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[Brief version published April 26] Community Services District staff is working with developer John Sullivan to try to reach agreement on the water needed for his hotel project after a design-build proposal for a water treatment plant was ruled out by CSD. Sullivan, a Murietan, had proposed to design and build the plant -- instead of the usual competitive bidding process -- but board President Jerry Pasek told a recent workshop on the project that bidding is required under state law.

Undaunted by the setback for their design-build plan, representatives of Sullivan's Cosumnes River Land company proposed another approach to get water for the hotel project. The developer proposed paying $175,000 for a design to upgrade and expand the existing plant. In return, the developer wants the CSD to supply water for the hotel and extended-stay project from existing water treatment capacity. Sullivan calculated the project would require 19 units of water, while CSD General Manager Ed Crouse estimated 30 units. A unit is 750 gallons of water use per day.

Sullivan says the CSD has sufficient system capacity to grant him the water.  The CSD disagrees, saying a new water treatment plant is needed.  Sullivan also says he's owed the water because his development property, which he purchased a year ago, paid into an improvement district for years under a previous owner.

The April 26 workshop, which lasted four hours, included a discussion of water treatment technology, a history of Rancho Murieta's water treatment facilities, options for funding and constructing infrastructure, explanations of bond districts, shortfall agreements and letters of credit, rehabbing the existing plant versus upgrading it, treatment capacity, and conflicting views about what developments have paid their fair share for treated water.

Consultants, lawyers, former CSD directors and Sullivan addressed the group, and more than a half-dozen neighbors spoke. Several commented that they don't want existing residents to assume costs for new development, and a few others, as the meeting went on, used words like "confusing" and "overwhelming" to describe the onslaught of information. About three dozen people attended the session, many of them with business connections to the development.

Workshop

About three dozen people -- many of them connected with a development project -- attended a four-hour workshop at the Community Services District on April 26.

Resident Ted Hart, who has repeatedly urged the CSD board to provide water for the hotel project, said, "This thing needs to be handled as expeditiously and as fast as it can be. … The board understands this completely. The community needs to understand that you just can't sit here."

Janis Eckard, a resident who's weighed in on water and development issues over the past decade,  said, "From everything we've seen up until this time, it's always been there's no capacity. … If we have a super hot day with a high water usage and then we have a large fire, are we going to have the water? That scares me to death."

At the end of the four-hour session, Crouse volunteered to work with Sullivan to see if they could find agreement on providing water for Sullivan’s project in time for the May 15 board meeting. Crouse said staff would look into sizing a new water treatment plant that would replace the first phase of the existing plant built in 1974 and provide additional capacity.

Pasek said there are three issues -- starting the design document, reaching final agreement with Sullivan on whether water can be available and developing a financial plan for the plant’s replacement and expansion.

"There is no absolute, drop-dead timeframe that we have to upgrade the plant if we so choose," Crouse said. "Our replacement schedule replacement life is four more years. … We're still operating. We're not in any imminent failure. … The only reason why we're moving down this path is we had the original design-build proposal that obligated us to pay $3 million. If that's off the table right now and we can reach accommodation with John on (water service) for his hotel, then there is no absolute drop-dead that we have to do something tomorrow or the next day."

Sullivan's $6.6 million design-build proposal would have committed the CSD to pay more than $4 million in a lease-back arrangement. The CSD would also have been responsible for permits, inspections and other items, although there was no cost estimate in the plan for those expenses. The only other source of funding in the plan was $3.3 million from a bond district on the South or the letter of credit South developers provided as a guarantee of payment.

At the workshop, Crouse said the existing plant can be upgraded with membrane technology and expanded to provide additional capacity. "But when it gets down to that plant expansion, what we're going to pay for is only 900 units, which is the 1.5-million-gallon capacity of Plant 1. … Should we upsize some of the facilities and have (developers) reimburse us later so that they can install membranes -- "

"The answer to that is, hell, yes, you'd want to do that," Pasek interrupted.

"But on whose nickel?" Crouse said.

"You build the 10-car garage and you figure out who pays for garages four, five, six, seven, eight, nine and 10 because we only need three cars' worth," said Pasek.  "…And then they supply the cars when and if they need them."

When the Improvements Committee met with a consultant for the plant design last week, Crouse described the task as figuring out what membrane system capacity the footprint of the existing water treatment plant could accommodate.

"Then the CSD would be obligated to build their 1.5 (million gallons per day) capacity replacement for Plant 1," Crouse said. "And then anything above that, should we decide to upsize the piping, controls, basins, anything else, we would fund that effort, but seek reimbursement later when the future developers come in so that they could buy into the plant capacity.…" The developers would be able to add components to satisfy the needs of their projects.

Pasek said, "The basic way I was looking at it is if it's embedded in concrete or would be a bitch to add later, put it in now for the max case."

Sullivan, who participated in the committee meeting, said it was important to get moving on the project as fast as possible because construction costs are increasing. But he added that residents would be "dramatically overpaying" by building the 1.5 mgd plant instead of using Mello-Roos funds to construct a plant with double the capacity.

In 2009, the CSD looked into replacing the existing plant on its own after the recession brought development to a halt. The membrane filter upgrade for the existing plant was supposed to be installed as part of a developer-financed expansion of the plant to serve their projects.

With the cost to rebuild the plant estimated at $6.5 million at that time, the CSD opted to budget $1.5 million to rehabilitate the plant instead. "We’re hopeful that eventually development will turn, and there may be an opportunity to partner with the developer," Crouse said in 2010. "… If we commit to spending $6.5 million, then that money is probably off the table as far as our discussions with the developers."

The new water treatment plant has proven to be an elusive goal for the CSD. The next phase of Rancho Murieta development -- Murieta Gardens, South subdivisions Lakeview and Riverview, and the Retreats and the Residences of Murieta Hills on the North -- has county conditions of approval that do not allow construction until the new water plant is online. 

CSD policy states the district's current commitments to provide treated water exhaust the capacity of existing facilities and new commitments will only be made if there is a completed water treatment facility with sufficient capacity. "Under no circumstances shall the District directly finance water treatment facilities to serve development that the District is not previously committed to serve," the policy adopted in 2004 reads.

As the 670 Group, developers have negotiated collectively with the CSD for a financing and services agreement that would guarantee water and sewer service for their developments and provide reimbursement for expenditures that benefitted the North.

In the present economic climate, the $1.5 million the CSD budgeted for the water treatment plant rehab became its fair share for the water treatment plant rebuild and expansion. When the developers said they needed CSD to step up its commitment, they settled on a 50/50 sharing of the cost, with a maximum of $3 million for the CSD portion, Crouse said in a recent interview. The cap is intended to get the developers to move forward sooner rather than later, Crouse said.      

Sullivan says he will not enter into the financing and services agreement and he has presented the CSD with a separate services and fees agreement. "This idea that the FSA is a cure-all solution to who's going to pay for what is absolute fantasy," Sullivan told the CSD board in March.

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RM.com's picture
Joined: 06/19/2007
Posts: 27727
Post rating: 1387

Emails: Should CSD get a community vote on this?

This afternoon we've been copied on a string of emails relating to this development issue:

To CSD board and general manager:

Although the exact dollar amount for the water treatment plant is unknown, therefore the phrase "advisory vote," this is a request to have one or more directors place the following on the agenda for a verbal vote of the board at the next, May, CSD meeting. Thank you.
Regards,
Candy Chand

Agenda Request:
To initiate an official election, consisting of a paper advisory vote , to decipher if the ratepayers support funding a water treatment plant.

 


 

Ms Chand::
 
Your request will be denied for several reasons
 
1. As I understand it, you are no longer a resident of RM hence, have no standing for such a request.
 
2. It is premature to initiate such advisory as specifics of what exactly is to be built and who (residents/developers etc.) is responsible and for how much of the cost has yet to be determined. In addition,  the method of financing has not been determined which greatly affects the monthly expense.for whomever is deemed responsible and that is the critical element in any informed vote.
 
3. When you were a resident, I know you were an outspoken advocate for ZERO improvement to the community as total open space was apparently your goal. Growth of any sort was attacked. The Water Plant serves existing residents as well as any future residents so changes need to be made to our 40 year old system  and some of the change is the responsibility of the current 2500+- homes. What we are looking at is an improvement to our processing/water quality and providing a modular expandable system should a developer wish to pay for it to gain the capacity they need. Battling development is reserved for the County Planning chambers and that is where your efforts should be aimed.
 
4. As stated in your request, should the residents vote NO, the water plant would be shut down and the community dries up as there would be no funding available. We are NOT building an additional water plant but looking into upgrading the existing WTP #1 built in 1975.
 
5. Any member of the BOD can, during the discussion phase of the meeting, request that staff investigate the costs/feasibility of a popular vote and if a Board majority believes this is the time to have such, it would happen at the appropriate time.
 
Jerry Pasek

 


 

To CSD board and general manager:

Mr Pasek. I am still a homeowner in Murieta. If needed, I will gladly ask another homeowner to make the same request.
 
In the meantime, are you absolutely certain you have the sole authority to make such a decision?

Candy

Bobbi Belton's picture
Joined: 07/30/2007
Posts: 275
Post rating: 442

Community vote?

We existing residents are responsible to rehab/upgrade our exiting WTP, which is now 38 years old. I raised the issue of having an advisory vote on whether current residents/ratepayers should be required to fund MORE than that. It would take more money than we have in reserves to upgrade to current technology and I believe folks understand that we would need some sort of financing. GM Ed Crouse made it clear yesterday that this is NOT something we need to do ASAP, but it is on the District's horizon.

What I want to know is how the community feels about "building big;" i.e., building in anticipation of development and then being reimbursed after the developers get here.

Yesterday's workshop came down the hill like a steamroller run amok--and this was after there was consensus among the parties that CSD, as a special district, could not use the "design-build" process Mr. Sullivan suggested.

I apologize to those who attended and were overwhelmed by too much data too quickly. In retrospect, Mr. Pasek shoud have cancelled the meeting.

There is no longer any reason for a push to "get this done."

Now I'd like to see what the ratepayers have to say.

Bobbi Belton

Candy Chand's picture
Joined: 08/15/2007
Posts: 304
Post rating: 811

Thank you.

Thank you Rancho Murieta.com for posting this thread of emails.  Thank you Ms. Belton . And thank you to the wonderful residents who've already informed me they will be sending in a similar request to CSD :):

#Ethics  #DoTheRightThing  #NoSpecialFavorsForDevelopers

Candy Chand

PatCan85@hotmail.com  955 2027

Brady Johnson's picture
Joined: 02/26/2011
Posts: 3
Post rating: 10

Upgrading our current system

Upgrading our current system to meet new technological advances is a reasonable cost associated with owning a home out here. Upgrading the CAPACITY of our system is outside the reasonable cost as a homeowner and should be funded by whatever company is seeking to use and gain money off of the additional development. This should be a joint venture between homeowners and developers. If this deal requires 100% payment by residents, even if "paid back" (with interest?) later, is not in our best interests. 

Jerry Pasek's picture
Joined: 12/13/2007
Posts: 135
Post rating: 191

Water Plant

Since some in this crowd want to kick the can (once again after 10 years of doing so) and have RM remain in "hospice care" for what appears to be personal desires (gross open space). Let me once again state what some of us on the CSD BOD are considering::

1. Add a technologically improved water processing capability to our existing 38 year old plant. The current plant even if rehabbed with sand filtration technology may not meet long term water quality standards and is very limited in capacity to current output. Any significant demand for water must result in a new/expanded plant costing the new residents tens of millions.

2. RM for a decade has been in a "hospice like" care relative to new residents or business capability as every attempt to expand has met stiff resistance from a vocal few.

3. New technology allows CSD to utilize the existing plant footprint to install filters (new technology) and additional capacity (should someone wish to pay for it) while providing enhanced water quality for existing residents/users at minimal cost..Financing is VERY attractive at this time thus limiting monthly costs to current residents.

4. We are aware that no resident wishes to "subsidize" those nasty "developers" even though they will gladly take advantage of any new amenity that additional residents might provide (new businesses/medicalfacilities etc.) or new parks/ball fields.

5. Residents need to understand that time doesn't stand still and their propertyy values depend upon what this community evolves to and if stagnant, they will go DOWN! Status quo is NOT in your financial interest. Think about it!

Jerry Pasek

Matt McGuire's picture
Joined: 07/29/2007
Posts: 63
Post rating: 198

Chain of events

Am I reading the chain of events correctly?  A homeowner sends an official agenda request to a quorum of CSD Directors.   A single Director replies and denies the request to even add the item to the agenda?  Did the Directors discuss this request behind close doors and Mr. Pasek presented the decision or did Mr. Pasek speak for the CSD board without authorization?

In regards to the water treatment plant I agree with Mr. Johnson.  I do not support funding the expansion of the plant for additional development.  Developer's should fund that cost.  Retrofitting the existing plant for current residents is a different matter. If the plant needs to be retrofitted in the future for existing residents then we should be funding that endeavor.   

I have sent my official agenda request to the CSD Directors.  I am not sure why Mr. Pasek does not even want it on the agenda for discussion.

Janis Eckard's picture
Joined: 11/18/2008
Posts: 7
Post rating: 42

Vote is critical!

Upgrading the existing water plant to improve water quality is one thing, forcing residents to pay developer expenses is another. Let the community vote!

Janis Eckard

Janet Nicholson's picture
Joined: 10/28/2007
Posts: 236
Post rating: 380

Pie in the Sky

It seems Mr. Pasek thinks we live in the Field of Dreams.  Build it and they will come.  Well, not with my money.  Developers pay first, not residents, who then hope that some developer will actually be viable enough to build and will actually pay us back. 

We could upgrade the WTP betting on the come, and if I were a developer, I'd say I don't need to pay for the WTP because it already exists.  First you have to have a viable developer. 

Clearly, Mr. Pasek has issues with Ms. Chand.  But to me it's not just about NOT building; it's about being careful and selective in the selection of developers to ensure the quality of what's being built and how the development fits with the rest of the community.  The houses on the North are not cookie-cutter replicas of each other.  To drop that kind of development on the North would ruin the North.  But it makes money for developers because mass production is a cheaper way to build.  How well did that work out for residents on the South whose houses fell apart?

This community is not going to become a ghost town just because we don't kowtow to every Tom, Dick and Harry developer who comes kissing the rings of certain CSD Board members.  But it just might if we aren't careful about what kind of development we allow.  And, all the hyperbole about how it will increase our home values is just that - a bunch of hot air.  And our home values aren't going to tank if we don't build the Field of Dreams WTP.

Upgrading to current technology is a reasonable expectation for which homeowners should contribute.  To expect anything more than that to be borne by the ratepayers/residents is totally unreasonable.

Myrna Solomon's picture
Joined: 07/31/2007
Posts: 427
Post rating: 745

Jerry...your comments were out of line!

Jerry, you might be the President of the RMCSD, but you do not speak for all of the directors....do you? I sat through some of the meeting on Friday, and clearly from the beginning of it, you were defensive. I noticed that another director noticed that as well.

Your comments to Candy that she wanted zero growth in this community was just plain wrong, and bringing this up now is out of line in my opinion. I also support a vote on this as well. If our water plant needs to be fixed or improved, lets do it, but this community shouldn't pay one penny for John Sullivan's hotel or any future development until those developers pay up front for those improvements. That is the way it has always been, and should continue to be in the future. 

Myrna Solomon

T. Hanson's picture
Joined: 08/07/2007
Posts: 318
Post rating: 474

CSD President Pasak and developers

Mr. Pasek, to remind, you are an elected official with all the responsibilities that lawfully go with that duty. Along with those duties goes the ethical responsibility to protect the individual and the institution against any improprieties in office. Clearly you have caused concern with your profession of building construction as well as RMCC affiliation in furthering developer interests here, with the Sullivan interests. Further, as an elected representative, you have slandered citizens of your constituency. In that elected capacity, you are not indemnfied against personal liability.   

Myrna Solomon's picture
Joined: 07/31/2007
Posts: 427
Post rating: 745

yes..this is a dictatorship

what the heck is going on?? No vote, no disgussion, and our water is just handed over without going through the long established rule; that developers pay first for expanding the water treatment plant. This is just plain wrong...Ed Crouse seems to have wimped out by pressure from the John Sullivan group...isn't he supposed to protect our resourses??

Myrna Solomon

Candy Chand's picture
Joined: 08/15/2007
Posts: 304
Post rating: 811

Amazing

Although I believe in the Miracle of Canaan--where Jesus turned water into wine-- I'm perplexed by a developer who can turn threats into water.

#ItAintAboutAHotel
Candy Chand
955 2027
PatCan85@hotmail.com

Janet Nicholson's picture
Joined: 10/28/2007
Posts: 236
Post rating: 380

Just as clarification

It may appear that Ed Crouse has wimped out here - and admittedly I'm not always in agreement with him, but he's been pretty solid on this subject - it is important to remember that Ed takes his marching orders from the Board of Directors.  He can make recommendations and may not agree with the Directors' decisions, but as an employee he must do what they tell him to and must represent the district as they direct him. 

I do not believe he agrees with the direction the Directors' are going; I am pretty sure he knows what a boondoggle this would be and believe he would tell the Sullivan group to go pound salt until they pony up all the money in advance.

We should be questioning the sensibility of our directors and the legality of what they propose.

There is a post I read yesterday on RM.online that said:

"'Under no circumstances shall the District directly finance water treatment facilities to serve development that the District is not previously committed to serve,', seems pretty clear to me."

Seems pretty clear to me, too.

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