to water users and to ensure compliance with the law.