A Tale of Two Projects

The City of Beaumont is taking on two of the most significant and costly projects in recent memory, probably in all of the city’s history, the Potrero Interchange and the Waste Water Treatment Plant (WWTP) expansion. Both projects will benefit the city but both projects have created a lot of discussion and some controversy, as expected. Following is a brief summary of the projects.

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Potrero Interchange

The city breaks ground this week on Phase 1 and Phase 1A of the Potrero interchange at State Hwy 60.

Phase 1 will involve constructing a 6-lane bridge with center median and bicycle lanes extending Potrero Blvd over SR 60; adding a ramp from Western Knolls to Potrero Blvd. The widening of SR 60 at Western Knolls and widening Potrero Blvd east and west of the new bridge are also included in Phase 1

Phase 1A consists of constructing acceleration and deceleration lanes.

Phase 2 Will include constructing partial cloverleaf interchange and ramps providing full freeway access (ingress and egress in both directions) and will be undertaken after the earlier phases have been completed.

More than $13 million-dollars of tax payers’ money had already been spent on this project for design, environmental and right of way acquisition of phases 1, 1A, & 2 before Kapanicas and Urban Logic Consultants (ULC) principals left town. Much of the money was directed towards contracts involving ULC. These contracts were awarded by previous councils without competitive bidding. The city most certainly paid too much for ULC's work.

Another $21.6 million is needed to complete phases 1 & 1A. $13.4 million in State and Federal Grant funding has been acquired leaving a funding gap of about $8.4 million. The city council approved the completion of phases 1 & 1A on one condition, the gap must be covered with cash from the property owners, those benefitting the most from the interchange, No more tax dollars would be spent to complete the first phase. The cash has been deposited by the land owners in the bank providing the city the working capital needed for construction. The city will use the cash to fund the construction and later will be reimbursed with the grant money through the Riverside County Transportation Commission (RCTC) the stewards of the government money.

The settlement of the WRCOG (Western Riverside Council of Governments) resulted in the City of Beaumont rejoining WRCOG's TUMF (Transportation Uniform Mitigation Fess) program and makes it possible for the city to apply for TUMF credits for the Potrero project. If the project is approved as TUMF eligible, property owners will receive credit towards their DIF (Development Impact Fees) , and if authorized by WRCOG, credit towards TUMF.

Phase 2 of the project doesn’t have a funding plan established as of today, although Phase 1 presents mobility and economic value as a stand-alone project. 

Completing phases 1 & 1A will open up the area south of SR 60 to economic development. This area has been zoned for commercial and industry and will provide much needed, long term tax revenue for the city. Completing phases 1 & 1A will not only secure the grant funding for Beaumont, it will guarantee the $13 million of tax payer funds already paid into this project will not be completely wasted.

The fact that land owners have provided the cash flow the city needs to move forward on the project and that no more tax dollars will be contributed to the first phase is a huge win for the citizens of Beaumont.

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The Waste Water Treatment Plant

The City's waste water treatment plant (WWTP) has reached 75% of its permitted capacity of 4 million gallons per day (mgd).  Per the City’s NPDES permit from the Regional Water Quality Control Board (Board), once the WWTP reaches 75% capacity the City must begin the process of planning and constructing an expansion to add capacity.  The Board’s Basin Plan establishes the discharge requirements for WWTPs within the watershed. 

In 2015, the Board adopted a Basin Plan that requires the City to reduce the total dissolved solids (TDS or salts) in the WWTP discharge and future recycled water.  The City has selected to implement reverse osmosis treatment to reduce TDS, and the Board has issued a compliance order establishing mandatory timelines for the completion of the WWTP expansion and TDS treatment.  The reverse osmosis treatment removes TDS from the water and creates a brine waste product that must be disposed of.  The deadline for complying with the order before fines will be assessed against the City is to have the new treatment facilities operational by 2020 and mitigate for excess TDS complete by August 2025. Also, a failure to comply by the deadline could result in a cease and desist order from the State, which could lead to a moratorium against all development, residential, retail and commercial. This result is not acceptable.

The WWTP expansion and salt mitigation facilities will cost the City approximately $110 million, $65 million for the plant expansion and another $45 million for a brine disposal pipeline to connect to the Inland Empire Brine Line (IEBL).  The City’s brine line will be 12-inch diameter and 23-miles long.  It will be constructed from the City’s WWTP to San Bernardino where it will connect to the IEBL.  The IEBL pipeline extends from San Bernardino to Orange County Sanitation District’s (OCSD’s) treatment facility in Fountain Valley.  The brine disposal cost includes the purchase of pipeline capacity in the IEBL as well as treatment capacity at OCSD’s facility.   The existing sewer rates will provide the debt service to fund the plant expansion but does not cover the cost of the brine disposal facilities or connecting to the IEBL.

The decision to increase sewer rates on a community who has already given so much and have been so damaged by the previous council and administration is not an easy one for this council to make. We have already increased sewer connection fees on homes developed in the future from $3,194 to $5,125 per home to ensure that the new developments pay their share of the costs. Unfortunately, the City won't be able to cover the costs without a rate increase.

The City Council has directed staff to begin the Prop 218 legal process to raise sewer rates to meet the cost to comply with the Santa Ana Regional Board's order. This process requires a notification of the fee increase followed by a public hearing 45 days later and an opportunity for rate payers to protest in writing. If more than 50% of the rate payers file a protest, the increase will not be implemented. There are so many important questions that need to be answered that the City Council instructed the staff to go above and beyond the legal requirement and hold community meetings to address everyone's concerns. The first meeting was held earlier this month and the next meeting will be on February 15th. I urge you to get involved and make your voices heard.

Our predecessors obviously should have planned better for the expansion and brine removal. They talked about it for years but didn't responsibly manage our resources to make it happen. This council is committed to reverse the practices of the past and provide our community with a transparent and responsible government. Every decision this council has made has been in meeting this commitment.

Three years ago the city was on the brink of bankruptcy. We were facing judgements, pending lawsuits and RDA (Redevelopment Agency) obligations - all totaling more than $100 million. Now we are operating under balanced budgets; rebuilding reserves; and are completing long overdue projects promised by previous councils and administrations. 

This was not all done by the council alone. We have assembled an outstanding team that has made our amazing rate of recovery possible. We have made the difficult decisions to put the future of the City of Beaumont above all other concerns. We have come a long way towards reaching our goals and we still have a ways to go. We know what needs to be done and we are committed to getting the job done. 

Rebuild Beaumont

In 1993, the City of Beaumont was in serious financial trouble, and considering bankruptcy. The City Council hired Urban Logic, a consulting firm from Temecula, to take over control. UL's 3 principals, Dave Dillon, Ernie Eggers and Deepak Moorjani assumed the roles as directors of Planning, Public Works and Economic Development. They hired the City Manager of Calimesa, Alan Kapanicas, to serve as a consultant City Manager for Beaumont.

Beaumont's leaders told the 8,000 plus citizens they were going to grow Beaumont out of its financial crisis by building homes. The council created a city-wide Community Facilities District, CFD 93-1, made possible by the State's Mello-Roos law. The plan was to enable developers to build infrastructure for housing projects and be reimbursed by bond proceeds paid for by future homeowners' fees. This meant developers enjoyed lower investment risk and higher return on their investment than they could achieve in neighboring cities. Home development in Beaumont boomed until the housing crisis and recession of 2008.

UL's contract guaranteed the principals could charge the city up to 9% of the cost of each public project in Beaumont for "Plan Checking", "Construction Inspection" and "Public Works Construction Management". Developers would build their projects, UL would charge their fees, and once new homeowners were paying their Mello Roos taxes, proceeds from bonds would reimburse developers. This was all approved by the City Council.

The city wide CFD 93-1 was a first of its kind and may still be the only one in the State. Not only did it allow for low risk investment for developers, it provided access to funding for regional type transportation projects not specific to individual housing projects without voter approval.

UL and Kapanicas promised to provide infrastructure, sewer service, recycled water, fire and police service financed with development impact fees (DIF) and CFD taxes. UL's and Kapanicas' greed led to overpriced, non-competitive bid projects and directed millions of dollars in business to their private companies. Recycled water wasn't a priority; fire stations weren't built; and no fees were established for police services. However, UL still received inflated design and management fees for the infrastructure that was built.

In 2002, the voters of Riverside County approved an extension of the Measure A .5% sales tax for Transportation, passed in 1988 and set to expire in 2009. Along with extending the ½ percent sales tax, voters also approved a new program, the Transportation Uniform Mitigation Fee (TUMF). In order for a city to receive the additional ½ percent sales tax, it would have to participate in TUMF. Beaumont's city council agreed to participate and directed staff (Kapanicas and UL) to comply.

The WRCOG (Western Riverside Council of Governments) is charged with the administration of the TUMF program. A fee on new development, residential as well as non-residential is collected to assist in the building and improvement of the County’s regional arterial system to deal with the increased traffic from new development. Cities are responsible for collecting the TUMF fees from the developers and passing the revenue on to WRCOG.

UL and Kapanicas decided not to follow the council's direction; they did not collect the TUMF fees. UL retained local control of the transportation projects and continued to receive their fees. This lead to the WRCOG lawsuit resulting in a $43 million-dollar judgement against the city, about $60 million with interest.

The judgement was the catalyst leading voters to replace 3 incumbents in the 2014 election. The new council ordered independent audits which revealed the city had depleted its reserves and had been running multimillion dollar deficits for several years. The raids by the District Attorney's office soon followed and a year later Kapanicas, Dillon, Eggers and Moorjani, along with the former Finance Director and former City Attorney, were arrested.

In the two years following the raids, the City Council has hired a new City Attorney and new City Manager; reached a termination settlement with Kapanicas; settled the WRCOG lawsuit; resolved an SEC investigation; and referred one of its own members to the DA for illegal activities. This council has cleaned up corruption in Beaumont.

We still have many challenges facing us. Our sewer plant has reached 75% of its daily capacity and the Water Board has required a $100 million-dollar expansion to be completed and producing recycled water in less than 5 years. Our roads desperately need repair and our transportation networks are not able to handle the needs of the residents in what is still one of the fastest growing cities in California.

The actions of the previous administration under the oversight of previous councils left the city with no reserves and monumental challenges. Over the last two years we have started rebuilding financial reserves and working on needed transportation projects.

Many in our community are angry, I am too. They believe their hard-earned tax dollars have been wasted, misappropriated and embezzled. The recent plea deals by the criminals responsible prove they are right. So, what do we do now? We know what we need to do, we need to continue to rebuild Beaumont. Rebuild its infrastructure, its finances and its community's trust in its elected officials.

We recognize that the only way we move forward is by using the tools available to us to finance the projects our community needs to continue to move forward. We need to protect our city from stagnation. Our citizens moved to Beaumont because they believed in its potential. They made the largest investment most Americans make in their lifetimes, purchasing a home. Without sufficient infrastructure and responsible management of our resources, property values will evaporate and so will our families' futures.

Some voices on social media and on internet bulletin boards claim rebuilding Beaumont by asking its citizens to continue to invest in infrastructure that its city leadership should have already built makes us criminals. Is it criminal to recognize what needs to be done and finding solutions to get it done? I believe it would be more criminal to give up.

This council will continue to move forward despite being called corrupt, dishonest and criminals. Every one of us knew what we were getting into when we volunteered to serve. We know it isn't going to get any easier but we know what we need to do. We will rebuild Beaumont.

It Has Been My Honor

Serving as Beaumont’s Mayor in 2017 has been a great honor and brought with it a responsibility that I will never forget. 2015 was a year of discovery for Beaumont, 2016 was a year of accountability and 2017 has become, as I hoped it would, a year of healing and resolution.

Our small town has faced many big issues the last couple of years.  As I reflect back on 2017, I am proud of our City staff and fellow council members for their dedication to resolving the issues created by those before them. Their tenacity has placed Beaumont in a position of growth and prosperity. Highlighted below are the major accomplishments from 2017:

  • Fiscally responsible budget                                                    ADOPTED
  • 5 year Capital Improvement Plan                                           APPROVED
  • General Fund Deficit ($11 Million)                                           ELIMINATED
  • WRCOG Judgement ($67 Million)                                           SETTLED
  • Pardee Claim ($23 Million)                                                      SETTLED
  • BCVRPD Claim ($2.4 Million)                                                  SETTLED
  • Community Facilities District Fund Reconciliation               COMPLETED
  • Refinance for CFD/Mello-Roos Property Taxes (Phase 1)    COMPLETED
  • RDA Reimbursement ($4 Million)                                            DISMISSED
  • SEC Investigation                                                                       RESOLVED
  • Fiscal Sustainability Study                                                        COMPLETED

 

I hope 2018 is a year of continued rebuilding, leading to years of growth and prosperity in all industries and across all sectors of our local economy. On behalf of the City of Beaumont, I extend my warmest regards and best wishes to everyone. May the spirit of this wonderful season be with you and your loved ones throughout the holidays and many blessings in the New Year.

Q & A With Lloyd White

This was published as a political ad in the Record Gazette on 10/23/14

Why do you believe the Beaumont City Council race is so hotly contested this year?

I am feeling good about my part in this. I’m not an incumbent, so I’ve had no involvement in the budget deficits our city has created over the last four years. I’ve not been responsible for the potentially devastating $43 million judgment against Beaumont in the WRCOG lawsuit. I haven’t been sitting on the Council and just letting City staff run the show and make the decisions that affect all of us. It’s common sense that you can’t run your home on credit card debt. Well, we can’t continue to run our city on deficits either. It’s time for a change.

Do you feel the community is strongly behind you?

Yes.  I may not have the support of Marion Ashley and some of the others that have influenced Beaumont elections for years. I have the support of the people, the police officers association, the homes and neighbors that I visit. It is their support I value, not the politicians. Many of my friends and neighbors have suggested that I am the “people’s candidate not the politicians’ candidate” and I don’t disagree with that.

What do you believe you have to offer Beaumont?

Beaumont is a city with great potential, we have plans to grow to sixty thousand people or more in the next decade. Running our city will become more and more like running a business. I have a degree in economics from UCLA and an MBA. I’ve worked for 16 years for the “best-run company” in the Pass—Esri. My wife, Marti, my children, Caitlin and Riley, and I love this community and are committed to serving it. I will bring to the City Council a fresh perspective and the new ideas we need. We can no longer afford the same old “feel good” decision-making that may have worked in the past. I have the integrity, intelligence and “no special interests” perspective we need now for decision making.

Your opponents claim all you do is complain, what would you do differently if elected?

Recognizing the problems we face and criticizing the status quo is not “complaining.” You can’t fix problems and do things better unless you acknowledge what the problems are. You can find my common-sense six-point plan for Beaumont on my website:LloydWhite4Beaumont.com. But let me suggest some critical areas in which we need to do better:

First, we need to stop approving City budgets that the City Council says are balanced but that our own auditors warn are running at dangerous deficit levels. We need to stop ignoring our own auditors when they tell us we are not making good financial choices.

Second, the City Council steers the ship. Right now we are sailing toward significant financial risks like the WRCOG judgment and other pending lawsuits. This is not “gloom and doom”; it is reality. And we wouldn’t even be talking about it now if we had the kind of knowledgeable leadership that took these risks more seriously and were more business and finance knowledgeable.

Beaumont is appealing the WRCOG decision, so why should we worry?

There is always the possibility that we could lose the appeal; there is no guarantee we will win. If we lose, Beaumont would owe $43 million (that’s more than $1,000 for every man, woman and child in our city) plus $8,000 a day in interest. What is our contingency plan if we should lose the appeal?  How will we protect our taxpayers from this potential calamity?  The appeal has provided the duck and cover the incumbents wanted in order to avoid having to talk about an issue that makes it clear we need a new direction and new leaders. We need a contingency plan. That’s what leaders do. Kicking the can down the road is not acceptable strategy.

You mention having strong support, who is aligning to support you?

I have been blessed with a family and friends who are providing financial and other support. The college friends I met some 30 years ago at UCLA when earning my economics degree have pitched in today because they recognize my integrity and honesty and my commitment to serving the public. Many other Beaumont citizens and small business owners understand that we need to improve the way our city does business if we hope to thrive and grow in the years to come. Most important, I am NOT being funded by the special interest PACS who have dominated Beaumont politics for years. I will serve the entire community. That’s the kind of City Councilman you deserve.

What do you say when your supporters ask you who else they should vote for?

If you have three considerations and recognize we need change then you will make your vote stronger by not adding it to the count of those who have not stepped up and voiced the need for change. One vote, vote for change – Lloyd White for Beaumont City Council