The other climate in the Valley
In the San Joaquin Valley of California, two climates intersect The first is a prolonged, serious drought. The other, less visible, is the new financial climate of RISK FREE AGRIBUSINESS, created by special interests in finance, insurance and real estate, ironically called FIRE. The most obvious manifestation of the intersection of these two climates is the manic drilling of ever deeper wells and the construction on on-site reservoirs by agribusiness firms while, simultaneously, the state provides emergency relief to rural residents whose wells have been sucked dry to irrigate orchards, vineyards and cotton.
It is yet another subsidy to agribusiness in our new totally RISK FREE AGRIBUSINESS by which the taxpayers pay more millions to supply water to rural residents whose wells have been sucked dry by rapacious growers who disregard any responsibility to their communities whatsoever. It helps that more and more of these corporations are owned by out-of-town, out-of-state, out-of-country investors, for example insurance companies, hedge funds, Canadian, Mexican and European conglomerates and various foreign banks. Only in the fiction of American law are these corporations considered people, let alone neighbors.
Agribusiness, not the state, owes its neighbors the cost of this emergency because any fool, even from New York City, can see who is destroying the aquifer of the San Joaquin Valley. It takes people as venal as Valley-county supervisors to miss this, despite the long, dismal roll of farmers delinquent on their property taxes.
Although it is beyond the scope of this note to itemize the amount of money owed by agribusiness corporations and trusts in just one county, Merced, or how many members of the county Farm Bureau made the list, we included an excellent piece in 2014 on corrupt connections between some agribusinesses and a supervisor, still in office. Needless to say, this amounts to another subsidy to agribusiness. The story of the emergency funds for wells in Le Grand, Merced County, is another example of government subsidy that ought to have been paid by the one interconnected family agribusiness whose farmland surrounds the town. Instead, members of that family might be applying now for emergency water deliveries rather than drilling deeper wells. There is no bottom to the sense of entitlement of the great whining farmers and ranchers of California.
Yet another is the property-tax subvention by the state to counties under the Williamson Act. Although, in the wake of the Bust of the real estate Boom, our former governor, Arnold The Hun cut that subvention from the state budget, some agricultural counties, Merced for instance, picked up the difference under the relentless whine from farmers while mercilessly slashing budgets for health and human services at precisely the moment poor people, in these notoriously high unemployment-rate counties, needed those services most.
Also beyond the scope of this note is the amount of money the new, improved RISK FREE AGRIBUSINESS will receive from the new Farm Bureau crop insurance programs in which both the premiums and the payouts are generously subsidized by the taxpayer.
When is the public going to realize that without all these subsidies, our wonderful RISK FREE AGRIBUSINESS is not really profitable at all except by raking in public funds while destroying all commons in its path, and beyond those commons, the general Common Good? -- blj
Merced supervisors approve emergency water aid plan
Program scheduled to begin in August
Nonprofit will operate the program
Meant to give temporary help for residents with failed wells
As California’s drought worsens, Merced County residents whose wells have failed could get some temporary help come August.
The Merced County Board of Supervisors on Tuesday unanimously approved an Emergency Water Distribution Program. The plan will authorize a nonprofit group to supply up to 2,500 gallons of water to residents for health and safety purposes, said Jeremy Rahn, the battalion chief for the county’s Office of Emergency Services. The program is scheduled to be implemented in August.
The goal is to help those whose wells have failed and are waiting either to have their well fixed or to gain access to another water supply, such as through the city, Rahn said. Drilling a new well or finding an alternative water supply could mean months without water for residents. That’s where the Emergency Water Distribution Program comes in.
“The drought is impacting everybody,” Rahn said. “This is the fourth year of drought conditions we’ve been facing. Now we’re seeing impacts affecting health and safety. This program is meant to be a temporary solution.”
Residents who need the assistance must apply and show verification of a failed well. Next, the applicant must go through a screening and review process.
The county has not determined which nonprofit will operate the program. Once it’s up and running, the county will oversee it. The nonprofit will be able to apply for state assistance to run the program through the California Disaster Assistance Act and the Governor’s Office of Environmental (sic) Services. Perhaps what the reporter meant to write was Governor's Office of Emergency Services? -- blj
NOW WE’RE SEEING IMPACTS AFFECTING HEALTH AND SAFETY. THIS PROGRAM IS MEANT TO BE A TEMPORARY SOLUTION.
Jeremy Rahn, battalion chief for county’s Office of Emergency Services
The nonprofit will supply a household with a water tank containing 50 gallons of water per person and 1 gallon of bottled drinking water per person for one day. Once the residence is connected to a water source or has a working well, another household in the same situation will be given water.
Supervisor John Pedrozo said the sooner the program is implemented, the better.
“We need to move as fast as we can on this to make this come to fruition,” he said. “We’re getting calls every day of issues with domestic wells. This is just another way of assisting those in need.”
Board of Supervisors approves nonprofit to distribute emergency water aid
Water will be available for health and safety purposes
Merced County will accept applications Aug. 1
Self-Help Enterprises chosen, will subcontract with local nonprofit
The Merced County Board of Supervisors on Tuesday unanimously approved allowing Self-Help Enterprises to install and maintain emergency water distribution systems for county residents whose wells have dried up.
Choosing a nonprofit to administer the funds was the latest step in the county’s Emergency Water Distribution Plan. The plan authorizes a nonprofit to supply water to residents for health and safety purposes, according to Jeremy Rahn, the battalion chief for the county’s Office of Emergency Services.
Merced County received 80 requests for well-drilling permits from mid-April to June, and some drillers reported wait lists up to 18 months long for a new well.
Self-Help will apply for state assistance to run the program through the California Disaster Assistance Act and the Governor’s Office of Environmental Services.
Rahn said he spoke to about 35 people who plan to submit applications Aug. 1 – when the program is set to begin – to receive the water. Once the applications are submitted, the county will process them so Self-Help can begin to distribute the water.
County officials were unsure exactly when parched residents may receive any water.
WE ARE IN A CRUNCH. WE NEED TO DO SOMETHING NOW.
Deidre Kelsey, Merced County supervisor
At the Tuesday meeting, Adam Cox, executive director of the Builders Exchange of Merced and Mariposa, voiced concern with the county’s proposal process in choosing a nonprofit. He said the county did not contact enough organizations for the program. Cox also was disappointed the county chose an organization from Visalia rather than a local nonprofit.
“There are several organizations in town that are capable of providing these services that were not contacted and would love an opportunity to give back to their community,” Cox told the board.
Jim Brown, the county’s CEO, said the county completed the proper request for qualifications process but moved swiftly on choosing a nonprofit as the board directed. Self-Help will subcontract with a local nonprofit, and the county is open to adding additional vendors as subcontractors, he said.
“We are trying to do our best job to balance that equation of get it done and stay local,” Brown said.
Many of the supervisors agreed it was important to get the program up and running as soon as possible.
“We are in a crunch,” Supervisor Deidre Kelsey said. “We need to do something now.”
Stanislaus supervisor calls for relief for residents with dry wells
Stanislaus County Supervisor Bill O’Brien said the county should consider providing relief to residents whose wells have gone dry and needs an emergency action plan in case drought conditions worsen this summer.
Stanislaus County Supervisor Bill O’Brien said the county should consider providing relief to residents whose wells have gone dry and needs an emergency action plan in case drought conditions worsen this summer.
County staff members had started to explore potential loans for financially distressed homeowners before O’Brien’s comments at Tuesday’s Board of Supervisors meeting. The county’s Water Advisory Committee is scheduled today to discuss a possible loan program for residents who can’t afford new wells and staff members are expected to bring proposals to county leaders soon.
O’Brien also called on the county Office of Emergency Services to prepare a contingency plan in the event that entire rural neighborhoods lose their wells later this summer.
Emergency relief could include portable showers, drinking water and other assistance, the supervisor suggested.
O’Brien represents areas outside Oakdale where many domestic wells have failed after three consecutive drought years. More homes in the Oakdale area – and other parts of the county with sinking groundwater levels – could be jeopardized if water use intensifies in August.
“We are getting into the bad part of the summer and need to look at immediate actions we can take,” O’Brien said.
The board approved a letter asking the state for a temporary waiver on air quality rules for well-drilling rigs. O’Brien said homeowners are waiting two to six months to replace residential wells because drillers are stretched thin, and more rigs are needed in California to hasten the work.
Only drilling rigs with clean-burning engines can meet the state’s air quality regulations. The county will ask the governor’s office, Legislature and Air Resources Board to consider allowing rigs with dirtier engines to drill wells for desperate homeowners for 12 to 18 months.
County Chief Executive Officer Stan Risen said the Office of Emergency Services first will look at other counties’ drought contingency plans before crafting one for Stanislaus. Residents with dry wells have been forced to use bottled water and are not able to take showers or wash their clothes. Some affected homeowners are seniors on fixed incomes, including a man near Denair whose only source of water was a 200-foot hose run from a neighbor’s house.
No data is available on the number of domestic wells that have dried up. A Bee review of county records showed that 69 permits were issued for new domestic wells in the first six months of this year, but it’s believed homeowners unable to afford replacement wells don’t take out permits. Some residents have said they were quoted prices of $17,000 to $19,000 for a new well and pump system.
Supervisor Terry Withrow, who serves on the Water Advisory Committee, said a possible source of loan money for replacing wells is the county’s economic development bank. The committee will discuss other potential sources, such as community development funds, and procedures to verify financial need.
Risen said the county won’t wait for the water panel’s next 100-day report. County leaders will see proposals from their staff within a couple of weeks, he said.
Supervisor Vito Chiesa was optimistic the worst was behind the county. He said irrigation of almond orchards should taper off next month and he had not heard new reports of dry wells from constituents near Denair in the past month.
Officials said many of the failed domestic wells in the county are shallow. The drought has resulted in less surface water for agriculture and more pumping of groundwater to irrigate thirsty crops, putting stress on aquifers.
Tuesday, supervisors adopted a water resources plan for eastern Stanislaus County to meet requirements for outside funding for groundwater management efforts. The plan was developed by Modesto, Ceres, Hughson and Turlock to be eligible for grants from the state water bond act of 2006. Other local agencies may use the plan for grant applications, staff members said.
The county’s Water Advisory Committee, formed to advise the county on groundwater issues, will recommend grant proposals to pay for activities such as groundwater monitoring or efforts to replenish aquifers.
Making Water More Liquid
When water is scarce, letting people trade it gets the precious resource to where it’s needed most
The water wells in the rich farmland of California’s Central Valley keep getting deeper, and the pumps keep getting more powerful. Farmers have agreed to reduce their usage of surface water, but nothing stops them from looking for water beneath their properties. So, in the fourth year of a devastating drought, down they go, pursuing a water table that keeps receding. So much water is being pumped out that the land is subsiding, damaging bridges and canals. One Central Valley cotton farmer has drilled five 2,500-foot wells, each the depth of two Empire State Buildings, the San Jose Mercury News reports. It’s literally a race to the bottom.
What’s going on in the Central Valley is a tragedy of the commons. As with overfishing or overgrazing, the drilling farmers overexploited a free, shared resource even before the drought struck. Individually, their logic is impeccable. Collectively, it could be disastrous. In that respect, the Central Valley is a microcosm of an increasingly parched world that hasn’t learned how to manage one of its most precious resources. A NASA study released in June said that “about one-third of earth’s largest groundwater basins are being rapidly depleted by human consumption.”
People have been puzzling over how to share water for as long as civilization has existed: No one really owns the stuff. It refuses to be tamed, cycling restlessly from air to land to sea. In some times and places it’s precious, in others excessive.
An important step toward resolving conflicts over water is to make it liquid, financially speaking. Water today is illiquid in the sense that the right to use it can’t be transferred easily. California’s mechanism for trading water is slow, clunky, and opaque. “If you wanted to do a trade now, you’d have to meet a broker in a coffee shop somewhere. There’s no Wall Street Journal, no Bloomberg, no Carfax,” says Richard Howitt, a scholar at the University of California at Davis’s Center for Watershed Sciences.
A free market in water can’t exist without clearly defined property rights. California lacks that for groundwater, relying on the courts to sort out conflicts. That leaves farmers furiously trying to outpump each other. A state law passed last year will gradually bring groundwater under regulation, but it doesn’t fully phase in until 2040. “I’m a market animal. I’m a money manager. But having efficient market forces requires a rational regulatory body,” says John Dickerson, founder and chief executive officer of Summit Global Management, a water-business investor in San Diego.
California’s water-rights system dates back to the gold rush, when miners diverted mountain streams
California does have a system for regulating surface water, one that dates back to the 19th century gold rush, when miners diverted water from streams to pan and sluice for gold. The state’s water law is based on the old miners’ code: first in time, first in right. Since 1914 a state agency, now the State Water Resources Control Board, has overseen allotments. Senior rights holders get first dibs on a certain quantity of water based on their historical use. Water rights go with land when it’s sold. That’s a workable basis for a trading system because it establishes a property right. (In the wetter Eastern states, where control of water is less of an issue, a vaguer “reasonable use” standard applies.)
California’s system needs some serious modernization, though. It encourages waste by dictating that water not used this year is forfeited in the future. Courts and the legislature have made clear that farmers won’t lose their water rights if they sell water when they have extra, but some potential sellers remain leery. More important, the state water board must determine exactly how much water holders are entitled to sell. This is necessary because historical allotments of “paper water” far exceed the actual amount of water that California gets, even in nondrought years. Progress is being made: For the first time, senior rights holders are being required to report their water usage annually—and to document their historical rights.
Physical obstacles to trading must be removed, too. Water gets stranded in the wet north of California because it’s hard to move southward past the delta of the Sacramento and San Joaquin rivers, the vast estuary east of San Francisco Bay. Governor Jerry Brown supports building bypass tunnels beneath the delta, but that could cost $17 billion and upsets some environmentalists, who fear the delta will be degraded.
Nothing is easy. Irrigation districts, controlled by agricultural interests, sometimes reject water sales to cities by willing member farmers. The ag interests fear that allowing farmland to go fallow will wreck the farm economy, says Clay Landry, managing director of WestWater Research, a water marketing and consulting firm in Boise, Idaho. With a few exceptions, California has done a poor job of helping rural communities make the transition from farming to other ways of earning a living. So they stick with what they know. The upshot is a sclerotic system in which only about 5 percent of California’s water is traded, and most of that among close neighbors.
If California’s water were fully liquid, more would be flowing to urban areas and less to agriculture, which generates 1.5 percent of the state’s gross domestic product but accounts for 80 percent of the water used by people (i.e., not counting water spared for “use” by nature). The state would need to build fewer costly desalination plants, such as the $1 billion San Diego County plant starting up this fall.
The mix of agriculture would probably continue to shift toward high-value vineyards, orchards, and tomatoes and away from corn, rice, and alfalfa, which need lots of water but fetch low prices and can be grown elsewhere. Farmers given an incentive to conserve water would be quicker to fallow their marginal fields or shift to less thirsty crops. Some types of farming might migrate to water-rich parts of the country—like Iowa, a grain-growing state that’s begun experimenting with vegetables. To protect endangered species, government and environmental groups could step up purchases of water rights to keep streams and wetlands full.
Australia shows what a water market can achieve. There, water rights are traded on an exchange like stocks, prices are posted for all to see, and transactions can be concluded in a day. Allocations are based mainly on a share of what’s actually available, not unrealistic fixed amounts. Farmers in the fertile Murray-Darling Basin of southeastern Australia almost completely stopped producing rice during the Millennium Drought last decade and switched to higher-value crops to keep making a living. University of Adelaide professor Mike Young says the market became possible when farmers chose streamlined water rights and surrendered their tangled old ones. “America is the home of free enterprise,” he says. “The fact that there’s not a water market in America means the institutional arrangements are all wrong.”
California captures enough water each year to meet all its needs if it operates efficiently—a big if. Water usage is already falling. Gradually, “markets are doing what markets do,” says WestWater’s Landry. “There’s learning, information sharing, creativity, and discovery.” The drought is speeding up the process. “What causes change more than anything is crisis,” Thomas Howard, executive director of the State Water Resources Control Board, told Bloomberg earlier this year. “I do see us making progress and moving toward the ideal system.” If not, there’s always Plan B: Pray for rain.
California Farm Bureau Federation
Governor Brown Signs Bill To Preserve Williamson Act
By Kate Campbell
After months of uncertainty, a bill signed by Gov. Brown last week reinstates a revised Williamson Act program intended to preserve the state's landmark farmland-conservation law. Brown signed Assembly Bill 1265 by Assemblyman Jim Nielsen, R-Gerber, which establishes the revised form of the Williamson Act through 2016.
The bill, which takes effect immediately, authorizes counties to revise the term for Williamson Act contracts from 10 years to nine years or from 20 to 18 years—a 10 percent reduction in contract length in return for retaining 90 percent of the property tax relief offered by the act.
"For more than 45 years, the Williamson Act has served as an effective conservation program that helps farmers withstand development pressures and stay in farming," California Farm Bureau Federation President Paul Wenger said. "We applaud the governor for upholding the real benefits of the Williamson Act."
The act became law in 1965 and protects 16.5 million acres of California farmland. Named for its author, Kern County Assemblyman John Williamson, the law requires farmland enrolled in the program to be assessed on its production value, rather than its "factored base-year value" under Proposition 13. Participating landowners agree to retain their land in agricultural use for the length of the contract.
For many years, the state reimbursed participating counties their foregone property tax revenue. But those payments, known as subventions, became a frequent bargaining point in state budget talks and eventually were eliminated.
That caused some counties to consider discontinuing the Williamson Act. Farm Bureau proposed the program contained in AB 1265 as an alternative to encourage counties to maintain the Williamson Act.
Wenger said the law signed by the governor "will save farmers and ranchers throughout California millions of dollars in property taxes and we're glad he signed it. The benefits to all Californians include locally produced food and contracts that ensure land enrolled in the program cannot be used for any purpose besides agriculture."
Having the law officially back on the books is especially important for eight counties that have already adopted the revised version of the farmland protection program. Kings, Madera, Merced, Mendocino, Shasta, Stanislaus, Tulare and Yolo counties all adopted an earlier version of the program under Senate Bill 863 last year, only to see it repealed in March as part of budget legislation. The governor's action means the counties currently participating in the program can continue to implement the shorter-term contracts for the 2011 tax year.
The provisions of the alternative funding mechanism include:
• If counties receive less than one-half of their foregone General Fund property tax revenue from the Open Space Subvention Program, they would be authorized to implement a new provision of the Williamson Act to allow contracts to go from 10 years to nine years or, in the case of 20-year Williamson Act contracts, to 18 years.
• The 10 percent reduction in the length of the contract restrictions would trigger a recapture of 10 percent of the participating landowners' property tax savings.
• Any increased revenues generated by properties under a new contract will be paid to the county. Because the increased revenue will be allocated exclusively to counties, they would recoup 50 percent or more of their foregone property tax revenue.
• Landowners may choose not to renew their contracts and begin the termination process.
"The eight participating counties can expect to recoup $6 million in revenue through this revised program," said John Gamper, CFBF taxation and land use director. "Once adopted by counties, the program's operations should be pretty simple."
At the same time, the benefits to the public of protecting farmland have been retained, Wenger said.
"Besides locally produced food, experts agree agriculture will provide economic stimulus for the foreseeable future," he said. "We've reached a point where people understand how significant food production is and that in California the pressures on farmland and farmers are intense, which tends to drive up land values.
"The Williamson Act helps address some of those issues and at the same time preserves open space for species and habitat protection," Wenger said. "And, with the revised Williamson Act signed by the governor, funds to cover subventions to counties for foregone property tax no longer come from the state's General Fund, but the benefits to farmers and the public remain."
Along with acknowledging Nielsen's role in introducing the bill, CFBF Administrator Rich Matteis noted that Sens. Lois Wolk, D-Davis, and Doug La Malfa, R-Richvale, both served as principal co-authors.
"Of course, we also want to express our sincere appreciation to Gov. Brown for helping to save this valuable land conservation program," Matteis said, "and to all the members of the Save the Williamson Act Coalition who worked diligently for re-enactment of the law."
In a prepared statement, Nielsen said the new law "will provide peace of mind and hope for the future for our hard-working California farm families and their employees."
Sun-Star Special Report: Adams stops bank seizures, taxes go uncollected, Pedrozo brokers special meeting; is it politics?
A last-resort method of collecting unpaid taxes was discontinued by the Merced County treasurer-tax collector eight months ago, resulting in a potential loss of revenue to the county and a break to some businesses that owed hundreds of thousands of dollars. The issue raises questions about the Board of Supervisors’ involvement in the tax collection process.
Sweet potato grower Victor Produce was sent to collections in 2012 and owed the county $67,951.96 with a monthly interest of $861.24, according to an email obtained by the Merced Sun-Star. Owner Jim Victor was set up on a $10,000-a-month payment plan but failed to make payments, the email said. email@example.com
A last-resort method of collecting unpaid taxes was discontinued by the Merced County treasurer-tax collector eight months ago, resulting in a potential loss of revenue to the county and a break to some businesses that owed hundreds of thousands of dollars.
The decision to quit collecting taxes using bank seizures comes as the county faces a potential deficit of $9.3 million for the 2014-15 fiscal year, according to a preliminary budget released last month.
The issue raises questions about the Board of Supervisors’ involvement in the tax collection process. District 1 Supervisor John Pedrozo allegedly told Merced County Treasurer-Tax Collector Karen Adams that one business owner -- who owed the county nearly $68,000 at the time -- was “good for the money.”
That business -- though it struggled to pay its taxes -- made a significant monetary contribution to Pedrozo’s most recent political campaign.
In an email obtained by the Merced Sun-Star, Adams directed staff at the Revenue & Reimbursement Department to “discontinue bank seizures” until further notice. Adams provided no explanation for stopping the collection effort in the Aug. 9, 2013, message.
Adams, who is up for re-election this year, has been the Treasurer-Tax Collector since 2002. She took over the Revenue & Reimbursement department after a reorganization in 2009.
Adams acknowledged stopping bank seizures in an interview with the Sun-Star and said it’s unclear when they will be reinstated. Adams said she discontinued the practice after discovering two seizures had been done illegally and because of a shortage in management staff.
“There were several bank seizures that came to my attention that were not executed legally and it’s my job to follow the law,” Adams said, adding that collectors tried to seize money to extinguish debts past three years -- a violation of the state Revenue & Taxation Code. Adams said she’s still “refining” the process, but has added a checklist to ensure collectors don’t go after taxes older than three years.
A bank seizure is an enforced collection of unpaid taxes that involves freezing a delinquent taxpayer’s bank account and taking the money that’s owed. Tax experts say it’s the last resort and happens only after collectors have tried everything else, including phone calls and letters.
“Collectors try to work first on agreements and work with people as much as possible,” said Gordon Ford, Stanislaus County Treasurer-Tax Collector. “It’s just when they absolutely refuse to be cooperative that you have to take a more drastic step.”
Bank seizures do more than just collect delinquent taxes owed to the county.
They are also a revenue generator for the county’s Revenue & Reimbursement Department, which gets a $50 collection fee for each bank seizure it performs.
One collector, who spoke on condition of anonymity in order to protect her job,recalled doing at least 10 bank seizures in one week. There are five collectors in the office, and if each one handled the same amount, it would be $2,500 in weekly revenue to the department.
“That is what helps sustain our office,” she said.“You’d think something like this that generates so much money for the county would be a top priority.”
That extra revenue might have saved Mia Kendall’s job, according to county records. She was one of three people laid off from the Revenue & Reimbursement Department last year because revenues decreased by $127,168 from 2011-12 to 2012-13. Revenues fell another $150,731 from 2012-13 to 2013-14.
“We kept asking if our numbers were good and if we’d survive another year,” said Kendall, who worked as a collections clerk for eight years. “They kept telling us we were OK, and we were looking at it every month. Then she (Adams) came in and said the numbers weren’t where they wanted them to be.”
Kendall said she believes the loss of revenue from discontinuing bank seizures was one of the reasons she got a pink slip.
“That’s major revenue that would have saved my job,” Kendall said. “This was instant money and sometimes the accounts were almost $25,000. It didn’t make sense, because who would stop money coming in?”
Adams said the department’s drop in revenue isn’t because of stopping bank seizures. She blamed it on the loss of several large collection accounts -- the county hospital, traffic fines in 2009 and court infractions two years ago.
“So it was not the lack of revenues from a $50 bank seizure fee,” Adams said. “It was the loss of revenue from our client base changing.”
‘Special treatment’ for some
In response to Adams’ decision to stop bank seizures, an email from a collector in January captured her frustration -- and pointed to three businesses that owed large sums of money.
“I have a folder full of 2012 taxes and a folder full of 2013 taxes that are ready for bank seizure that I CAN (sic) collect on,” Nicole Mattos wrote in the email obtained by the Sun-Star. “The county needs the revenue and R&R has been told we need to generate more revenue, but we are not being allowed to. It is very confusing why accounts are assigned to our office, but we are not allowed to do our job.”
Mattos said Summit Sales, a pipe-plastic manufacturer in Gustine, WakeCraft Boats Inc. in Atwater, and Victor Produce, a sweet potato grower in Livingston, are a few examples of businesses that owe substantial amounts of money, and their cases had reached the point at which a bank seizure would be the next step.
Mattos declined comment when contacted by the Sun-Star.
Summit Sales was sent to collections in 2010 and had a balance of $60,420.54 as of January, accruing $408.34 a month in interest, according to the email. Mattos said in the email that she knew the business owner personally and believed he had money, pointing out that he owned several homes.
“We tried enforced collections until he spoke to you (Adams), and we were advised to back off,” she wrote in the email, adding that the state seized what he owed them. “Now R&R along with the taxpayers of Merced County is left holding the bag.”
Another collector, who spoke on condition of anonymity, worked closely on the account for Summit Sales, which she described as a “huge account.” “The guy was supposed to come in and make arrangements to pay and he never did,” she said. “He never came in, never answered his phone, and we were told to never seize it again.”
Adams denied speaking to the owner of Summit Sales and said she aggressively pursued collection efforts, including closing the business temporarily. “It was the very first time we closed a business,” she said. “I have never backed off. Instead we did multiple seizures, but we couldn’t find a bank account that had any money in it.”
Attempts to reach Summit Sales’ owner Mitch Giles were unsuccessful.
WakeCraft Boats owed the county $38,671.62 by January, accruing $377.96 a month in interest, according to the email. Mattos said the owner made only two payments, one in 2010 and another in 2013.
“R&R confirmed he owns ranches and property and was not in a financial hardship,” Mattos wrote in the email. “We asked for him to provide proof of his financial hardship, but we were told he did not have to prove that to us.”
A collector who worked on the account said WakeCraft Boats is still in business, despite owing thousands of dollars in taxes. The business was sent to collections in 2010.
“We’re not able to do our jobs. The powers that be are keeping us from doing the job,” she said. “It’s revenue for the county, and if we’re not doing that, everybody suffers.”
David Telling, owner of WakeCraft Boats, declined comment when contacted by the Sun-Star earlier this month.
Pedrozo’s involvement, campaign contribution
Sweet potato grower Victor Produce was sent to collections in 2012 and owed the county $67,951.96 with a monthly interest of $861.24, according to the email. Owner Jim Victor was set up on a $10,000-a-month payment plan but failed to make payments, Mattos said in the email.
Mattos said Victor Produce’s bank account was seized twice in 2013, but collectors had to give the money back both times at the direction of Adams.
“You told us ‘John Pedrozo said he was good for the money,’ ” Mattos wrote in the email. “Is Mr. Pedrozo writing the county a check for Victor Produce’s taxes?”
One of the collectors who spoke on the condition of anonymity recalls having to return money to Victor Produce multiple times after it was seized. “On two separate occasions, we were instructed to give his money back,” she said. “Karen Adams came in with Victor Produce, a year ago, and said ‘you will give his money back and you will set him up on a payment arrangement.’”
Adams acknowledged refunding Victor’s money after it was first seized on Feb. 7, 2013, but said it was because the seizure was performed illegally. She denied returning his money a second time, as claimed by the collectors.
“It came to my notice before I met with Mr. Victor that the bank seizure had been executed illegally,” Adams said, adding that they tried to collect taxes beyond three years.
In November 2013, the business owner reduced his monthly payments to $2,000, but still did not make the payments, Mattos wrote. “Finally Mr. Victor admitted he is having financial problems (no surprise to R&R) and is moving to Mexico,” Mattos said in the email. “The county/taxpayers are left holding the bag on this one as well.”
Though the business owner admitted to financial hardship, he was able to contribute money to Pedrozo’s re-election campaign last year.
Victor Produce donated $1,000 to Pedrozo’s campaign in February 2013, according to the supervisor’s financial disclosure forms. It was the largest monetary contribution to Pedrozo during the filing period from Jan. 1, 2013, to June 30, 2013.
Having won re-election in November 2012, Pedrozo’s campaign was long over when he received $1,000 from Victor Produce. But shortly before getting the donation, the supervisor received a phone call from the business owner in February.
Pedrozo said he got a call from Jim Victor after the county first seized his bank account on Feb. 7, 2013. Pedrozo said Victor was upset because he didn’t have enough money to pay his employees that week.
“After I heard his story, that’s when I got involved like I did,” Pedrozo said, adding that Victor Produce is a large business and employs many people. “He was unable to make payroll for his business so he contacted me and I spoke to Mr. (Jim) Brown (County Executive Officer) and Karen (Adams) to see if we can work something out.”
Pedrozo said he met with Victor and Adams in person on Feb. 13, 2013 -- the day the donation was received -- to come up with a payment plan. Pedrozo said he saw Victor again later that day to accept the $1,000 donation.
The money was recorded on the supervisor’s financial statement two days later on Feb. 15, 2013.
But when Victor did not make payments based on the plan, Pedrozo said, he received a call from Adams.
That’s when Pedrozo said he arranged a second meeting on May 31, 2013, with Victor, Adams and County Executive Officer Jim Brown. Pedrozo said both Brown and Merced County Counsel James Fincher were aware of the meetings and the steps he took to help Victor.
“County Counsel was aware of everything I was involved with -- the whole process -- as was Mr. Brown,” he said.
In an interview with the Sun-Star, Brown said it’s not uncommon for him to participate in meetings about constituent issues, though this was the first one about delinquent taxes. Brown has been CEO since December 2011.
“Pedrozo said he would like me to be included in this meeting,” Brown said. “I had very limited knowledge on the situation. I’m not sure I said a thing the whole meeting. It was to observe and to make sure (Victor) was treated fairly and the issue was resolved.”
Brown denied that he had any knowledge of the campaign contribution to Pedrozo before this week.
Pedrozo said Victor’s $1,000 donation didn’t influence the decision to help with his tax troubles. “All I know is he was a constituent of mine and he needed help. I would do that for any of my constituents,” he said. “When I get a phone call from someone, I try to help them.”
Pedrozo claimed he didn’t know Victor personally, but that didn’t match up with what the business owner told the Sun-Star. “He was a good friend of mine, so I went up and talked to him and he helped me out,” Victor said. “He just negotiated with them and talked to them. He did a good job.”
Victor said he owed close to $142,000 from property reassessments, not delinquent taxes. The bill came as a surprise, Victor said, because he thought it was taken care of by a staff member. But the business was behind on its reassessment taxes by about four years.
“They came and slapped me with a bunch of taxes and said I have to pay it now,” Victor said, adding that he made multiple payments before his account was seized. “I specifically told them, we started a new business in New Mexico and I told them I needed more time, but they wouldn’t give it to me. Instead of them working with you to help you out, they seize your account after you made payments.”
Victor said he doesn’t see anything wrong with contacting his county supervisor for help. “I think it’s his job to try to find a solution to the problem and I would hope he stays where he’s at because people need him,” he said. “I’m not the first person he’s helped out.”
According to Adams, Victor still owes the county about $60,000 for his 2012 and 2013 taxes, but is up to date on his current payment plan.
Other supervisors and political experts sound off about issue
Victor Produce was one of the accounts that got “preferential treatment” from Adams, said one collector familiar with the account. Some business owners picked up the phone and called county supervisors to get a break, she added.
“There are certain people that call the Board of Supervisors and say who they are,” she said. “They say, ‘I know so and so, and I will call the board.’ The Board of Supervisors is not supposed to be involved at all in the collections process in this county.”
District 2 Supervisor Hub Walsh said he doesn’t recall receiving such calls from constituents, though people sometimes call to ask about processes and payment deadlines. “What I normally do is I try to get as much information as I can, then refer them back to the department head to resolve the issue,” he said. “But I will not call in and say ‘Hey Karen, cut him some slack.’ ”
District 4 Supervisor Deidre Kelsey said she also refers people to Adams and tries to ensure proper communication, but hasn’t met with constituents about tax-related issues. “Beyond that, I don’t think there’s any reason for a county supervisor to get involved with trying to ameliorate the taxes someone owes,” she said.
Board Chairman and District 5 Supervisor Jerry O’Banion said he’s assisted with tax-related problems, but stops short of trying to sway the process. “I do expect the department head to make up their own minds on how the constituent can be helped,” he said. “I’ve never tried to intimidate anyone or force anyone to make a specific decision.”
District 3 Supervisor Linn Davis did not return calls for comment.
Adams said county supervisors “quite often” get involved with the tax collection process for constituents, though the level of involvement varies by supervisor.
“Depending on the supervisor, it may just involve an email or they may just ask me to deal directly with the taxpayer, or they may voice the request of their taxpayer and I deny it,” Adams said. “Regardless of any kind of pressure that’s been put on me, I have never granted any leniency to anyone.”
A political expert said Pedrozo’s behavior could be a conflict of interest and an example of influence peddling, which happens when an elected official uses their influence to sway a government decision. She said it appeared there was a favor being paid back -- the large contribution to Pedrozo’s campaign.
“Why is he helping him (Victor) and not anyone else?” asked April Hejka-Ekins, professor emeritus in the political science and public administration department of California State University, Stanislaus.
The tax collection process is directed by state laws.
According to Penal Code Section 428, anyone who “willfully obstructs or hinders any public officer from collecting any revenue, taxes, or other sums of money in which the people of this state are interested” is guilty of a misdemeanor.
Reasons for officials to pursue discontinuing bank seizures
Gary McKinsey, a private Modesto-based accountant, said discontinuing bank seizures could be motivated by political reasons.
“This could be a nice move politically to be able to say to the voting public, ‘Look, I’m on your side, I’m not going to arbitrarily take money out of your account,’ ” he said.
The longtime accountant said stopping bank seizures decreases county revenue and encourages delinquency or nonpayment. “If there are no repercussions, then why pay your taxes?” McKinsey said. “Most counties are cash-strapped, so to quit attempting to collect money doesn’t make sense.”
One expert said bank seizures are handled differently in each county, but can be a costly and tedious process for counties with limited resources.
“They are really time-consuming and it depends on if you have the staff to deal with them,” said Shari Schapmire, president of the California Association of County Treasurers and Tax Collectors and treasurer-tax collector of Mendocino County. “If you don’t have the staff, it’s not a place you want to make a mistake.”
Gordon Ford, Stanislaus County’s treasurer-tax collector, said a bank seizure is only one tactic for collecting money. Changing a collection method could be beneficial, he added. “I would like to think that no collector would throw away a technique forever,” he said. “We’ll apply different techniques at different times to try to generate revenue.”
Ford said Stanislaus County hadn’t used bank seizures in many years, but recently started the practice again.
In Fresno County, the treasurer-tax collector Vicki Crow said it’s good to give collectors all the tools available to them, especially because collectors are given performance measures. Fresno County performs bank seizures when necessary.
Crow said she occasionally receives calls from Board of Supervisors’ assistants asking to help a constituent, but doesn’t allow it to influence her decisions.
“I take an oath to follow the law and there is law directing the collections effort,” Crow said. “We would politely discourage any of our Board of Supervisors from being involved in it. In fact, they really don’t have any influence because it’s ultimately my decision and it’s law-driven.”
Emergency state funding issued to repair Le Grand wells
State and local government officials joined forces this week to provide financial assistance to a community on the brink of emergency after losing two of its three water wells last month.
Assemblyman Adam Gray, D-Merced, Merced County Supervisor John Pedrozo, and officials from the state Department of Public Health and the Governor’s Office of Emergency Services toured Le Grand’s wells Friday – most of which are aging, out-of-service or experiencing drops in water production.
“I have a lot of sleepless nights right now,” said Richard Kilgore II, public works superintendent of the Le Grand Community Services District. “If we lose another well, we’d have to go to bottled water or have portable water trucked in.”
Kilgore, who’s worked for the district 33 years, said he’s never seen a critical situation like the one Le Grand now faces. He placed a call to Pedrozo, who contacted Gray’s office to help secure state emergency drought funding to repair Le Grand’s wells.
Gray said his role was to bring the situation to the state’s attention and make sure the agencies could act. “This community had an emergency situation,” Gray said. “Let’s get in front of a crisis and solve the problem, and that’s what we did here.”
Le Grand will receive $237,000 in state funds for the first phase of redeveloping its wells, according to Kassy Chauhan, Merced district engineer with the state Department of Public Health. That amount includes $30,000 for bottled water, if necessary. The funding is allocated based on a community’s need and the level of emergency, state officials said.
The money will help rehabilitate a water well drilled in 1966 that collapsed due to its age and another one that had a valve fall out. A third well needs new equipment to reach its capacity of producing 1,000 gallons a minute after it dropped to 200 gallons a minute.
Kilgore said district officials made temporary fixes to some of the wells, but a permanent solution is needed.
If the first round of repairs doesn’t fix the problems, Le Grand could get another $240,000 from the state’s public water system drought emergency funding. That money would be used to purchase private land that contains a well drilled by a developer in 2005.
“The development didn’t happen because the housing market went to pieces, but he already drilled the well,” Kilgore said, adding that it’s 75 feet from a water main. “We’ve gotten permission to test the well, and if it meets state requirements, we’ve already talked to them about buying it.”
Kilgore called the funding a “godsend” and said repairs will start within weeks. Without the emergency funding, he said the community of Le Grand could have been in serious trouble.
The situation already impacted area schools, and education officials were thinking of a backup plan, said Rosina Hurtado, superintendent principal of the Le Grand Elementary School District.
“Toward the end of the school year, our water pressure went really low when the wells started going out,” Hurtado said. “We were getting concerned because we need to have the restrooms functioning and have drinking water for the students.”
Hurtado feared the water shortage could affect businesses that provide local jobs during the summer.
One of those businesses has already made several changes to help conserve water.
“We have to be more careful with water when we’re washing dishes and can’t keep it running,” said Margie Vallejo who works at the Pizza Factory in Le Grand.
“It’s scary thinking we might not have the water,” she added. “It’s a small town. What’s going to happen to us if that happens?”
Kilgore said Le Grand residents are on a “stage 3” water conservation level, which means restricted watering days and the mandatory use of buckets to wash cars. Stage 4 would ban outdoor watering and car washes.
Pedrozo called the current drought the worst he’s ever seen, but said the funding will help prevent a dire situation for Le Grand residents. “Water is our most precious commodity,” the supervisor said. “I think we acted on it quickly enough, and that settled people’s nerves.”
While the well repairs will benefit residents living in the water district, they’re not the only ones suffering from one of the driest years on record.
Longtime growers like the Giampaoli family have been forced to idle 150 acres of land. The family has about 20 private wells on their Le Grand property.
“We’re just hoping the wells we have last for the season,” Dario Giampaoli said. “I don’t know what next year will bring. It’s day by day, I guess.”
Julie Giampaoli said one of her domestic wells, which reached around 250 feet, has gone dry. She urged politicians to think about long-term water-storage solutions.
“You can’t build a dam overnight. We needed this a long time ago,” she said. “Funding is great, but ultimately, we need the long-term storage. If we go completely dry, the nation’s going to feel it.”