Tomales services district to bid jobs

03/19/2014

After 15 years under a single administrator, the Tomales Village Community Services District is on the cusp of implementing a competitive bidding process that could put the current holder, Karl Drexel, out of a job. 

Since the district was created in 1999, Mr. Drexel has guided the management of the town’s wastewater system and park. Now the district’s financial advisory committee wants to split his job into two roles—one in administration and one in fiscal management—and see if those jobs can be done for less than Mr. Drexel’s $80,000 annual
contract. 

The district also hopes to solicit bids for the operation of the treatment plant, currently managed by a Napa-based company, Phillips and Associates. Savings could partially offset future rate increases necessary to fund looming capital improvements.

The financial advisory committee, formed in 2012 and comprised of two board members and four Tomales residents, has been busy gathering input from ratepayers for the 2014-2015 annual budget and creating new policies to guide budgeting, competitive bidding and capital projects.

Last week the board of directors unanimously approved the policy for a competitive bidding process, which would require a minimum of three bids for each contract. (The board must hold a separate vote to send the positions out to bid, and at least one board member is unsure whether she will support that move.) The finance committee is now writing job descriptions, and hopes to start the next fiscal year under new contracts.

“We don’t know if we’re paying too much,” said Deborah Parrish, who was elected to the board last November and now serves both as board vice president and head of the finance committee. But, Ms. Parrish said, the community has expressed growing concern with the price of services. 

“Personally I am troubled that we continue to fund a full-time administrator when that may not have been something we actually needed,” she said. “Perhaps we could have had a part-time administrator and taken that money and put more into reserves along the way. That was the thing that troubled me the most, and one of the reasons I decided to join the board.”

There is no way to know whether the current cost of services is fair without a competitive process, she said. 

But Mr. Drexel only partially agrees. He said competitive bidding is key when it comes to big capital projects, but might not be for a position needed year in and year out. “Whether or not it will be successful in acquiring and maintaining quality people, that’s yet to be seen,” he said. “Change is good at times, but a lot of times you lose the consistency of how things are going.”

Mr. Drexel, who lives in Santa Rosa, spent 20 years as a self-employed wholesale lumber broker. When that industry took a hit, he sought a new line of work and landed at the nascent community services district, which had just split with North Marin Water District. He is happy with his second career. “I’ve learned a lot. It’s a way to pay back the community. It’s very rewarding,” he said. 

The wastewater system Mr. Drexel administers has been in place since 1976, built after the county began to suspect faulty septic systems near drinking wells were making some people sick. The water district managed the community system for two decades, but in 1996 a pipe broke and treated wastewater leaked for days before the agency became aware of the problem. Its response to fines from the Regional Water Quality Control Board was to increase rates in town. 

People were not happy. Louise Gregg, a 44-year resident, remembers when they announced the fines. “The board from North Marin said to the community at a big meeting up at the middle school that because it’s our system, we had to pay for the fines and stuff. So I raised my hand and said, ‘Well if it’s our system, can we fire you?’ And they stopped for a minute and thought about it and someone on the board said, ‘Yes, actually you can.’ So we did.”

The town formed an independent special district and inherited a wastewater system in mediocre shape, with old equipment and overdue maintenance. In the 2000s, the district replaced rusty pipes and installed system-failure alarms, emergency remote controls and lots of new pumps, paid for by a mix of grants and loans. The district increased its cash reserves from the $144,000 left by the water district to $385,000 today. Solar panels installed a few years ago cover 95 percent of the system’s energy use, Mr. Drexel said.

But in recent years, the community has grown concerned about the total administrative budget, which constitutes 45 percent of the district’s costs, according to Ms. Parrish. 

Mr. Drexel responded that percentages were an inaccurate gauge of good business practice. He developed the district’s operations manual, successfully appealed for permit-fee waivers that might otherwise have cost the district thousands of dollars, and writes grants. He said audits have never identified internal control over finances as a problem. A spreadsheet he sent to the Light said that his salary and health insurance constituted 36 percent of total expenses. 

It is difficult to make comparisons with other special districts because of widely varying budgets and operations. Special districts in Inverness and Bolinas, which have much larger budgets, pay around 11 or 12 percent of costs to administrators; that same percent would amount to less than $30,000 in Tomales. But the general manager in Inverness makes significantly less operating his larger budget, around $60,000 a year.

In 2011 Ms. Parrish, then a strategic-planning consultant who had previously held jobs as a financial officer, facilitated the creation of a five-year plan for the district. (Ms. Parrish is now transitioning into professional photography.) 

“I could see clearly what the concerns from the community were. Sustainability and transparency—they wanted that,” she said. One of the outcomes of the plan was the formation of the financial advisory committee, which she joined last year. 

In January, Ms. Parrish also became one of district’s three new board members; a fourth, Sue Sims, had served for less than a year at the time of the election. Only one long-timer, five-year director Patty Oku, remains on the five-person board.

Directors enlisted a Sacramento-based nonprofit, the Rural Community Assistance Corporation, to evaluate the annual rates people pay for the wastewater system last year. Rates have not been raised in almost a decade, other than a $5 monthly fee introduced in 2008 to pay for the solar panels. 

The rate study, which is being done pro bono, is not yet finished. But Ms. Parrish said a draft found that the current $800 annual fee would need to jump roughly $350 to build healthy reserves and help pay for needed capital improvements—if district expenses remain the same.

Currently, income is exceeding expenses, but when the depreciation of infrastructure is accounted for, the district is running at a deficit. Mr. Drexel said they add money to the reserve every year, but there is no policy guiding those annual deposits.

The biggest looming capital need, according to Ms. Oku, is slip-lining the entire pipe system. That could cost $800,000, making a raise in rates inevitable. “There is no way to save enough money by reducing costs in the next five to 10 years, [which is when] we need to eventually start working on our delivery system,” Ms. Oku explained.

After the first draft rate evaluation was written, the financial advisory committee contacted the nonprofit and said it could not assume current costs are fixed. There had been “little exploration… of current expenses or cost-cutting options as first steps prior to rate increases,” the committee wrote.

In a response, the nonprofit said a final solution will likely involve some mix of expense cuts and rate increases. If the district wants to avoid any rate increase, it would need to cut costs by over 23 percent, or $46,509. 

Ms. Parrish said that although they may not be able to avoid a rate hike, a competitive bidding process will give the district’s 98 ratepayers more confidence. “We can stand firmly and strongly and say, ‘Here are the reasons.’”

But so far it has been difficult to get those ratepayers involved in the creation of next year’s budget. The finance committee sent out postcards inviting people to join a temporary budget committee; only one resident responded. 

Since then they have brainstormed new approaches, and now plan to assemble a list of questions that two members will use to survey passersby outside the deli and bakery for two days in April. 

Ms. Parrish acknowledges that having Mr. Drexel compete for positions he has held for so long might make some people uncomfortable. But, she went on, “After 15 years of not having any look at contract services, I feel that it’s time. This is how business works.” 

Mr. Drexel said if the new positions entail too much board interference, he might decline to bid anyway. 

Both he and Ms. Oku said the board already provides checks and balances by reviewing bank statements and bills on a monthly basis. And Ms. Oku praised the administrator’s track record.

“You get what you pay for,” she said. “We have received two Small [Wastewater Treatment] Plant of the Year awards. We have been successful in writing and receiving grants. You always worry that maybe people don’t see the positive effect of having such a well-run system.” She said Mr. Drexel’s grants have brought in roughly a million dollars during his tenure.

The bidding process, Ms. Oku said, “could be considered cost-saving. But at what cost?” She is unsure whether or not she will vote to send the positions out to bid this year.

The new board president, Bill Bonini, a general contractor born in Tomales, was impressed with the state of the wastewater system on a recent tour. But, he added, without bidding, it was all but impossible to know the fair price of a service.

For his part, Mr. Drexel said that if he is outbid—or if he chooses not to bid—he will seek a job with another special district, using his credential as one of just 47 certified special district administrators in California. He earned the certificate through a mix of an exam, years of work and continuing education. “If it comes to pass that the new positions that are being developed don’t suit me, I’ll move on. There are plenty of positions out there for me,” he said. “I will stay in government. That’s the idea.”