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Opinion: Citizen Raises Stink Over Rising City Sewer Tax

By Tom Clifford, Special to Riptide


City of Pacifica staff proposes that we borrow $2.1 million over three years from the wastewater treatment fund (Enterprise Fund).The proposed use of this borrowing is to pay off the pension obligation bond. Wasn’t this bond just refinanced in 2010?



The fund was set up to repair and replace the wastewater treatment system starting in 2020. The fund also owes $21 million in state loans payable by 2022, and another $11 million in bond obligations. 


The fund now has the additional burden of being the primary source of funding for the $50 million judgment under the Clean Water Act (to correct conditions that led to a sewer spill on Linda Mar Beach).


This is the same fund that was plundered by City Council for years until the courts put a stop to it: $750,000 a year was transferred to the General Fund. That money has never been paid back.


City Council has a terrible record with paying back internal loans. Council loaned the Rockaway Beach Redevelopment Agency $6.5 million from the General Fund, and for years the agency found reason after reason not to repay that money. When the state took over the agency, Pacifica taxpayers lost.  


Even if council does set up a repayment program, the Enterprise Fund will not have sufficient money left in it to meet all its obligations in a timely manner. The net result will be that our already high sewer fees will go much higher. Local businesses, hotels, and restaurants will see sewer bills that could put them out of business.


Homeowners on fixed incomes could find themselves unable to pay their property taxes and could lose their homes (sewer fees are collected as part of the total property tax bill).


Please contact your council members and say NO to this unwise plan.



Len Stone 650-355-5700


Mary Ann Nihart 650-359-7624


Karen Ervin 650-483-2692


Mike O’Neill 650-302-2470


Sue Digre 650-278-1606



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While I don't like the idea of this borrowing of funds from the sewage plant fund intended for plant replacement, it may be the only way that the city can refinance the pension obligation bonds (POBs) and save the taxpayers some money by cutting the repayment time down greatly.

Keep in mind, we're talking only about the POBs for emergency personnel, fire, and police. The POBs for "miscellaneous" personnel, that is, everyone else in the city's employ, remain in the hands of bondholders, who, at the end of a 20-year period, will have reaped a 110 percent return on their investment ($11 million + interest = $23 million).

I also would like to compliment the new city manager, Ms. Tinfow, on the clarity and understandability of her budget docs. It is only because of the recent budget hearings that we understand, for the first time I know of, the depth of the debt trouble we are in.

A sewer tax increase was passed 3/11/2013. Starting from a baseline of 2013/2014, it provides a 2.8% increase starting 7/1/14, a 5.9% increase starting 7/1/15, and a 10.4% increase starting 7/1/16. This was to pay for improvements in the system due to the lawsuit. But now the city can afford to extend a loan of about $700,000/year (at only 1% interest!) from sewer funds to pay off pension bonds. So it appears that the city didn't need the sewer tax increase, at least right now?

While I applaud the ingenuity of the city to save us what would be about 6% interest on the pension bonds, it seems that we were taxed for one thing—sewers—but the money wasn't really needed for sewers, and went somewhere else, to pension bonds.

Wow -- Mayor Nihart is apparently more naive than most high school students, even after several years on the job. Sounds a little too uninformed to be participating in managing the city's multimillion-dollar budget.

Given the way the city spends public monies without always getting public approval, it is fiscally more prudent to pay a commercial bank, and not the city.

Since the borrowing from the Enterprise Fund is a refinance of the payments we must make, we are actually paying an additional 1 percent to stretch these payments out. We are paying this extra interest ($6,200 the first year, growing to $21,000 in the third year and then slowly declining over the remaining four years) from the General Fund to the Enterprise Fund. Remember, the General Fund is so short this year that they are hand-wringing about $3,000 in funding for beach cleanup.

Since City revenues are projected to remain flat, City Council should be paying as close to zero percent as it can for this internal loan and reduce the drain on the General Fund.

I sent this email to the five City Council persons:

Dear Councilperson,

I'm writing to object to borrowing from the wastewater treatment fund to pay off the pension obligation fund. Apparently, city staff has proposed that we borrow $2.1 million over three years from the wastewater treatment fund (Enterprise Fund).

We have just endured another increase in sewer taxes, supposedly to pay for improvements/maintenance in the system mandated by the court-ordered settlement. This was occasioned in part by years of "borrowing" from the sewer fund (which was never paid back) and deferring much-needed maintenance.

Collecting property taxes earmarked for one purpose (sewers) but using them for another ought to be illegal. Is it?

I say spend the Enterprise fund ONLY on sewers. No "borrowing" until the last round of "borrowing" is paid back.

And I got this reply from Mary Ann Nihart a day later (pretty good!)

Thanks for your feedback. I appreciate your thoughts and while on the surface I understand your concerns, the money is legally protected. It has to be paid back. In addition, we are currently paying 6 percent interest of your tax money to a corporate bank rather than to ourselves. Personally, I would rather save my tax dollars and grow them by paying the interest to ourselves. It is the fiscally responsible choice.
Thanks again.
Mary Ann

My reply follows:

Mayor Nihart,

Thanks for your timely reply.

Is this money (in the Enterprise Fund), which you say is legally protected, somehow different from the previous money "borrowed" from the sewer fund, and never paid back?

Also, when will it be paid back?

Again, thanks for your time.

I guess I should have asked what "legally protected" means, although maybe that will come out in a further answer.

Add our names to the list of people opposed to the idea of borrowing from the sewer funds, and say that we want the sewer rates reduced as we are obviously paying too much.

Signed: Todd Bray (big fat nobody) and Alida Bray (former Pacifica Resource Center board member, currently on the Sanchez Art Center Advisory Board)

This internal loan is on the agenda for this Monday's City Council meeting and could be adopted as early as the May 27 City Council meeting.

Pacifica is going to bankrupt itself if City Council continues to spend more than is on hand for escalating pension payout.

Somehow it's fitting that Pacifica's own District 3 supervisor candidate running unopposed is the poster boy for pension reform.

Pacifica taxpayers cannot continue to pay out for public pensions. It's time to outsource the police, and restructure the public pension system to a worker-funded 401k plan, like virtually everyone else in the workplace.

No more taxes for Pacifica property owners. Enough is enough.

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