In recent years, the 855 employees of the San Diego Water Department have faced scandals, alleged mismanagement, media scrutiny, and the rebuke of the city council. All this began in 1999 when news stories appeared locally about water thieves and industrial hogs who didn’t pay their bills — accusations that proved true and forced changes in how the 100-year-old agency operates.
Consequently, the department has new policies to deal with the press. Senior public-information officer Kurt Kidman said that “ten years ago we might [have been] a whole lot more accommodating than we are right now.” But today, he said, the department is “in a real difficult position. We’re definitely under the gun with Channel 10. When we breathe, they want to know how much it cost us.” In 1999 KGTV/Channel 10 reported on how “big water customers are allowed to run up huge bills that go unpaid.” In the “hidden meter” scandal, reporter Mark Matthews discovered one million dollars’ worth of unpaid bills, with “dozens of industrial water meters…recording only 10 percent of the water going through them.”
In 2000, the San Diego County Grand Jury convened to investigate. According to the Union-Tribune, its report cited a water department “riddled with problems ranging from workers who didn’t trust their supervisors to billing policies that left workers largely on their own in deciding how to handle unpaid bills.” The grand jury issued 29 findings, 2 of which concerned the department’s slow response to suspected hazardous materials at a city construction site. The department acknowledged that it knew “of a possible asbestos hazard for seven months before the site in question was examined for hazardous materials” and that it took another six months before determining the charge was “unfounded.” The water department maintains that no workers were ever exposed to asbestos.
In 2001, the council brought in Black & Veatch, which describes itself as the “world’s largest provider of engineering and consulting services to the water industry.” The council asked Black & Veatch to assess the water department’s performance, in part, because the department had asked for a rate hike. The council deferred that hike pending Black & Veatch’s report.
Jake Boomhouwer, the regional manager for the management consulting division of Black & Veatch, said the purpose of its four-month-long “management review study” was to assure council and community that the water department “wasn’t totally out of line.” During the summer of 2001, Boomhouwer and three teams of consultants evaluated the department’s “organizational performance” and its “planning and information systems.” The review’s strongest language labeled the “infrastructure of the water system” in “serious need of improvement.” Their report also concluded that the department’s customer-service sector was inefficient and had “considerable room for improvement.”
A shake-up of city bureaucracy occurred last October when Richard Mendes was hired for the newly created position of utilities general manager. Mendes was installed to oversee the San Diego Water Department and the Metropolitan Wastewater Department, which has had its own set of spills with contaminant results. (It should be noted that the water department only delivers water; the wastewater department is responsible for disposing of that water once it’s been used.)
Then, in spring 2002, two water-safety orders were issued that would require upgrades to the city’s delivery system and would, no doubt, culminate in higher rates for water customers. The first, under the federal Safe Drinking Water Act, mandated that communities adopt stricter water-treatment procedures. The second order was sent, as a reminder, by district engineer Brian Bernados of the California Department of Health Services. Bernados told the water department that if it didn’t comply with a 1997 order from Sacramento requiring the city to protect its consumers from two cancer-causing pollutants, the public health would be compromised. He issued a not-too-veiled threat. If the city failed to comply, “There are a number of enforcement tools prescribed by law, including public notification, citations, fines, mandatory water conservation, and service-connection moratoriums.” In effect, Bernados gave the city no alternative but to comply.
To upgrade pipes or personnel, the water department must play ball with the mayor and the city council. Water department spokesman Kidman told me that in the past 13 years, the department has asked the council for water-rate increases some 50 times. The council has bestowed 2 hikes. In neither instance, Kidman noted, has the council taken the water department’s pricing recommendations.
In March 2002, the water department asked the council for more money. The department proposed a 6 percent across-the-board rate hike to collect $508 million for capital improvements. Prior to public comment on the proposal, the city manager and the water department gave the council options from which to choose. These favored the high-end user, the low-end user, or neither. On April 22, utilities general manager Mendes called for the “neither” option, the one that would apply “equally to all customers,” no matter how much water the small or large customer used. This plan would add $1 the first year to the average customer’s bill, rising to $10 a year at the end of five years. City manager Michael Uberuaga also urged the council to adopt the equitable proposal, as his department had during the 1997 round of rate hikes. That year, however, councilmembers chose an inequitable increase, something they appeared poised to repeat.
None of the public opposition to the hike before the council targeted the rate hike itself. All speakers supported upgrading the municipal water system, which even the San Diego County Taxpayers Association called “warranted.” But voices rose against the city’s equitable plan, mostly from groups representing San Diego’s large water users. These included the San Diego Regional Chamber of Commerce, the San Diego Regional Economic Development Corporation, the San Diego Food and Beverage Association, and the San Diego County Apartment Association. These groups argued that residential customers should bear more of the rate-increase burden since, they claimed, it is less expensive to bring water to one large user than to many small users. Huge spikes in the big users’ bills would be painful, they contended, in a falling manufacturing and tourist economy enervated by fears of terrorism. Steve Zapoticzny of CP Kelco, a plant that makes biopolymer products on San Diego Bay, said that his company uses one million gallons of water a day. Reminding the council that there were 300 jobs at stake, Zapoticzny said CP Kelco could not “absorb” the new costs.