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Bad Governance Needs a Holiday
This is the first in a blog series advocating for Good Governance Practices in Marin.
Things stink at the Ross Valley Sanitation District, the agency responsible for sewage collection in the Ross Valley and San Quentin Peninsula. Three board members, who vote as a bloc, pushed through a series of 3-2 votes to approve a highly controversial lawsuit settlement, during the Memorial Day holiday week. This was despite public pleas for a 45 day public review period prior to the board’s vote on the settlement.
Rushing to vote during a time when many constituents are likely to be away smacked of a move to block any public airing of or inquiry into the circumstances surrounding the settlement and its impact. Does the RVSD board have something to hide? Is this simply another example of crony politics and indifference to voters’ concerns? Or is there something more sinister at play?
The Backstory
RVSD sued the Central Marin Sanitary Agency (CMSA, the entity that processes the waste water collected by RVSD and other Marin sewage collection agencies), the California Department of Corrections and Rehabilitation (the operators of the prison at San Quentin), and the County of Marin for unlawful trespass. In this suit, RVSD alleged transgressions by CMSA, which they say poached RVSD’s customers (San Quentin prison and San Quentin Village) by contracting with the prison to provide services using RVSD’s force main and pump station assets at a lower price than RVSD was charging.
RVSD scored a first round victory in the suit: a Sonoma County Superior Court judge denied CMSA’s Motion for Summary Judgment, ruling in RVSD’s favor. (The judge ruled that the assets’ ownership was a triable issue, i.e., that the alleged trespass might indeed have occurred.) The ruling enhanced RVSD’s chances of prevailing at trial. But with the July 2014 swearing in of two newly elected board members, the political balance of power at RVSD changed.
Director Mary Sylla, who was keen to end the suit, was joined on the board by two others who shared the same agenda, Tom Gaffney and Michael Boorstein (a friend whom Sylla had encouraged to run).
This new three-Director majority pushed to settle the lawsuit by effectively throwing in the towel and giving away the disputed assets, along with the associated revenue flow, to CMSA for no consideration. Why would RVSD fold a good hand – and do so by ceding assets that the court agreed may indeed be theirs -- without gaining something in return for their ratepayers?
What was the Hurry to Vote? Was it Just to Keep the Public in the Dark?
For several months prior to its precipitous Memorial Day holiday actions, RVSD declined to provide the public with any details of its settlement negotiations with CMSA and the suit’s other defendants.RVSD stated that publicly airing the settlement’s terms would compromise RVSD’s legal position should it decide (against the majority bloc’s clear intentions!) to pursue its suit.
This secretive behavior appeared designed to keep the public in the dark -- even when the suit's defendants were fully informed.
In early 2015, prior to any public decision-making meetings, two RVSD board members (Gaffney and Boorstein), together with General Manager Greg Norby, met privately with Supervisor Katie Rice, CMSA Director Al Boro, and CMSA General Manager Jason Dow to start discussions. Notably, both Marin County (of which Katie Rice is a senior official) and CMSA were defendants in the suit brought by RVSD. Depending on who's talking, Rice's role was variously described as broker, facilitator, mediator (for which Rice has no training), or someone who introduced the parties (who already were well acquainted). This is not simply a semantic issue, because, as Director Meigs stated at the May 27 meeting, she only found out later that Katie Rice and others, but not an attorney, were at these closed door meetings. At that point Meigs' trust in the process vaporized.
There’s no way to know for certain what occurred at those meetings, as a public records request turned up neither notes nor minutes of the closed door sessions. In fact, the anti-settlement RVSD board members say they were not fully informed of what transpired. Referring to these irregular closed door meetings as well as other aspects of the flawed, secretive process of the hurried settlement, Meigs observed "Trust is our biggest problem here, that and transparency."
In mid-May 2015, draft settlement terms were inked and CMSA voted to approve them. For another 10 days RVSD continued to sit on the document, denying the public access to it. They hid behind the thin excuse that public release of the settlement would compromise RVSD’s legal options. This explanation made no sense since RVSD was simultaneously touting the draft settlement as its only choice, saying it had surrendered its legal options three months prior in order to complete a bond refinancing.
RVSD finally called a special meeting for May 27, 2015. The sole purpose of this meeting was to approve the draft settlement. The meeting’s agenda and draft settlement were released online only, on Friday of Memorial Day weekend, when few people were around and paying attention. Rather than a timely response to public demands to air those closely guarded documents, RVSD waited until the regulatory deadline (five days prior to the scheduled vote).
May 27th fell just two business days after RVSD finally released the draft settlement terms. Interested citizens felt they’d been given the bum’s rush.
However, despite the tiny time window afforded, a number of people contacted RVSD’s board, urging them to conduct, in the open, a 45 day review of the proposed settlement prior to any vote. Directors Frank Egger and Pamela Meigs endorsed that suggestion. But they were shut down in the first of that night’s contentious 3-2 votes.
Having dispensed with the public’s need to know, the board majority then hastened through a series of additional 3-2 votes to approve the settlement.
The majority bloc’s choice to “get it done” quickly over the holiday period inevitably raises suspicions. Multiple observers asked, “What is the Hurry?” The pro-settlement bloc – Board President Thomas Gaffney, Mary Sylla, and Michael Boorstein -- stonewalled on these questions. Citing procedural rules that do not require the board to respond to issues raised by the public (in writing or at the meeting itself), the board majority declined to provide any rationale for shortchanging public participation other than, as bluntly stated by Director Michael Boorstein late in the May 27 meeting, “We’re gonna have to do what we’re gonna do. So be it.”
Does the Settlement Save or Cost Ratepayers?
Proponents defend the lawsuit’s settlement as a money-saving move to arrest the rising legal costs of the suit, which exceed $450,000 to date. That seems entirely plausible until one considers the unexplained hurry.
Directors Egger and Meigs, who opposed the settlement, argued it in fact leaves ratepayers worse off. They cited two reasons. First, the settlement permanently ceding RVSD’s San Quentin assets and revenues to CMSA means RVSD forever foregoes $1 million in annual income (without any offsetting reduction in salary, benefits, and pension expenses). Second, by settling without consideration, RVSD forfeited the possibility of a better financial outcome (through litigation, arbitration, or renegotiation) in a dispute that it was in fact winning. To effect the settlement, RVSD gave CMSA its San Quentin force main and pump station assets. It received nothing in return from CMSA for these assets, which Director Egger says are worth $4.3million.
Had RVSD received commensurate compensation, those assets should have generated a return on investment of $200,000 or more annually.
What was the net effect of the settlement on ratepayers?
It turns out RVSD doesn’t actually know the settlement’s financial impact. The night RVSD’s majority block rammed through its predetermined vote, staff publicly conceded, in answer to Director Egger’s questioning, that it had never conducted a fiscal analysis of the settlement.
The board majority didn’t even blink. They plowed ahead with a vote to approve.
This was simply stunning. How could the board vote on such an important matter in the absence of any numbers? How much (if anything) would it have cost RVSD to delay a vote for 45 days in order to permit public participation and indeed, perform a fiscal analysis? Might the rush to settle actually trigger additional, much higher, legal expenses if the district is forced to defend its hasty actions in court in a suit brought by other interested parties?
The week after the RVSD majority’s voted for immediate settlement – and against open government -- ratepayers were notified of a large rate increase. At the very least, this was unfortunate timing. But it also highlights an unanswered question: What role did the settlement play in this customer rate hike?
Could the Settlement Actually Trigger Higher Litigation Costs?
To complete the settlement RVSD gave CMSA $4.3 million in force main and pump station assets for free. The majority bloc contended that these “assets” were actually a liability. They assert the assets are decades-old pipe that is in bad repair, needs maintenance, and might cause a spill that would be expensive to clean up and could subject RVSD to regulatory penalties if it pollutes the Bay. However, Egger maintained that the pipe divested via the settlement was actually some of the newest and best in the district -- a statement that was not challenged.
There is an interesting twist in this saga that RVSD failed to disclose to the public.
RVSD is presently under a U.S. District Court Consent Decree and Order. The April 2006 order, which resulted from a lawsuit brought by San Anselmo resident Garril Page, requires the district to repair and maintain its assets to a high standard through April 2016. The suit brought by Page was precipitated by numerous sewage spills, overflows, and broken pipes.
The Consent Decree requires RVSD to undertake extensive repairs, upgrades, and maintenance to its entire system, and to do so only with the consent of the plaintiff, Ms. Page. The RVSD board majority’s assertion that they’re getting rid of bad assets that could endanger the district’s future finances means the necessary repairs have not been completed. They chose to solve this problem by giving away the assets. So the question now is: does the settlement violate the letter or the spirit of the consent decree? Ms. Page thinks it does.
The Plot Thickens
On May 26, the day before the RVSD board voted to settle, Ms. Page’s attorney sent RVSD a letter stating that transfer of the San Quentin force main and pump station to CMSA would violate the Consent Decree. But it appears that certain board members and RVSD staff members chose to ignore the May 26 letter, not even disclosing its existence to the entire RVSD board prior to their vote. In an effort to ensure RVSD paid heed, Ms. Page delivered the same message during Public Comment at the RSVD board meeting. The board did not respond to that issue at all. They just plowed forward and voted, 3-2, for settlement.
Under terms of the Consent Decree, RVSD has 30 days to respond to any notice of violation. If RVSD fails to respond, Ms. Page’s attorney has put them on notice that “unless within 30 days, the attempted transfer [of pump station and force main assets] is cancelled, with proof of cancellation provided to our office, we will file a motion, in United States District Court, Northern District of California to hold RVSD in contempt of the court Order and seek to compel compliance therewith.”
It remains to be seen how the Court will respond to the Notice of Violation filed by Ms. Page’s attorney. But this could end up being quite costly to RVSD to defend. And what happens if they lose and have to rescind the settlement?
Is the Elephant in the Room Future San Quentin Development?
Some suggest the answer to the “What’s there to Hide?” question lies with San Quentin’s future.
One consequence of RVSD’s unilateral legal capitulation is that RVSD has ceded control of the entire San Quentin peninsula from its sphere of influence. The settlement’s opponents – led by RVSD Directors Frank Egger and Pamela Meigs – assert that this was not an accident. They allege that shifting control of San Quentin to CMSA, an entity over which Ross Valley voters’ influence is more modest, is part of a scheme to lessen obstacles to future high density development on the peninsula.
Grand schemes to capitalize on San Quentin’s real estate value first got a boost from the 2003 San Quentin Vision Plan. At the behest of the San Quentin Reuse Committee (chaired by powerful Marin County Supervisor Steve Kinsey), the Marin County Community Development Agency worked with an urban planning consultant to produce a report advocating the redevelopment of San Quentin into a new world class, mixed-use, transit-oriented urban hub.
In 2009, Jared Huffman (then State Assemblyman) co-sponsored a bill to block construction of a new San Quentin death row: committing new state money to the site would have precluded its sale to developers. Huffman’s bill passed both chambers but was vetoed by then-Governor Schwarzenegger.
When the state punted on decommissioning the prison and kept alive plans for expanding death row, Marin County shelved the San Quentin Vision Plan.But shelved does not mean shredded.
A similar plan was dusted off in 2012, when the Board of Supervisors, again under President Kinsey’s leadership, came close to designating San Quentin as a transit-oriented Priority Development Area. Steve Kinsey tried to sneak approval of the San Quentin PDA through on the “consent calendar” (i.e., without any public disclosure, discussion, or hearings) until environmentalists called “Foul”. The San Quentin City plan returned to the shelf.
With Jerry Brown now in Sacramento and Huffman in Washington, the Congressman is once again pressing (e.g., at an April 8, 2015 Rotary Club talk) for mega-development on the San Quentin Peninsula. Plans call for thousands of new homes, commercial development and the relocation of the ferry terminal. This is essentially a new version of the recently defeated Larkspur Landing Station Area Plan. If he can’t make that fly, there are rumors of Plan B, a smaller transit-oriented development at San Quentin if the state decides to retain but not expand the prison.
Proponents of large-scale development at San Quentin are tenaciously persistent. In the age of big money politics, this should be no surprise. As I’ll discuss in a subsequent blog series, real estate interests are the largest contributors to the campaigns for Board of Supervisors and almost every other elected position in Marin, including RVSD.
What Does Sewage have to do with Development?
The high-density housing cum transit hub proposed for San Quentin is identical to the conceptual framework mandated (and widely contested) under Plan Bay Area. Except the San Quentin site is a whole lot bigger and more special. That means there’s a lot more money at stake. Proponents should expect huge opposition to building a new, intensive-use urban area in a county fighting to maintain its rural-suburban character.
That’s where RVSD comes in – or did, until the settlement agreement.
As explained by Bob Silvestri in his April 20, 2015 Marin Post blog,
“New State legislation promotes unrestricted growth. Sewer capacity is one of the last recognized means for locals to assure appropriate development. The agency that controls San Quentin sewer service via a contract with the prison controls development of the SQ peninsula. Since 1981, that has been RVSD.”
Transferring control to CMSA from RVSD puts San Quentin further out of reach of direct democracy. RVSD’s board is comprised of five elected officials. They are elected by voters in the Ross Valley, which abuts San Quentin. CMSA is a Joint Powers Agency.Its board is appointed by the member sewage collection agencies and consists of representatives of local member municipalities.
Although RVSD comprises nearly half of CMSA’s volume, it gets to place only two of its Directors on CMSA’s six-member board. Gifting assets to CMSA thus dilutes RVSD’s control over San Quentin from 100% to 1/3. It neuters the Eggers-Meigs opposition to San Quentin development. And it puts off the table the possibility of the sanitation district capacity from ever being used as a means to block unpopular large-scale development on that site.
It is interesting to note that late in the meeting, after losing the vote to approve a 45 day public review period, Director Egger put forward a motion to dismiss the suit entirely rather than settle. The intent was a compromise solution to at least keep the San Quentin assets under RVSD control even if the majority was determined to drop litigation. Director Sylla dismissed Egger's motion out of hand as a "delaying tactic." Meigs retorted that both the public process and the opportunity for middle ground among the board were short-changed: "That's a real disservice to the community. With the [board] split, it's your way or no way." Unsurprisingly, the compromise motion to drop the suit failed, also on a 3-2 vote.
After crushing the compromise motion, the board majority quickly moved to approve the draft settlement agreement. With its final 3-2 vote of May 27, the board majority finished what it had had clearly determined to do prior to convening the only public meeting on the matter
The Sideshow
Like any good circus, the one at RVSD had quite a sideshow. Allegations of bad faith, irregular behavior, and political ambition abound. Avoiding the tit-for-tat recriminations, it distills down to two allegations.
On the one hand, Gaffney was accused, initially by Egger, of failing to disclose a conflict of interest (having been a paid consultant to the suit’s defendants). Although his form 700 campaign filings did not disclose those payments, counsel engaged by RVSD to evaluate the matter found no fault. Many observers still felt that, to avoid the appearance of impropriety, Gaffney should nonetheless recuse himself from voting on the RVSD settlement. But, as Gaffney points out, recusal would have left the district deadlocked on a vote for the draft settlement. (This might actually have been a very good thing, forcing board members to compromise and pursue better settlement terms.)
On the flip side, the majority bloc (Gaffney, Sylla, and Boorstein) saw Egger’s aggressive opposition to the settlement as political grandstanding. Egger, a long-standing opponent of desalinization and high density development, has repeatedly hinted in the press that he might take a run at Katie Rice’s District II Supervisor seat in 2016. The fact that Egger drummed up substantial public opposition to the settlement – coupled with Gaffney’s outrage at the conflict of interest allegations -- made its proponents all the more determined to deny him a victory.
Bad Governance Needs a Holiday
Citizens have a right to good governance.
Governance is the “process of governing.” Process matters. Good governance means having public officials who respect the statutes AND underlying principles of laws promoting open, transparent, and participatory government. It also means representing constituents’ concerns and favoring those over special interests. These are simple tenets that we can all embrace and should not be too difficult to execute.
RVSD’s board majority’s rush to settle provides an object lesson in bad governance. If elected officials want to do something they can’t defend, they do it over a holiday. Holidays are not an accident of the calendar. You can see them coming long in advance. If it’s an innocent scheduling error, take extra time before acting. Forty-five days would have been prudent.
Good governance would dictate a real public hearing process prior to a board, like RVSD’s, voting on a matter of great public interest. Genuine attempts should be made to ensure that as many people as possible learn in advance of a meeting. Ample opportunity and multiple modes for the public to access relevant documents should be provided. Public comments, both written and oral should be invited and sufficient time left to receive and respond to them. A public comment period at a hearing should not be just a box to be checked off!
I am not just picking on RVSD. Sadly they have plenty of “bad governance” company here in Marin. Perhaps we citizens, acting together, can push the needle in the “good” direction.
Bad Governance needs a holiday to “get it done.” We Marinites need a holiday from bad governance.