Response to the 2019 Grand Jury Report - the Florin Resource Conservation District – a Case of Mistaken Identity?*

The FRCD Board decided to alter its basic mission, without benefit of an outside review or other investigation, relying solely on a staff report. The three options did not consider the legal differences between Resource Conservation Districts and Water Districts. The FRCD disagrees wholly with this Finding. The statement that the Board's decision to alter the mission of the FRCD was based solely on the April 2018 staff report is factually incorrect. The District retained outside consultants and conducted numerous meetings on this matter long before the vote was taken on April 18, 2018. These prior communications and considerations were also reflected in the April 18, 2018 staff report entitled "Florin Resource Conservation District Financial Challenges and Potential Remedies" (the "Staff Report"). Prior to the April 18, 2018 Board decision, the District retained Kampa Community Solutions, LLC to conduct a Needs Assessment in 2016 and commissioned the law firms of Best Best & Krieger and Meyers Nave to research needs and issues relating to the long-term viability of the FRCD and other associated matters. The monies paid to Kampa and Meyers Nave to conduct this work exceeded $70,000. The statement that the three options did not consider the legal differences between Resource Conservation Districts and Water Districts is also not correct. Significant legal work was conducted to analyze the FRCD's legal authority to operate and maintain a water system. This analysis included a review of Division 9 of the Public Resources Code and the validation action taken by the FRCD after it acquired the Elk Grove Water Works in 1999. Significant legal work was also conducted to analyze how a water district could be created (under Option 3 in the Staff Report) and the legal and financial risks associated with Option 3.

Because Board Members are elected at large from the entire area of the FRCD and not from within the smaller boundary of the EGWD, equitable representation of rate-payers may be denied. The FRCD agrees with this Finding.

The FRCD complied with all legal requirements with its decision to adopt a rate increase at the July 18, 2018 Board meeting. The FRCD agrees with this Finding.

The FRCD erred in setting the protest deadline at July 2, 2018, as Prop 218 mandates that written protests be accepted until and at the public rate hearing (scheduled to be July 18, 2018). The FRCD disagrees wholly with this Finding. The FRCD complied with Article XIII D, Section 6 of Prop 218, which requires the agency to provide notice at least 45 days before holding a hearing at which the proposed fee or charge will be considered. No protests were actually rejected in this case. In fact, one person actually read one protest into the record during public comment at the hearing. Out of an abundance of caution, however, the FRCD will make it explicit in the future that protests will be accepted up to and including the date of the rate hearing.

FRCD is actively working to reduce its debt, debt service, and bond retirement payments, while maintaining an adequate debt service coverage ratio. The FRCD agrees with this Finding.

The FRCD did not follow its own policy when extending the current Legal Counsel's contract, which led to the creation of an unfair hiring practice. The FRCD disagrees partially with this Finding. At issue is the assertion that there was a conflict between the updated policy on Professional and Consulting Services Agreements, adopted under Resolution 11.14.18.03, and the action taken by the Board to amend the agreement between the FRCD and the Nosky Legal Group on December 19, 2018. The conflict is partially attributable to the updated policy's inclusion of Section 37103 of the California Government Code. This code section, by its terms, is permissive and applies to general law cities rather than Resource Conservation Districts. Accordingly, the incorporation of that section was not intended to mandate a certain procedure, but was instead included only as a point of reference. No unfair hiring practice existed because, in fact, the District conducted a thorough Request for Proposals (RFP) process earlier in 2018 that resulted in the retention of another law firm. When that firm's agreement with FRCD was unexpectedly terminated, FRCD needed replacement counsel immediately. Accordingly, the present counsel was retained and served in an interim capacity for six months. At that point, issuing an RFP for legal counsel was unwarranted because the General Manager and Board Members were already well familiar with its legal counsel and his interim service.

Because the FRCD policy manual is silent on interim contracts, the potential exists for extending interim contracts in lieu of soliciting proposals for professional services. The FRCD agrees with this Finding.

FRCD is unable to monitor leaks and pressure losses in a timely manner. This is a public safety issue and a potential liability for FRCD. The FRCD disagrees partially with this Finding. This Finding stems from an unusual and rare event that occurred on December 25 (Christmas Day), 2018 involving a water main break that discharged into a creek for approximately 12 hours without being noticed. The District agrees that leaks and pressure losses could be construed to be a public safety issue. The Finding, however, implies that we have no ability to monitor leaks and pressure losses in a timely manner, which is not entirely correct. The FRCD presently operates a Supervisory Control and Data Acquisition System (SCADA), which, during normal business hours, would likely alert the operators to a pressure drop that would indicate a water main break. The SCADA system is also set up to alert operators during non-business hours when certain alarms are triggered. The event that occurred on December 25, 2018 did not trigger any alarm and thus the District's on-call operator was not dispatched. Because the leak went directly into a creek, it was also not visible to the public as would occur in a typical water line leak.

After voting to award health benefits to Board members, no further action was taken, no policies were created, and no health insurance benefits were awarded to Board members. The Board could institute health benefits for themselves with no further public discussion. The FRCD agrees with this Finding.

The practice of conducting closed sessions after open sessions at the Board meeting may lead to an uninformed public and forestalls knowledge or comments. This practice does not encourage public engagement. The FRCD disagrees wholly with this Finding. The FRCD disagrees that the current order of sessions inhibits the public's access to information about reportable actions. The public has the opportunity to remain at the meeting to hear any reportable action from a closed session. If a customer desires to find out what was reported out of closed session, and that customer does not wish to remain outside of the closed session until any report out is made, he or she may call the District to obtain that information. As a practical matter, the FRCD has rarely taken reportable actions in closed session. Since 2015, the FRCD has conducted 39 closed sessions, only four of which had a reportable action. In the past four years, not one request has been received for information about reportable actions in closed session. It should be noted that the present session order is consistent with how most water agencies in the Sacramento region conduct their business. Of the 14 water agencies surveyed, all but two hold closed sessions after the open sessions during regular Board meetings.

Candidate pools for Board Member seats are so low that elections are sometimes not required. As a consequence, Board members are appointed by the County Board of Supervisors, denying a voice to the public in selection of those who represent them. The FRCD disagrees partially with this Finding. The District agrees with the first sentence, but disagrees with the second sentence in this Finding. The Board of Supervisors, in a representative form of government, has a duty to faithfully act in a manner to represent their constituents within the FRCD boundary. This includes the appointment of FRCD Board Members if required. When that is required, the public has an opportunity to express their opinions about a potential candidate when the item is considered by the Board of Supervisors. It is noteworthy that this Finding fails to acknowledge the uniqueness of the FRCD as it is one of the very few RCD's that has elections. According to the California Association of Resource Conservation Districts, out of the 98 RCD's in California, only three (of which the FRCD is one) actually conduct elections. Thus, the vast majority of all RCD's always have their Board Members appointed by their respective County Board of Supervisors.

The lack of adequate Board member awareness of regulations, operations, and institutional history can lead to poor decisions on the part of the Board and leads to an over-reliance on the General Manager and staff. The FRCD disagrees wholly with this Finding. Each new Board Member receives an orientation binder as part of the onboarding process. This binder is very thorough. Moreover, for about a decade, the Board has required Monthly Operations Reports, which have been provided. These reports are reviewed as a standing item (not on the Consent Agenda) and almost every operational aspect of these reports is discussed at Board meetings. Each Board Member also brings forth a unique skill set from which they provide broad and excellent oversight of what is occurring in the District. As a body, FRCD Board members conscientiously fulfill their duties in reviewing Board packets, materials and items taken to the Board for consideration. To imply that the Board is simply deferring operational control to the General Manager is inaccurate.

There is a pronounced lack of public oversight of the FRCD, as shown by poorly attended meetings and few Board candidates. The FRCD agrees with this Finding.