Mesa Water District responds to report, critics

Amid recent media reports and public scrutiny over developing changes at the Mesa Water District, its board president elaborated on the state of the district in a recent public speech.

President Jim Fisler told attendees of a Costa Mesa Chamber of Commerce breakfast April 18 that the district is financially strong, preparing itself for the future and, with the help of a bolstered communications department, committed to transparency and outreach.

Fisler’s nearly 40-minute speech at the Costa Mesa Country Club — which was planned before the April 14 publication of an Orange County Register investigation about the district’s marketing expenditures — addressed the Register’s story in part, but he also commented on it in a follow-up interview with the Daily Pilot.

Among the changes highlighted in the Register’s report are significantly increased spending on branding and communications compared with other Orange County water districts, as well as a 25% rate increase implemented over five years while simultaneously boosting budget reserves in an effort to maintain the highest AAA bond rating.

The thousands spent on communications, including instituting a new logo and shortened name from Mesa Consolidated Water District to Mesa Water District, was one focal point of the Register’s Watchdog report — and the subsequent target of some community criticism.

Also at the heart of the Register’s story is Mesa Water’s multiyear, “$500,000 branding” campaign, a rounded amount that combines the nearly $280,000 the district has spent for branding since 2008 and the forecasted $208,400 in the fiscal year 2014 budget for continuing that purpose.

The latter amount, however, has been cut from the 2014 final adopted budget, said Stacy Taylor, the district’s communications manager.

“We’re done with branding,” she said. “Our directors have made it very clear that there will be no further funding for the Mesa Water branding account.”

Still, why spend hundreds of thousands boosting name recognition for a government entity whose ratepayers don’t have any other choice anyway?

“Right now, people take water for granted,” Fisler told the Pilot. “They turn on their tap, and there’s water, but we have to, I think, do little better job of telling them that this is a water-delivery system.

“It’s not just somewhere where water comes out, that there are pipes that are being replaced, a half a billion dollars in infrastructure that’s aging. All water districts face it.”

Other monopolized government agencies — such as Southern California Edison and Southern California Gas Co. — have communications departments and spend money on PR campaigns, added Paul Shoenberger, Mesa Water’s general manager.

It was his decision in August 2010, partially spurred by a 2008 survey that indicated ratepayers didn’t know who provides their water, for Mesa Water to establish a communications department.

“You’ve heard of ‘Flex your power,’ ” Shoenberger said. “It’s important for three reasons: health and safety; water-use efficiency or conservation; and connecting the ratepayers for the value that they’re getting for their rates.”

That department, newly renamed the Public & Government Affairs Department, is comprised of two full-time employees and two temporary, part-time interns, with $1.3 million budgeted this fiscal year. The amount makes it Mesa Water’s smallest department, taking up about 3% of the district’s nearly $37-million annual budget.

Fisler contends, however, that he isn’t hearing from constituents about Mesa Water’s communications spending. Such concerns, rather, are coming from “a small circle,” he contends, “half of which aren’t in our district … this storm is going to run out of rain.”

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‘Water boarding’

One such vocal critic is John Earl. The Huntington Beach resident is the founder and main writer for Surf City Voice, a blog whose “water boarding” commentary and stories include some on Mesa Water. Earl said while he may not be a Mesa Water ratepayer, he feels concerned about what’s happening in all water districts.

“All these water districts are intertwined here in Southern California and also, to a certain extent, throughout the state,” he said.

After all, he contended, “the water that Mesa gets doesn’t belong to just Mesa … that’s a totally absurd issue, really.”

Earl was not allowed entry to the invite-only unveiling celebration in March for the $20-million Mesa Water Reliability Facility, which boasts more daily water production, energy efficiency and achieving the district’s long-standing dream of 100% locally sourced water. Instead, he stood outside of the facility’s Gisler Avenue entrance, on the public street, videotaping attendees as they walked in.

He also wrote critically of the event on his website, calling it a “misuse” of public funds.

Mesa Water officials said they offered Earl a private tour of the facility at another time, but that he declined.

“This event was open to who? It was open to other water buffaloes … and consultants. And that’s a huge concern,” Earl said.

“Anyone can go for a private tour,” he added, “but that’s not the same.”

One of the district’s directors was also critical of the event, which included a Native American water-blessing ceremony, music and catering. He showed it with his vote.

In September, Director Jim Atkinson voted against the $49,650 contract for the event planner, according to the meeting minutes.

“It seems a little over the top,” he later told the Register.

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Rate increase, transparency efforts

Concerning the nearly 25% rate increase that began in January 2010 and ends in June 2014, Fisler said that while “as an elected official, you don’t want to raise rates,” the increase went through a thorough analysis for legal and ethical concerns, as well as a determination of appropriateness to serve “the public good.”

The increase was instituted as an effort to address rising costs.

Mesa Water officials say they’re also committed to transparency. Their plan has included a website with posted employee compensation figures, district finances and board meeting packets. They also employ staff to handle public records requests.

The board meetings, however, are not broadcast online or on local television — a point of contention for some critics.

Doing so is not an imminent priority, though the district is looking into it, Fisler said.

Fisler said he has researched a videotaping option before, but felt at the time that it couldn’t be done cheaply enough for a good product.

Besides, Fisler said, he would rather see people at the board meetings.

“A televised thing is one way — out there,” he said. “We don’t get any feedback from that. I don’t think we grow as fast from that.”

Earl, however, said the district should broadcast its meetings as larger agencies do, like the Metropolitan Water District of Southern California.

“They don’t give a rat’s you know what of bringing the public to those meetings,” he said.

Taylor, the district’s communications manager, said the board maintains an extensive public outreach program through community events and various education workshops, like its water-wise landscaping class and Water Issues Study Group. The district sponsors events too, such as the city’s first Mayor’s Celebration dinner at the Segerstrom Center for the Arts.

Mesa Water also has a partnership with KOCI 101.5 FM, a small Costa Mesa-based radio station.

Those public outings are “actually even more interactive than a board meeting,” Fisler said, “where you have three to five minutes for a comment.”

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A better AAA rating

The district plans to bolster its reserve funding from $22.9 million to about $39.7 million by the end of fiscal year 2017. If achieved, Taylor said, it would strengthen Mesa Water’s AAA bond rating and allow the district to fully maintain its operations with “cash on hand” for 1.75 years.

Mesa Water’s decision comes in contrast to an Orange County Grand Jury report issued in April 2011 that, among its criticisms of water districts in general, expressed concern about them amassing “unrestricted” reserves based on undocumented reasons and uses. Mesa Water’s response that July disagreed with the grand jury’s report on several fronts, including the reserve building.

“Maintaining a AAA rating involves specific criteria for ‘days cash on hand’ and reserve funding levels,” then-board President Fred Bockmiller wrote in the district’s response. “While Mesa Water’s reserves are legally classified as ‘unrestricted,’ the board has categorized them as ‘designated funds’ for the sole purpose of economically and effectively maintaining, operating and repairing the district’s already efficient water system.”

Earlier this month, the board also voted to remove “maintain competitive rates” from its seven-point strategic plan, opting instead for a goal of being “financial responsible and transparent.” The Voice of OC’s report on the decision said there was no explanation for the change, “and the board’s discussion was no more forthcoming.”

Comparing water rates among districts isn’t an straight comparison, though, Fisler said.

Other Orange County water districts are subsidized by as much as 50% through property taxes and the like, which may make their rates lower in comparison, he explained.

Mesa Water receives no such tax subsidies. Ninety-five percent of Mesa Water’s revenue comes from its water rates, Fisler said, and the district has the lowest expenditures per capita of any Orange County water district.

“Rates are not a benchmark that we can do and the public can see to judge apples to apples,” he said, adding that “we want to be a perpetual agency and we want to have the lowest costs. And I think the district’s customers can be happy that we’re the lowest expenditures and we have the AAA bond rating.”