Audit Will Delay Water System Decision

A decision on whether to lease the city’s water system to a private company will most likely be delayed until November while the plan is reviewed by an independent auditing firm, City Manager Bill Smith said Wednesday.

For the past several months, city staff members have been soliciting bids from companies interested in leasing and operating the aging water system, which is $10 million in debt and needs about $20 million in repairs.

A proposal from the top bidder, California-American Water Co. of Chula Vista, would give the city $151 million in cash payments over 40 years, as well as provide $6.5 million up front for infrastructure improvements, Smith said.

The plan is being proposed as an alternative to raising residents’ water bills by about 25% to pay for the repairs.

But some residents, a City Council member and city union leaders have questioned the credibility of the privatization proposal, saying the deal might be too good to be true. Councilman Frank Fry Jr. compared California-American to “Santa Claus.”

At a special meeting Tuesday, Councilman Tony Lam proposed that the city hire an independent accounting firm to audit the plan and ask the city’s Financial Review Committee to conduct a study too.

The council supported Lam’s proposal on a 3-2 vote, with Fry and Councilwoman Margie L. Rice dissenting.

“This has become so political, and there’s a lot of misinformation out there,” Lam said Wednesday. “I wanted to balance this out and get an independent voice.”

Smith said he had hoped to present a final contract for the council’s review on Oct. 22, but the audit will delay that.