Water Districts’ Merger Talk Could Rattle Whole State

Blame it on Lester Boyle.

After all, it was Boyle who brought this merger issue up in the first place, back in the 1950s, and it has been a thorny issue here ever since. Boyle, founder of an engineering company, made the seemingly simple suggestion that Capistrano Beach’s water and sanitation districts merge.

Forty years later, election season has resurrected Boyle’s idea in the rustic Doheny Village section of Dana Point, home of both districts. But merger talk can open up a monstrous can of worms with reverberations for water districts statewide, some water officials contend.

California has 3,172 independent special districts--including about 35 in Orange County alone--each with a budget and board of directors who receive salaries and, usually, health and travel benefits.

Critics call the districts a hidden and extremely expensive layer of government that is rife with waste.

“It is absolutely unbelievable and unconscionable the benefits some of these directors get at taxpayer expense,” said Mike Reed, who is himself a director of another small, independent district in Dana Point called the Capistrano Bay Park and Recreation District.

But supporters say the districts and their elected boards represent American democracy at its most fundamental and local level.

“It’s the closest form of government for the people,” said Catherine Smith, deputy director of the California Special Districts Assn. “A local area can come together and say we want this service performed and we’re willing to pay a fee or have a property tax assessment. It’s much more of a chance to have citizen participation. It’s not the intimidation of going to your state legislature or the County Board of Supervisors. It has the ability of reflecting what a community wants.”

Because of its not-so-distant rural roots, south Orange County has myriad districts, most of them unknown to the public. Six water districts and two sanitation districts, all with multimillion-dollar budgets and all charging customers different rates, exist in Dana Point alone.

The consolidation of these districts has been talked about for years but rarely acted upon until this fall, said Ray Miller, who retired this year after serving for 20 years as general manager of the South Coast Water District.

“While I was a general manager, I must have been contacted six times by the Orange County Grand Jury, asking me why we can’t consolidate these districts,” Miller said. “They wanted to know why we have so many.”

Many of the South County water and sanitation districts are anachronisms that date back to the large landowners who needed water and sewer services for their ranches or farms, Miller said. That they have survived into the 1990s, however, is often more a testimony to the stubbornness of the district directors and their ability to cling to their seats, some water experts say.

“There’s only one reason directors start balking when you talk about mergers,” said T.J. Meadows, a San Juan Capistrano native who served for 40 years as the general manager of the city’s water district. “They don’t want to give up their perks. Otherwise, these districts would have merged a long time ago.”

In some cases, after months of political battles, districts have merged. The South Coast Water District and the South Laguna Sanitation District merged in July, 1976, but only after agreeing to expand to a seven-member board, Miller said.

Since that merger, however, the directors have voted to phase out health benefits they once enjoyed.

“Those benefits are uncalled for,” Miller said. “That shouldn’t be done.”

The fact that directors of some of these districts receive health benefits, travel expenses and monthly stipends in exchange for meeting two days a month infuriates some local officials.

Last year, when several directors of Reed’s district attempted to vote themselves health benefits last year, Reed denounced the idea.

“My feeling is we, as directors, are here as a community service, not to collect things like health benefits from the taxpayers,” Reed said. “People who want those benefits are serving for the wrong reasons.”

Not everyone agrees.

The five directors of the San Clemente-based Tri-Cities Municipal Water District, who meet twice a month, do get vision, medical and dental benefits for themselves and their dependents paid by taxpayer funds. That district also offers lifetime health benefits to directors and their dependents after 12 years of service on the board, a benefit the district’s full-time employees do not get.

Lloyd Woerner, a director of the Dana Point Sanitation District, which does not offer benefits to the board, is another critic.

“I think it’s sinful that anybody would collect health benefits out of an elected office in a special district,” Woerner said. “It’s just greedy. I don’t think there is any office in a special district that merits that. These are not full-time jobs.”

It would make the most sense, Woerner said, to merge the two sanitation districts that serve Dana Point.

Dennis A. Erdman, who is both the general manager of the Capistrano Beach County Water District and a 16-year Tri-Cities director, defends the practice of offering health benefits. Most of the directors are elderly by the time they retire from the board and wind up claiming Medicare supplements only, Erdman said.

“In actuality, the benefits have never really cost the district much money,” he said. “I’m not saying that potential doesn’t exist, but it hasn’t yet.”

Nevertheless, some water officials say the Tri-Cities Municipal Water District represents a prime target for a merger. The district exists only as a “middleman” in the flow of imported water to the area and acts as a wholesaler, buying water from one agency and selling it to another.

Tri-Cities, headquartered in San Clemente, offers a contrast to the financial situation of that city. While the city of San Clemente had to eliminate 25 jobs this year and nearly had to cancel its annual Fourth of July picnic for lack of funds, the projected Tri-Cities budget for fiscal year 1992-93 lists nearly $100,000 in meeting fees, travel and resort accommodations, convention attendance charges and health benefits.

Tri-Cities records show that in the 18 months between Jan. 1, 1991, and June 30, 1992, all five directors traveled to two conferences in California and four directors attended another.

Miller said conferences are beneficial if one or two members attend and report back to the others, but adds that the benefit can be abused if entire boards attend.

“Four of five directors attending a conference is a little overkill,” Miller said. “If one or two go, they normally walk away a little smarter, which is good. But you can easily overdo it.”

John P. Serences, a Tri-Cities director who has served on the board since the district was formed in 1959, said the cost of traveling to meetings is necessary to keep up with changes in the water industry.

“You have to learn; you can’t sit still,” Serences said. “I have 32 years in this business, but the younger people need to learn. That takes a lot of time.”

Of the need for health benefits for water district directors, Serences said Tri-Cities can afford it, and that the actual costs are low. Tri-Cities budgeted nearly $24,000 for the 1992-93 year for director benefits.

“It’s peanuts,” he said. “We are not talking about a lot of money here. I think the district utilizes money the best way we can.”

District general manager salaries are also potential areas of concern, according to Dana Point district director Woerner. Some of the small districts in South County offer their managers salaries in the $75,000 range, plus car allowances, although there are usually less than 10 employees to oversee.

“Those salaries are ludicrous,” Woerner said. “They don’t compare with other public sector salary ranges at the county level, for instance.”

These kinds of savings are at the heart of the current election in Capistrano Beach, where 14 candidates have lined up on both sides of the merger issue and are seeking election to the water and sanitation boards.

Susan Trager, a well-known Irvine-based water rights lawyer, says the small, special district system works for the good of the public most of the time.

“You are dealing here with a public servant mentality . . . with people who are not political and not aggressive,” she said, adding that the small district represents “one of the true town hall meetings left in this country.

“The bigger they get, the less responsive they are; they lose their humanity,” Trager said.

Trager contends that districts will and should merge during the normal course of time. But even when they do, it will not mean real savings for the taxpayers.

“Today, people get a glass of water delivered to their tap for 1/100th of a cent,” Trager said. “That’s almost free. How can people complain?”

Water Districts Everywhere

Four South County water districts, all serving Dana Point, differ considerably in how they spend taxpayer money and pay their directors.

Capistrano Capistrano Beach Beach County Water Sanitary District District Formed 1948 1928 Annual budget $970,000 $1.2 million Cash in bank (reserve) $2.5 million $1.5 million Directors 5 5 Annual director fees (total) $7,500 $17,800 Annual director expenses (total)** $10,000 $16,000 Per director meeting stipend $100 $100 Monthly meetings 1 2 Stipend for committee or conference meetings $50 $100 Dental/medical/vision benefits Yes Yes General manager’s salary* $57,000 $65,600 Number of employees 9 8

Tri-Cities Dana Point Municipal Sanitary Water District District Formed 1956 1959 Annual budget $1.8 million $12.8 million*** Cash in bank (reserve) $1.8 million $2.5 million Directors 5 5 Annual director fees (total) $6,500 $20,000 Annual director expenses (total)** $7,500 $48,000 Per director meeting stipend $100 $125 Monthly meetings 1 2 Stipend for committee or None $50 conference meetings Dental/medical/vision benefits No Yes General manager’s salary* $42,000- $20,500+ 66,000 Number of employees 7 5

* Plus benefits and retirement

** For conferences, meetings and travel

Note: Tri-Cities administrative assistant gets $45,000 for part-time work; $60 per hour

*** Includes water sales

+ Part-time

Source: Individual districts

Researched by LEN HALL / Los Angeles Times

Times staff writer Jodi Wilgoren contributed to this story.