$1.4 Million in Water Funds Misspent?

What was supposed to be a run-of-the-mill approval of water rate
hikes turned into an unexpectedly unanimous vote for city staff to
investigate whether $1.4 million from a water fund was improperly
spent to finance downtown beautification.
Council votes unanimously to investigate claim that money went inappropriately into downtown improvement

n By chris bone

Staff Writer

Gilroy – What was supposed to be a run-of-the-mill approval of water rate hikes turned into an unexpectedly unanimous vote for city staff to investigate whether $1.4 million from a water fund was improperly spent to finance downtown beautification.

Shortly before the City Council voted 6-1 Monday night to approve a 5-percent jump in water rates – in response to an increase by the Santa Clara Valley Water District – Councilman and mayoral candidate Craig Gartman aired allegations against the city – based on anonymous sources. City Administrator Jay Baksa said the money was spent in accordance with council approval.

“There is nothing wrong with that you did,” Baksa told the council. “No water money was put into downtown improvements.”

Councilman Peter Arellano said the allegations could be “baseless.”

“Water funds are suppose to be used for the repair and maintenance of the water system, and the allegation is that this was done for (downtown) redesign, which doesn’t fall under the criteria of water funds,” Gartman said. “I want to see if the allegations are accurate to make sure the rate increase is justified.”

The entire exchange surprised councilmen, many of whom had blank faces when Baksa told them they had approved the spending.

In an e-mail sent to Baksa Monday afternoon before the council meeting, local resident Debbie Bradshaw wrote, “It has come to my attention that monies earmarked for specific usage regarding water in Gilroy were used for the downtown redevelopment project. I was told that the grant money for the DR (downtown redevelopment) ran short as it was decided to move water pipes (that were perfectly operable) to fit in the design, yet this was not in the master plan … If funds that are for water use purposes were indeed transferred to the downtown project, then there should be no increase to the citizens of Gilroy.”

Gartman’s source was a separate, anonymous tip, but its revelation caused Baksa to say he had received Bradshaw’s e-mail.

After Gartman told the council he planned to investigate the allegation himself and before the body directed staff to do so, Mayor Al Pinheiro told Gartman he should’ve brought the information to himself and Baksa in a more subtle manner.

“If you’re going to wait until [the Oct. 1 council meeting], then I would suggest you give us the allegation to review,” Baksa told Gartman. “Enough of this, ‘I’m going to investigate this by myself’ crap.”

As of Tuesday afternoon, Baksa said he hadn’t received a copy of Gartman’s source’s allegation, which the council had ordered Gartman to do, he said.

While all the councilmen expressed concern about the potential misuse of city funds, many said it’s entirely unrelated to the water hike, and Baksa said the accusation “is just wrong.”

Bradshaw and Gartman’s anonymous sources haven’t been the only finger-pointers, though.

Conservative activist Mark Zappa made similar allegations Monday afternoon, as well.

“The city jumped the gun on this one. Why? Because they have this pet (downtown revitalization) project they want to get done, and they used the pipes as a guise for the rest of the job,” Zappa said. “Maybe they would not have raised (water rates) 5 percent if they hadn’t spent $1.45 million on downtown streets.”

Regardless of the allegation, if a majority of the city’s 10,962 property owners had written protest letters to City Clerk Shawna Freels, then the rate hike would have failed, according to the California Supreme Court.

The high court decided in July that land owners have the right to protest any increases in “property-related fees” that include water, sewer and garbage rates. These rates were previously exempt from public outcry, according to Jolie Houston, Gilroy’s assistant attorney.

But as of Monday evening, City Clerk Shawna Freels had received only 190 letters from individuals and couples, some of whom own more than one of the 12,832 properties in Gilroy.

Darin Taylor, a senior project manager with the Santa Clara Valley Water District, said increased costs for pumping water from the ground led to the local hikes that will pay for the management of the groundwater basins. Groundwater charges in South County, he said, increased from $230 to $255 per acre-foot as of July 1.

An acre-foot of water equals an area roughly the size of a football field filled to a depth of one foot. It is enough water to supply two families of five for about a year.

Baksa said this year’s rate hike is just the city’s way of avoiding debt by relaying the water district’s July 1 increase to local consumers.

The decision means the average annual bill for a South County family of five will go from $115 to about $127, according to Santa Clara Valley Water District figures.

Nobody from the public showed up at the meeting to address the council.

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