Thursday, June 9, 2016
OID sues two of its own board members
By Garth Stapley
OAKDALE – Water leaders voted 3-2 Tuesday to sue to bar elected board members Linda Santos and Gail Altieri from closed-door board discussions regarding an ongoing lawsuit facing the Oakdale Irrigation District.
Santos and Altieri cast “no” votes but were outvoted by board members Steve Webb, Gary Osmundson and Herman Doornenbal.
Board members also agreed unanimously to investigate themselves for a leak presumably related to the lawsuit.
After the meeting, Altieri said, “Linda and I have followed our mandate of the people who elected us, and we will not be intimidated or bullied.”
State law allows leaders to meet out of the public eye when discussing matters such as legal action, and the OID panel huddled behind closed doors after Tuesday’s testy board meeting. It was held in an auxiliary building to accommodate a crowd of about 60, many of whom asked to go forward with a fallowing program – the subject of the lawsuit.
The district has provided judges with conflicting information about the program and has yet to publicly explain its status. “All previously contracted participants were notified” May 24 and 25 that it’s in limbo, a report said, after a judge last month ruled that the district must conduct more environmental studies before launching the program.
The board majority deserves blame for “badly mismanag(ing)” the program by not complying with environmental law, Santos said in a statement Wednesday.
“Instead of apologizing to the community for their mistakes, the district’s administrators and three board members are maliciously spreading misinformation and falsely blaming Gail Altieri and (me) for the program’s demise,” Santos said. “Now the board majority wants to shut us up by cutting us out of OID’s decision-making process.”
In technical terms, Webb, Osmundson and Doornenbal voted to go to court to seek a judge’s temporary restraining order and preliminary injunction against Santos and Altieri, “to preclude them from participating in further closed-session discussions” on the fallowing lawsuit.
OID lawyers last month had asked the judge to order Santos and Altieri not to speak with the suing attorney, but the judge said that request was “procedurally incorrect” and declined.
Examples of other agencies suing their own elected leaders include city councils in Riverbank and Patterson, which went to court to try to remove former council members Jesse James White and Sheree Lustgarten, respectively.
Some OID board members sparred in open session Tuesday over aspects of the lawsuit. In private, the board voted unanimously to have its attorneys “explore whether there was a breach of closed-session confidentiality by a (board) director and to bring back appropriate remedies for board consideration,” General Manager Steve Knell reported.
Santos and Altieri have said they were kept in the dark about OID’s fallowing program, and attorneys opposing the program used their declarations in the lawsuit. In open session, board Chairman Steve Webb said “the court case was going in our favor; every finding was for us, till you (Santos) and Gail decided to join the court case on the other side, then it seemed to shift a little bit.”
The women are not parties in the lawsuit, Santos noted. Both voted Tuesday against paying a law firm $30,000 for a month’s work, partly because one of its attorneys abruptly declined to engage in a verbal argument with opposing counsel just before the judge ruled against OID.
Osmundson drew loud applause when he suggested that the legal bill “could have been zero, if people weren’t suing us all the time.”
Osumdson is named as a defendant in the lawsuit because he applied to fallow land that he farms, then voted a couple days later to create the fallowing program, potentially putting $119,000 in his pocket. Without his vote, the program would have died in a 2-2 tie, with Santos and Altieri opposing.
Attorneys told him his vote would be legal because terms of the fallowing program would favor him no more than other participants, he and Knell have said, and Osmundson did not end up with a pending contract, a court document said.
“Gary Osmundson is as honest a guy as you’ll ever meet,” said a man in the audience who did not provide his name.
Some in the audience, including Frank Rivera, Nate Ludlow and Dustin Boothe, were upset because OID urged them to sign up for the program, then canceled it too late for them to grow anything. Participants were to get 20 percent of proceeds in cash and spend 75 percent on efficiency upgrades.
“I’m playing by the rules. My pasture’s dead. The water’s (gone) down the river and we’re not getting paid for it. There’s something wrong there,” Rivera said.
Others’ comments suggested confusion over the program’s status. Steve John, Robert Longstreth and Mary Alpers, for example, urged the board to forge ahead.
John Brichetto went after Santos and Altieri, saying they were in cahoots with critics, alluding to Louis Brichetto, a plaintiff in the fallowing lawsuit; the brothers have fiercely opposed each other in separate court matters. Karla Schwoerer scolded John Brichetto, saying, “to personally attack (Santos and Altieri) is not proper.”
Santos and Altieri were outvoted again in a 3-2 decision to support OID’s partner on the Stanislaus River, the South San Joaquin Irrigation District, in its sale of 10,000 acre-feet of water to the Stockton East Water District and a related document memorializing both districts’ responsibilities in that and other water sales.
In other matters, the board unanimously agreed to hold night meetings on the third Tuesday of each month and to have Knell prepare monthly newsletters. His office also began posting online meeting agenda packets with supplementary materials last week. Santos and Altieri had advocated for all those points in calls for transparency when campaigning before their elections in November.
Garth Stapley: 209-578-2390, firstname.lastname@example.org
Water giant gave $1.4M loan to official
By Ellen Knickmeyer
SAN FRANCISCO – A California public water district that earned a rare federal penalty over what it described as “a little Enron accounting” loaned one of its executives $1.4 million to buy a riverfront home, and the loan remains unpaid nine years later although the official has left the agency, according to records and interviews.
Westlands Water District says its 2007 loan to deputy general manager Jason Peltier — now at $1.57 million with a 0.84 percent annual interest rate — is allowed under agency rules on salary.
But experts in governance say the deal raises red flags, not just over the unpaid loan and its generous terms but over whether Peltier and Westlands complied with laws mandating disclosure of the use of public funds.
“Show me the statute that allows this,” said Peter Detwiler, long the top consultant, now retired, to the California Senate on local government finance.
“Where else could you borrow $1.6 million dollars for 0.84 percent?” Detwiler asked. “Who wouldn’t want a real-estate deal like that? Sweet.”
Westlands, which sells water to big farmers and other landowners in the country’s largest public irrigation district, came under scrutiny in March, when federal regulators levied a $125,000 penalty against it over bookkeeping that a Westlands’ general manager had described as “a little Enron accounting.”
The Securities and Exchange Commission had concluded Westlands misled bond investors about its financial condition.
A heavyweight in California water politics, Westlands currently is negotiating two multi-billion-dollar deals with local, state and federal agencies that would reshape water distribution in California, the country’s agriculture leader.
Peltier described the loan from Westland’s reserve funds as a good deal for the water agency and for him.
“It was what was attractive to me, and I guess it worked for them relative to where their reserves were,” said Peltier, who has since bought an additional house in Pebble Beach while his loan to Westlands for his home on “Millionaires Row” along the Sacramento River has remained unpaid.
Governance experts say public agencies sometimes provide home loans to help recruit executives, but say Peltier’s appears unusual because it was extended for years at a fraction of the interest rates of commercial mortgages, the district’s various actions on the loan were not disclosed publicly although Peltier is a public official, and the loan will continue for years after he stopped working at Westlands.
“Each of the individual features is a bit unusual. Taken together these features are very unusual,” Fred Whittlesey, a consultant on employee compensation based in Washington state, said of the circumstances of the loan.
“Free money is usually a great deal,” Whittlesey said. “But it may not be appropriate in an employment arrangement.”
The story on the loan is this, according to Peltier and records from Westlands and the U.S. Interior Department, where he worked before Westlands:
In March 2007, Peltier, whose Interior job included overseeing California water issues, notified the department he was looking for a job elsewhere. Two months later, he signed a $1.4 million purchase agreement for his home with a new, “state of the art” $115,000 boat dock and a $100,000 swimming pool.
Peltier said he had already signed the paperwork before getting the Westlands job offer. Westlands hired Peltier June 25, 2007, as chief deputy general manager, and a short time later loaned him the full $1.4 million home price, agency records show.
Terms initially required Peltier to repay the money within a year, when he sold his old house in a Virginia suburb of Washington, D.C. But Peltier said the home didn’t move after the 2007 housing crash, and records show he signed repeated one-year loan extensions.
In 2012, he and Westlands revamped their agreement giving him until 2021 to pay off the loan, with a final payment of more than $1 million, according to district records. Peltier made monthly payments of about $5,000 from January 2013 to February 2015.
Peltier, whose salary ranged between $185,000 and $200,000 according to state records, finally sold the house back East in February 2014, and left Westlands for a job at an affiliated water agency in summer 2015, with the Westlands loan still unpaid.
Current Westlands Deputy General Manager Johnny Amaral defended the transaction.
“Unfortunately, Mr. Peltier, like millions of other Americans, was unable to sell his property in Virginia because of the collapse of the housing market and the bridge loan was converted to a long-term loan,” Amaral said in an email.
Westlands officials declined interviews.
The Associated Press had asked Westlands under open records laws to provide all documents on the loan, including any showing whether the district disclosed the deal publicly.
In response to written questions, Chief Operating Officer Dan Pope said the home loan was allowed under a district rule that gives officials the authority to set salaries. There was no public record of the district board’s loan decision, Pope wrote, because it was made in a closed session.
The AP could find public mention of the loan only on the website of a federal agency that oversees municipal bonds. Posted there were Westlands’ annual audits, which from 2010 on reported a $1.4 million loan to an unidentified management-level employee.
Peter Scheer, head of the California-based non-profit First Amendment Coalition, said Westlands as a public agency should have disclosed all of its actions on Peltier’s loan, noting that the public has a right to know those details. Scheer’s group has been supported by donations from some news organizations, including the AP.
California law requires public officials like Peltier to file annual financial disclosure forms, which includes reporting some loans.
Peltier said he had begun reporting the loan in his most recent annual disclosures. However, his reports through 2015, obtained from the state, make no mention of an outstanding loan from Westlands.
Asked about the apparent discrepancy, Peltier said he thought he had included the information.
Asked whether the loan from a public agency would require disclosure, Jay Wierenga, spokesman for the state Fair Political Practices Commission, said, “Someone probably has to have a pretty good reason to not report a loan that’s outside of the realm of what’s normal and available to the public at large.”
Redding Record Searchlight
Tehama County gets groundwater board, 40-bed facility
By Joe Szydlowski
Tehama County’s public works will move forward with establishing a commission to develop a long-term plan for sustainable groundwater use.
The Tehama County Groundwater Commission will meet after local agencies and the board of supervisors put forward their nominees for the 11-member panel, said Gary Antone, director of public works.
“The bottom line is trying to identify on a local level how to manage groundwater resources and also in consideration of surface water resources,” he said.
The supervisors voted to create the board and to sign a contract to nearly quadruple the number of transitional housing beds at their meeting Tuesday.
State law passed in 2015 requires local agencies to establish a groundwater sustainability agency. The Tehama County Flood Control and Water Resources Board will serve that role for water districts there.
The commission will investigate how the county can use its groundwater supply in a renewable way, Antone said. Then, it will compile its findings in a final plan that will then go to the board of supervisors, he said.
“Mainly, it’s probably going to be a good information resource to better understand what’s going ton with aquifers in the area,” he said.
Its meetings will be open to the public.
How much power it will have isn’t clear at this point — it could be granted enforcement powers, though any decisions could be appealed to the Board of Supervisors, according to agenda documents.
But what those enforcement efforts would look like — or even if the commission will have them — remains unclear because the commission is still very young, Antone said.
Nonetheless, its primary purpose will be developing the plan, he said.
“At this point we are just beginning this process,” he said. “This is more just fact-finding and to show that we have a good water source. It is potentially sustainable if we use it in an appropriate manner.”
Tehama’s groundwater supply is doing well, though a few areas do have problems when it gets hot and they’re pumped more, Antone said.
The supervisors also approved a contract with The Church Without Walls and Storehouse Ministries to manage a 40-bed transitional housing facility in Red Bluff, said Bill Goodwin, county administrator.
It will serve those on probation, parole or other alternative custody programs, he said.
That’s slightly different than the original, broader potential clients for the former Sportsman’s Lodge motel on Antelope Boulevard, Goodwin said.
State money will pay for the costs — $2,683.33 per month through January 2019. The facility has security cameras and door sensors so staff will know when a door is opened after curfew.
Currently, the Tehama County Probation Department operates two transitional housing facilities with 12 beds total. Those will close.
Richard Muench, chief of probation, told the board of supervisors he hopes to have people move in by the end of June.
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Redding Record Searchlight
Report: Agriculture industry big business for North State
By Greg Barnette
Northeastern California’s agriculture industry helped soften the blow of the Great Recession, a Chico State University Agribusiness Institute study says.
The value of agriculture production in the region more than doubled from 2004 to 2014 and agriculture accounted for approximately one of every five jobs in 2014, the report says.
“The thing about agriculture is it brings new dollars into the community,” said Bruce Lindauer, a third-generation nut and fruit farmer in Tehama County.
Chico State’s report looked at agriculture production, processing and its related industries to the overall economy in 13 northeastern California counties, including Shasta, Tehama, Trinity and Siskiyou.
Higher commodity prices helped drive the economic increases, even as the region struggled through the recession, said Chico State agriculture professor and report author Eric Houk.
Inflation adjusted per capita personal income increased at a faster rate in northeastern California from 2004 to 2014 than the rest of the state, 12.2 percent versus 7.1 percent. Houk said agriculture in northeastern California plays a bigger role in the economy than the rest of California.
“As such, it is believed that the success of the agriculture industry is one of the things that prevented a decline in per capita income during this period,” Houk wrote.
Houk said the region’s income levels are still below the state average but were relatively stable from 2004 to 2014.
The report breaks northeastern California into two regions, valley counties, which includes Tehama, and mountain counties, which includes Shasta.
“It makes sense. It’s kind of interesting to know what the substantial impact agriculture has on our rural counties,” said Liz Elwood-Ponce, co-owner of Lassen Canyon Nursery, which grows strawberry plants for growers around the world. The company is based in Redding but has facilities throughout northeastern California.
While the 2014 value of strawberry plants were dwarfed by walnuts ($952.2 million), almonds ($795.3 million) and rice ($719.8 million) — the three highest commodities in the valley counties — the berries, at $146.1 million, were the top valued crop in the mountain counties followed by harvested timber, at $125.5 million.
“Most of the (strawberries) in the state and one could argue outside of California, the plants come from the northern area, and mostly Siskiyou County actually,” Elwood-Ponce said.
The value of strawberry plants has increased but the pace is slower than that of nuts and other fruits.
“I think the statistics are skewed because the value of those nut crops has increased so much,” Elwood-Ponce said of the report that said crop values went up 113 percent from 2004 to 2014.
Acreage for strawberries is down because of cost and demand, Elwood-Ponce said, and that has affected values.
“I think the varieties that are in favor right now, you can produce as much on fewer acres,” Elwood-Ponce said.
For walnut farmers, it’s been a tremendous run fueled by positive press about the health benefits of walnuts and other nuts and a growing Asian market. That has helped drive the cost of walnuts from 65 cents a pound 20 or 30 years ago to $2.20 in 2014, Lindauer said.
“We got real aggressive in the marketing of walnuts based on that PR,” said Lindauer, whose grandfather started the family farm in Dairyville, south of Red Bluff, in 1920. The farm grows walnuts, pistachios and plums, which are dried for prunes.
Lindauer has about eight full-time employees and then adds workers depending on time of year. He will employ up to 30 during the harvest season, which runs late August through October.
Chico State’s Houk said commodity prices were strong in 2014 and that helped increase values.
“Prices were strong enough that the overall value of crop production increased even though our region fallowed over 100,000 acres of rice,” Houk said via email, adding that equates to about $200 million in foregone rice production.
But the values of walnuts and some other commodities are expected to drop in 2015. The numbers are expected to be released later this summer.
“I think the world economy has caught up and there was some panic by processors who started dumping on the market instead of holding,” Lindauer said, adding that it has saturated the market and affected prices. “If I am a buyer out there and realize what’s going on, I would sit back and let the market fall.”
Business reporter David Benda has been a journalist for nearly 30 years, including stints as a sports editor and copy editor. He has a background in business and a love for gardening, reading, hiking and sports, especially the Pittsburgh Pirates. He also writes the weekly “Buzz on the Street” column.
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Sacramento Business Journal
El Dorado County splits on two land-use measures
By Ben van der Meer
El Dorado County voters split on a pair of land-use measures in Tuesday’s primary election, approving Measure E but rejecting Measure G by nearly the same percentages.
Measure E, which passed 51.8 percent to 48.1 percent, had to do with the county’s conditions for traffic caused by new development. Under the measure, the board of supervisors would no longer be able to approve projects that would lead to certain levels of traffic congestion with a four-fifths vote. Other provisions in the measure would’ve required growth-caused traffic impacts to be addressed before new projects got approved, and required developers to pay for those improvements rather than the county, unless voters declared otherwise.
County residents who feel developers have too much sway over the board of supervisors supported the measure. Save Our County, one such group of residents, did not immediately return a call seeking comment on the election results Wednesday.
Save Our County also backed Measure G, which failed 48.7 percent to 51.2 percent. That measure would have imposed policies for development next to agricultural areas and mixed-use developments that were based on language in the county’s 2004 General Plan.
El Dorado County Farm Bureau opposed the measure. A bureau representative did not return a call for comment Wednesday. Other opponents included the El Dorado County Chamber of Commerce and El Dorado Winery Association.
Ben van der Meer covers real estate, development, construction, water issues and the business of sports.
Investigator: FDA still taking months to recall tainted food
By Ricardo Alonso-Zaldivar
WASHINGTON – Federal health officials failed to force a recall of peanut butter and almond products for three months after advanced DNA testing confirmed salmonella contamination, government investigators reported Thursday.
Despite new legal powers to compel recalls and sophisticated technology to fingerprint pathogens, the Food and Drug Administration allowed some food-safety investigations to drag on, placing consumers in jeopardy of death or serious illness, according to the inspector general’s office at the Department of Health and Human Services.
In an unusual urgent warning called an “early alert,” the internal watchdog said the FDA needs to pay “immediate attention” to the problem and follow clear procedures to get manufacturers to promptly recall tainted foods.
“Months and weeks when peoples’ lives are on the line?” asked lead investigator George Nedder. “It needs to be done faster.”
Responding to the findings, the FDA’s top food safety official said the cases singled out by investigators were “outliers,” a “very selective sample” in which recalls did not proceed quickly and efficiently in a matter of days.
Nonetheless, Deputy Commissioner Stephen Ostroff said the FDA has set up a group of food safety officials to review cases on a weekly basis that don’t seem to be moving. “That way we will be able to take action much more quickly in circumstances where there seems to be some reluctance at the firm,” he said.
Food safety has long been a weakness for the FDA, an agency thinly stretched to oversee about 80 percent of the nation’s food supply, including seafood, dairy, fruits and vegetables.
The FDA traditionally has relied on voluntary recalls to remove tainted products from the market, saying that’s the fastest route. But a 2011 law gave FDA power to order recalls in cases that have the potential for serious harm. More recently, the government rolled out whole genome sequencing — precise DNA mapping — to link bugs from people who got sick with samples from products or manufacturing facilities.
It didn’t seem to make much difference in two cases from 2014 that were examined by the inspector general. They are part of a review of 30 recalls from 2012 to 2015; complete results will be announced later.
The inspector general said one case involved peanut butter and almond products voluntarily recalled by nSpired Natural Foods Inc. on Aug. 19, 2014. That recall came 165 days after the FDA first discovered salmonella in samples from a company manufacturing plant, and a little more than three months after DNA mapping concluded that the salmonella from the facility was “indistinguishable” from samples taken from patients.
Salmonella is a bacterial illness that can cause serious and potentially fatal infections in young children, older adults, and people with compromised immune systems. Most patients develop diarrhea, fever and abdominal cramps and usually recover without treatment.
Ostroff said it was the first time FDA had used DNA mapping in an investigation, and “it just isn’t accurate” to suggest that the agency did nothing for three months after making a definitive link.
“I won’t tell you this went as quickly as we would like it go,” he said. “Now that we have more experience with this technology, we hope we don’t see similar timelines.”
At least 14 people in 11 states were sickened in the outbreak.
The second case involved various cheese products voluntarily recalled by Oasis Brands Inc. on three separate occasions during 2014. At least nine people were sickened in six states, including an infant who died, the inspector general said.
The final recall came 81 days after Virginia’s agriculture department first notified the FDA that it had discovered listeria in one of the company’s cheese products.
Listeria is a bacterium that causes flu-like symptoms. It is highly dangerous for pregnant women and can lead to miscarriage or stillbirth, even if the mother felt no symptoms. The inspector general said two women lost the babies they were carrying as a result of illnesses linked to the outbreak.
The FDA inspected the company’s manufacturing operation twice during the 81 days, and found listeria both times.
Nedder said the problem was that the first two recalls didn’t get all the products that were potentially contaminated. That only happened with the final recall on Oct. 17, 2014.
“If you were playing Russian roulette with three bullets in the chamber, would you feel safe if you took one or two of them out?” Nedder asked. FDA’s Ostroff responded that the agency was acting on the best available information at the time.
In Congress, a leading backer of food safety legislation called the inspector general’s findings “mind-boggling.” Rep. Rosa DeLauro, D-Conn., said “it is even more astounding” that the FDA has the authority to order recalls yet appears reluctant to use it.
Inspector General’s report – http://oig.hhs.gov/oas/reports/region1/11501500.pdf