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FPUD board requests LAFCO expedite merger with Rainbow; wants RMWD dissolved

Tuesday, March 11th, 2014
Issue 11, Volume 18.
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**This information has been submitted to the Village News by Fallbrook Public Utility District for publication**

FALLBROOK – After a year of working with Rainbow Municipal Water District toward a cost-saving merger, which fell apart last week when Rainbow board members asked to withdraw, the Fallbrook Public Utility District’s board of directors voted yesterday to request that LAFCO move forward and promptly merge the two districts anyway.

FPUD will be delivering the formal request to LAFCO today.

LAFCO, the Local Agency Formation Commission, is the government agency that reviews and coordinates logical and timely changes in local governmental boundaries and mergers.

The reason for FPUD’s request for a speedy review and merge is two-fold: Rainbow’s withdrawal will become effective April 5, and the monetary savings were there. In just 11 months, FPUD and Rainbow have saved more than $1 million by working together, with $800,000 of that savings accruing to Rainbow and $200,000 to FPUD.

The two agencies had entered into an agreement – a "joint powers authority" (JPA) – that allowed them to share each other’s employees, resources and other assets. Similar to an engagement before a wedding, both districts had agreed to explore the merits of the sharing agreement for one year and then consider whether merging would be beneficial.

But even though the savings exceeded both agencies’ expectations, the Rainbow board voted last week to withdraw from the JPA because they could not agree with FPUD on how to govern the new agency and elect new board members.

FPUD elects its five directors "at large," meaning anyone in the entire district can run, and vote for, each seat.

Rainbow, on the other hand, elects its five directors by division, and only voters living in that division can run, and vote for, a seat on the board.

Rainbow held firm and was not willing to yield from its desire to have the new district’s board elected by divisions. The new district’s board would have seven seats and the FPUD board initially proposed that the board members of the merged agency all be elected at large, then FPUD suggested a compromise in which four directors would be elected by division and three would be elected at large.

"The FPUD board thought they were meeting the Rainbow board halfway, but Rainbow held firm and the two agencies were basically at an impasse," said Brian Brady who is the general manager of FPUD and had also been the general manager of Rainbow since April 2013. "This is a loss for both districts. The savings we achieved will go away as Rainbow and FPUD separate."

The option of having all board members elected by division is not permitted under the Public Utility District Act. Since the two districts had agreed that the newly merged district would be a Public Utility District, they would then operate under that act.

Now Rainbow will have to hire its own general manager with the dissolution of the JPA. In addition, the engineering and customer service departments, which had been working together for both districts out of the FPUD office, will also have to be separated.

FPUD is requesting the two agencies be reorganized into one – that LAFCO review and dissolve the Rainbow Municipal Water District and annex its territory into the Fallbrook Public Utility District’s. If approved, the new district would then be an expanded Fallbrook Public Utility District.

Upon receipt of FPUD’s request, LAFCO will review the extensive documentation provided by both districts of the year-long sharing agreement, savings and potential benefits. Then based on the merits of the information provided, LAFCO will decide whether to merge the two districts.

"We owe it to both Fallbrook and Rainbow ratepayers to pursue this integration since it is ultimately a savings – a big one – to all customers," Brady said.

The JPA agreement allowed them to consolidate jobs, not by layoffs, but by not filling job openings as they developed when employees quit or retired. Other benefits included sharing equipment and reducing vehicle fleet and heavy /specialty equipment, improving emergency response, reduction in property and liability insurance and a host of other benefits. A merger would produce even more savings.



Comment Profile ImageFPUD and RMWD customer
Comment #1 | Tuesday, Mar 11, 2014 at 12:23 pm
Let's summarize. FPUD and RMWD are engaged. RMWD changes her mind and gives proper notice. FPUD pulls out a gun and threatens to kill RMWD if she doesn't agree to be taken advantage of by FPUD. Why would LAFCO agree to this? How come the ratepayers don't have a say? We need to start a petition to clean both houses here.
Comment Profile ImageRtotheM
Comment #2 | Tuesday, Mar 11, 2014 at 12:47 pm
Extremely odd behavior from FPUD. Hostile take over; yes. Tear apart the community to save so little. I don't think that is good governance.

The combined budgets of both agencies is above $60M. The bogus cost savings cooked up by the FPUD GM is at best $2M.

Why is FPUD willing to destroy this community to save 3% at best. AT BEST! This isn't even a blip in MWDs proposed rate increases that we have no choice but to accept.

They are acting like a spoiled brat who just had their shiny new toy taken away.
Comment Profile ImageLee
Comment #3 | Tuesday, Mar 11, 2014 at 2:15 pm

If we had a direct say, things would be different. Oh well.
Comment Profile ImageRtotheM
Comment #4 | Tuesday, Mar 11, 2014 at 4:10 pm
1090 violation? You bet'cha!
Comment Profile ImageDR DR
Comment #5 | Tuesday, Mar 11, 2014 at 5:02 pm
Got my notice today FPUD to shutdown March 15-27 for repairs and maintenance. No watering - I can't wait to see my water bill, should be about $20.00 less - because only a small portion is the actual water...maybe we can go over to Rainbow and borrow some.
Comment Profile ImageRMWD ratepayer
Comment #6 | Tuesday, Mar 11, 2014 at 5:37 pm
Why would anyone of sound mind have thought it was a good idea to have one chief executive in charge of two water districts and the Joint Powers Authority they both work with? Especially when the person is under contract to one district. And when the districts are as diverse as these two. Legal counsel said at the start of the JPA that there was no legal conflict of interest. . That was probably true then. But wouldn't working on one district's plans to dissolve the other constitute conflict? I'm not a lawyer, but it seems to me that is worth looking into.
Comment Profile ImageThe watchdog
Comment #7 | Tuesday, Mar 11, 2014 at 9:13 pm
I believe the Fallbrook pud should accept what has been processed by Rainbow mwd. Rainbow mwd followed protocol & filed accordingly and agreed by the board to withdraw from the Jpa saving the community from false information by fpud and there GM brian brady .Through this brilliant action by the Rainbow mwd water board the community should not believe into the Lafco letter from fpud. Again they are bully's of the community and do not listen to the community only their egos. Thank you rainbow mwd for standing up for the ratepayers and listening to the community.
Comment Profile ImagesickOfHighWaterBills
Comment #8 | Tuesday, Mar 11, 2014 at 11:33 pm
Hey, if being governed by some group, other than Rainbow policing itself, will cut prices, then I don't give a rat's butt how it gets done. We have lived in North Carolina, Hawaii, as well as other cities in SoCal, and the way Rainbow runs their business is as crooked as the day is long!! I have never in my life encountered such ridiculous water bills until we got here. How does Rainbow WD get away with charging customers $100 BEFORE they even use one drop of water?

We have been allotted 46 units of water, yet only use 13 per month. Then last month, the meter-reader comes out, opens each person's meter lid... doesn't even use anything to gauge usage. Closes it up. Week later we get a water bill that is $30 higher than last month. AND, our allotment went from 46 to 19 units!!
Comment Profile Imagereally angry
Comment #9 | Wednesday, Mar 12, 2014 at 2:20 am
Who the H@%&!! does the leadership of the Fallbrook Utilities District think they are anyway?!! Seriously, the nerve of these people is just beyond!!
Comment Profile ImageElla
Comment #10 | Wednesday, Mar 12, 2014 at 8:36 am
The U T San Diego North County coverage on this merger states that should LAFCO board of directors decide if dissolving rainbow would be in the best interests of both districts&customers financial&logistically, those who live in rainbow's jurisdiction could protest. If more than 50 percent file official protests the reorganization would be stopped. If between 25 percent to 50 percent of voters in the jurisdiction objected, then the issue could appear on a future ballot. The rate payers may still get their chance to decide.
Comment Profile ImageMe
Comment #11 | Wednesday, Mar 12, 2014 at 12:27 pm
I'm with "sick of HighWEater Bills."
Comment Profile ImageDoug
Comment #12 | Wednesday, Mar 12, 2014 at 1:25 pm
Now I know what it must feel like to be Ukrainian right now. FPUD just marches in and takes over......
Comment Profile ImageLee
Comment #13 | Wednesday, Mar 12, 2014 at 3:51 pm
@ #8 sickOfHighWaterBills

Comment Continued : The comment above was written from the same location.
Post Continued
Comment Profile ImageLee
Comment #14 | Wednesday, Mar 12, 2014 at 4:00 pm
When will WE, THE PEOPLE FINALLY stand up to this injustice peacefully, nonviolently and legally? When? How much longer are we going to take this injustice? Why do we anyway? Why are we SO afraid of OUR government, elected officials, et al., when this is a democracy, OUR democracy?

Comment Profile ImagePink
Comment #15 | Wednesday, Mar 12, 2014 at 4:08 pm
....only without the guns and tanks
Comment Profile ImageLee
Comment #16 | Wednesday, Mar 12, 2014 at 6:14 pm
@ #8 sickOfHighWaterBills

BTW, would you like to know what Rainbow's former GM earned? Enjoy.
Comment Profile ImageThe watchdog
Comment #17 | Wednesday, Mar 12, 2014 at 9:35 pm
Fpud needs to grow up and quit whining and accept they failed to join rmwd. Let each water district separate and end this nonsense and move on! Lafco should not get involved and refund the $25,000 back to fpud back to the ratepayers how can they do this without ratepayers approval... Send staff back to there respective districts. The end of JPA..
Comment Profile ImageRMWD ratepayer
Comment #18 | Wednesday, Mar 12, 2014 at 9:43 pm
#8 Water prices WILL NOT GO DOWN no matter what happens. FPUD and RMWD buy their water from the same suppliers. The suppliers charge what they want and both districts have to pay the price if they want the water. There is no supplier competition out there for our business.

That you don't understand the charges doesn't make Rainbow crooked. Some of the charges on your bill pay for pipes in the ground, tanks and reservoirs to hold the water so it is available to you, disinfection to make sure you don't get sick, billing costs, meter readers, covering the reservoirs as we were required to do (or face millions of $ in fines), maintaining and repairing facilities including fire hydrants, pump stations, lift stations, pressure stations. During the CALTRANS work on SR76 pipes have to be moved which costs Rainbow money. That's just a sample. Do you think that the water gets to your house magically?
Comment Profile ImageRtotheM
Comment #19 | Wednesday, Mar 12, 2014 at 9:58 pm
Re: comment #8... Nothing being proposed, including the hostile takeover, will cut your water bill. Even the architect of this fiasco, Brian Brady, has admitted publicly and repeatedly that FPUD has no intentions of lowering anyone's water bill. Rates will continue to rise.
Comment Profile ImageRMWD ratepayer
Comment #20 | Thursday, Mar 13, 2014 at 9:25 am

You give way too much credit to the public statements about savings. $2million is the stuff of pipe dreams.

A Rainbow paper, Summary of Shared Cost Relating to Consolidation Activities was handed out at the February board meeting. It shows that in the first 7 months of this fiscal year JPA costs for Rainbow have been $103,107, we have paid FPUD $14,168 for leasing FPUD employees' time, and that "savings" of $455,505 were based on the costs of 6 employees now departed from the district, one as long as 2 1/2 years ago! Does anyone consider the money you paid for a fender bender last year to be savings this year just because you don't have to pay it again?

Three of the positions were in senior management: GM, District Engineer/AGM, and Maintenance/Operations Manager.

Pouring salt in the wound is that the services of Mr. Brady cost almost 60% of what we were paying his predecessor...and we get maybe (generously) 10% of what Dave Seymour provided. Now it seems we are paying Mr. Brady to make us disappear and give FPUD our assets. Could that have been his job all along?
Comment Profile ImageOMEN
Comment #21 | Thursday, Mar 13, 2014 at 12:03 pm
Comment Profile Imagenectarine
Comment #22 | Thursday, Mar 13, 2014 at 6:45 pm
@15 Why use guns and tanks? FPUD has LAFCO on their side to do the dirty work.
Comment Profile Imageoldtimer
Comment #23 | Thursday, Mar 13, 2014 at 6:59 pm
Special JPA board meeting today. WHY? Rainbow said they wanted to withdraw and gave the required notice. FPUD said, try it and we'll make you disappear and take your assets. Their Monday filing acknowledged that Rainbow wanted out, but asked LAFCO to merge the two anyway. The word anyway is FPUD'S! What could they possibly have to talk about?

A lot, it seems. Milt Davies gave a homily about how much consolidation would do for the ratepayers, how many millions would be saved and on and on. How benevolent can you get?

Just a little while later, after FPUD's directors protested that they weren't trying to make Rainbow go away or take its assets, (never mind that the filing to LAFCO on Monday says just that), Mr. Brady was asked a direct question. If FPUD needed money to do the repair work on their waste water treatment plant, could FPUD sell Rainbow's district office area (valued at about $30 million) and use the money for the repairs? We could, was his answer.

Do Rainbow ratepayers need any more evidence of what was intended all along?
Comment Profile ImageRainbowtoo
Comment #24 | Thursday, Mar 13, 2014 at 8:11 pm
We need a solid manager to look out for Rainbow first. Consolidation needs to be on equal footing. LAFCO will sell us out to get points with the State LAFCO for finally coordinating something between Special Districts. If the whole concept were valid, a go slow approach makes sense and we needed a manager that can stand up to Brady. We have a whole lot more to offer long term than Fallbrook PUD can offer. In the long run, we should share some resources not lose our district.
Comment Profile Imagegeez
Comment #25 | Thursday, Mar 13, 2014 at 8:33 pm
Embarrassing, shameful and unethical. Stay classy FPUD.
Comment Profile Imageoldtimer
Comment #26 | Friday, Mar 14, 2014 at 5:19 pm
You are right, Rainbowtoo, a good, solid general manager working for Rainbow's ratepayers is what helped the district turn around from what it was almost a decade ago. We need one now, but they can't hire one because JPA is still in effect and Brady is technically still general manager.

I hope people are paying attention. It might come down to a petition signed by 25% of ratepayers objecting to being obliterated or a 50% vote on the same issue. Please talk with your neighbors about what is going on and decide whether you want an independent Rainbow or being FPUD's captives.
Comment Profile ImageDenominator
Comment #27 | Monday, Mar 17, 2014 at 8:29 pm
To all those who complain about water rates but oppose this merger: it is all about the denominator! If you divide the annual fixed charges that it takes to get the water to your house by a small number of meters (ie Rainbow) the fixed charges are huge. Merge with Fallbrook and the denominator goes up so the fixed charge per meter goes down. Wake up and find out how water rates are set, people!
Comment Profile ImageRMWD ratepayer
Comment #28 | Tuesday, Mar 18, 2014 at 9:53 am

That would be true if all factors were equal. But these two districts are not alike in the distribution of their customers. It works with densely packed houses, but not where there are substantial distances, and hills between customers. Installing and servicing 500 meters close together is less costly for each. Installing-and servicing- 500 meters far apart from each other does not produce the same economy of scale.
Comment Profile ImageLarry RMWD
Comment #29 | Wednesday, Jun 18, 2014 at 6:14 pm
What makes FPUD so entitled that they can override the decision of RMWD? Thye are essentially equal. Something like this should not be decided by the LAFCO board as they will be swayed by attorney talk and payoffs by those who are grabbing for power. It should be decided by those who ultimately will pay more if done incorrectly- The ratepayers!

I had not heard of this until today and am appalled at the power grab of FPUD. At the same time, RMWD be careful to conduct business with the ratepayer in mind, not special interests.

I hate politics!

Article Comments are contributed by our readers, and do not necessarily reflect the views of The Fallbrook Village News staff. The name listed as the author for comments cannot be verified; Comment authors are not guaranteed to be who they claim they are.


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