In a Nutshell … The District is in a precarious situation

1)   Since 2016, the Board and previous District Manager have focused on buying a forest and not taking care of the Utility.

2) The Engineer’s two (2) recent reports and District Records document the cost & risk to the District of the Board’s lack of attention;

• $30,000+ in neglected maintenance and loss of the important redundancy in system functions.

• 15+ million gallons of water lost to a leak that has been known about for 27 months, and it continues to grow.  The Board has yet to acknowledge the leak. The costs to find and fix the leak are not yet known.

• Rather than fix the leak, for the past 16 months the District has intentionally exceeded state-permitted water rights to keep up with the lost water – and hasn’t told the State, which could result in financial penalties.

• The District Manager quit before all of the information about the neglect came to light. Now, the District is relying on one Staff member to do all of the current work plus the work that was neglected.

3)   The District has an opportunity to use its COVID relief money to offset $500,000 of unexpected costs (which could have been avoided) for both Districts.  But it appears as though the Board will vote on April 20 to spend the COVID money on thinning trees and fixing up roads, rather than repairing the Utility.

The following narrative, with supporting documentation, will provide the detail on these topics.

The Long Story (with Supporting Documentation):

Overview

The District’s contracted professional engineer has submitted his 2^nd report that details the impact on the Drinking Water System of neglected equipment maintenance.  (click here to see report)  As part of the neglect, his report identifies a water leak of 10-15 gallons per minute.  The report doesn’t mention that the District has been aware of the leak for more than 2 years and over the course of that time the District intentionally diverted 48% more water from Shark Creek than the State water rights permit allows, in order to cover up the leak and meet drinking water demands.  This increased, non-permitted usage was never reported to the State.  Lost water over the past 27 months is at least 15+ million gallons (38% of total water produced).   From District reports, the leak continues at a conservatively estimated rate of 18 gallons per minute and 46% of the total water produced by the plant is lost.

At next Thursday night’s Board meeting (April 20th), the Board is currently scheduled to vote to spend $171,000-ish of the District’s COVID Relief money on tree thinning and road improvements in the Watershed.  With rate payers facing an unexpected $500,000+  of immediate / very near-term costs from Water District and Sanitary District neglect, will the Board vote to spent the COVID funds to improve the Watershed or to repair the Districts’ Utilities, which are in dire need?

Engineer’s Report: Neglected Maintenance

Similar to the Sanitary District, the equipment maintenance neglect happened between 2017-2022, which were the Watershed purchase years.

The Engineer identified at least $30,000 of neglected maintenance tasks that should have been done, but weren’t. The most pressing are listed below:

• The “most critical” of these maintenance tasks is to fix the control unit that allows the plant to be operated manually.  This controller has been broken for over a year.  As it stands now there is a basic Dell PC that is connected into the system from which the system can be operated.  If that PC fails, then the plant shuts down and there is no way to run it, in which case there will be no drinking water.  The cost, $3,000.  (Note: the same controller in the Waste Water System has been broken for over 3 years.  Similarly, if the PC-interface to the system fails, then the Sanitary plant shuts down.)

• The “second most critical” task is to replace the redundant pump that pulls water out of Asbury Creek to supply our drinking water during the dry weather period.  That pump failed in 2017 and hasn’t been replaced.  If the current pump fails then the District won’t be able “ to ensure the plant can reliably meet demands over the peak summer season”.  The cost, $8,000.

• “It is important to locate and repair [the water leak] as soon as possible.  The water leak amounts to 20 – 40% of the 60,000 gallons per day average daily demands.”  No cost estimate was provided for finding or repairing the leak, nor any estimates for penalties that may need to be paid to the state.

Though the estimated $30,000+ neglect of the Drinking Water System is less than the $90,000 neglect of the Wastewater System, the % impact based upon the size of the plant/equipment is about the same, i.e., the Drinking Water System has fewer parts and is less expensive to operate.

	Drinking Water System	Waste Water System
Budgeted Costs to Operate	$43,000	$112,000
Neglected Maintenance	$30,000 + cost to find and repair the leak + possible State penalties	$90,000
Neglect as a % of Operating Costs	At least 70%	80%

The Leak

Background:  For 7-10 months out of the year (depending upon weather) the primary source of water for the District is Shark Creek.  By permit #53491, the State of Oregon permits the District to divert 54 gallons/minute from the creek for use by the District. (Click here to see Permit)

Increasing the amount of water diverted from the creek to the Water System decreases the volume of water in the creek, which negatively affects the fish habitat.  Protection of the fish in one of the considerations for how water rights are set by the State.

Timeline, Actions and Impact:

• Leak Suspected: At the January 2021 Board Meeting the public was told that “we possibly have a leak in the distribution system, as usage seems to be up about 10,000 gallons per day from normal winter use.  If anyone notices water bubbling in town, we’d appreciate knowing about it:”  (Click here to see Meeting Minutes)

• Leak Ignored: At the April 2021 Board Meeting, the public was told that leak detection was conducted “throughout the distribution system the week of April 5^th.  The good news is that we don’t have any major leaks, but we were unable to identify the small leak that we believe to be out there.’  (Click here to see Meeting Minutes)

• An Un-Permitted & Un-Reported Diversion of 26 gallons per minute of water continued for at least 16 months: At some point in time after April 2021 and before November 2021, the District began to divert 80 gallons of water per minute from Shark Creek, rather than the permit-allowed 54 gallons per minute, which is a 48% increase over and above the State’s permitted use for the District.  The diversion setting remained at 80 gallons per minute until the previous District Manager quit.

• Leak has exceeded 15 million gallon and continues growing: Being conservative and assuming that the leak started no earlier than January 2021, over 15 millions of gallons of water has been lost to the leak in the period between January 2021 and March 2023.  Over that period, at least 38% of the water produced by the plant has been lost.  The water loss of over 761,000 gallons per month in 2022 (18 gallons per minute) continues to grow.

• Two water sources are likely needed to keep up with the leak: Since the water being diverted from Shark Creek has now been lowered from 80 gallons per minute to the permitted level of 54 gallons per minute, there is a possibility that the level of water now being diverted from Shark Creek may not be sufficient to meet the needs of the District.  The pump at Asbury Creek may need to be brought online so that both Shark Creek and Asbury Creek are used until the leak can be fixed.  As such it becomes even more critical to replace the redundant Asbury Creek pump that has been out of commission for 6 years.

Accountability

Accountability for the neglected maintenance and the 27-month leak starts with the previous District Manager and ultimately rests with the Water District Board.

• District Manager’s Job Description: “Assure proper maintenance of pumps, valves and other plant equipment for proper operation. Evaluate equipment condition and makes recommendations and/or plan and schedule work for repair, rebuilding or replacement of installation.”

• Board Policy #17-03 WD:  Board Responsibilities – Control: “Evaluate the performance of the District Manager annually.  Identify types of information needed by the board to analyze effectively the district’s direction and achievement.  Create a process for collecting and analyzing information. Review and assess the organization’s performance against objectives, resources, plans, policies and services rendered.  Analyze major ‘shortfalls’ in achievement.  Ensure that the District is in compliance with all federal, state and local laws.”

Using Simple Math …

THIS:                    Before 2016, the District Manager spent all of his time on the Utility

MINUS THIS:      After 2016, he spent an increasing amount of time on the Watershed

    ——————————————————————————————————————-

EQUALS THIS:   After 2016, he spent a decreasing amount out of time on the Utility

Over the course of this time, concerns about the lack of Phil’s time spent on the Utility were raised with the Boards by the Community and previous Board members.. 

In email exchanges about these concerns, one of the Board Chairs said … “I appreciate your thoughts and concerns, many of which have been expressed from others through my time on the board.”  “When the forest project came up there was and continues to be discussions and decisions regarding Phil’s time by the boards. Phil has been up front about the time demands and his ability to manage the districts and requests direction from the boards.”  When it was brought up by a previous Board member that Phil was not meeting his objectives of the previous year, the response from a Board Chair was “this is not an uncommon occurrence.” 

The Boards knew that things were being missed in the Utility, and individual Board members were either okay with it, or didn’t care.

• In August – Sept of 2021, concerns about the previous District Manager were expressed and a specific process for collecting and analyzing information (as called for in the Board’s own policy) was recommended to a joint meeting of the Sanitary Board and Water Board.  These recommendations were dismissed as “micro-managing” the District Manager.  This process would have spotlighted neglected maintenance, as it later did through Public Records Request.

• In April 2021, as they do today, two standard District reports existed that could have been used by the Board to confirm that there was a leak.  In the best case, the Board never bothered to look.  As a result, the size of the leak has grown from 29% water loss in 2021 to 46% water loss in 2022.  And the leak continues to grow.  Given the downturn in the economy and inflated costs, the leak will be even more expensive to find and fix.

• For at least 16 months, the Board has taken no steps to ensure that the District was in compliance with state laws in regard to the District’s permitted water rights. 

Note: Chris Mastrandrea was very recently appointed to the Board to replace the previous Board Chair who resigned. He had no awareness of these issues and thus has no accountability for the lack of Board action.

Facing significant costs to repair to the Utilities, will the Board continue to prioritize funding the Watershed over the Utilities?

On the one hand, at least $500,000 of costs have been identified by the District’s Engineer over the next 2 years; $120,000+ of neglected maintenance (Water and Sanitary Districts), the significant water leak with no estimated cost to find it, repair it and pay penalties (Water District), and the $350,000 Web Lift station (Sanitary District). 

On the other hand, $600,000 – $800,000 of unspent COVID Relief funds are available to the District, and the Federally legislated intention for these funds is to repair/upgrade Water and Sewer infrastructure.  At least the lion’s share, if not all, of the $500,000 of costs from District neglect would seem to qualify.  The first step is a discussion with Business Oregon (who manages the COVID funds on behalf of the State) to lay out the pressing need for infrastructure repairs to both water and sewer and to formally ask them to reallocate the District’s funds from the Forest projects to these Utility Infrastructure projects.  (The State may be even more inclined for the COVID funds to be spent on fixing the Utility once they are informed about the non-permitted diversion of water for over 2 years). 

A strong case can be made to Business Oregon that fixing the now known problems in the Districts’ Utility infrastructure will have a more direct and pronounced impact on conserving/protecting source water and improving drinking water and waste water processing than will be the impact from thinning trees and improving roads in the Watershed.  Furthermore, funding these Utility infrastructure projects rather than Watershed improvement projects will be more in line the Department of Treasury’s final version of the law – ‘Coronavirus State and Local Fiscal Recovery Funds’ that states:  “The ARPA expressly includes infrastructure if it is ‘necessary’ and in water, sewer, or broadband, suggesting that the statute contemplates only those types of infrastructure.”

To date, the Board has shown determined interest in spending the COVID funds on improving the Watershed. 

At their April 11th meeting, the Board’s Forest Management Committee voted to recommend that the Board approve spending $171,000-ish of COVID funds on tree thinning and road improvements in the Watershed ($119,000 on contractors and $52,000 on Forester).   The Board is scheduled to vote on this expenditure at their Board Meeting next Thursday night (April 20).

From the rate payer’s perspective, the Board’s fiduciary responsibility is to put together a compelling case to the State for allocation of the COVID funds to the Utilities rather the Watershed.  Otherwise, both the Utility and Watershed are likely to be financial burdens to the Community for years to come.

On Thursday night (April 20), with rate payers facing $500,000+  of immediate to near-term costs from Water District and Sanitary District neglect, will the Board vote to spend the District’s COVID funds on improving the Watershed or will they pend that vote until serious discussions can be held with Business Oregon for using the COVID funds to repair the Districts’ Utilities, which are in dire need?

Part 2 of this Conversation will be published after the Board meeting to report on the Board’s decision.