City of Plymouth

Summary

The Grand Jury received three complaints alleging misconduct by members of the City Council. These allegations covered a wide range of issues including violations of the Brown Act; misappropriation of funds, misrepresentation concerning the Arroyo Ditch and other water related problems. The complaint also alleged mishandling of the proposed veterans’ hall.

After extensive investigations, the Grand Jury concluded that most allegations were unfounded.

Findings

1. After holding public hearings, the City of Plymouth entered a development agreement with Sutter Home Winery on December 11, 1997.
2. For many years, water from the city’s water treatment plant overflowed onto the property now owned by Sutter Home Winery. Under the terms of a development agreement, the city sells the overflow and additional untreated water to Sutter Home Winery for $45 per acre-foot.
3. The water rate charged Sutter Home Winery was determined by reviewing the rate structures of other cities and water agencies.
4. Planned Development (PD) zoning allows developers to vary from the requirements of other zoning districts in order to provide the city a better arrangement for the development of the land than might otherwise occur. The City Council allowed Sutter Home Winery to operate under this zoning.
5. PD zoning allows for uses similar to Sutter Home Winery’s operation. No Environmental Impact Report (EIR) was made.
6. Until recently, the city charged employees time against the water accounts based on the estimated time spent doing water related activities. This year, the city instituted an employee time reporting system that accurately accounts all time spent on each activity.
7. Under contract, the winery furnishes shared funding for a person to help with the ditch maintenance.
8. The 1997 and 1998 storms knocked out a large portion of the Arroyo Ditch. The city did repairs on the Arroyo Ditch with the help of the Federal Emergency Management Agency (FEMA) grants.
9. City financial records reflected an error of $111,000 in the current fiscal year.
10. At no cost to the city, the Amador Water Agency prepared a study for a lift station on the Arroyo Ditch.
11. The county may assume ownership of the Arroyo Ditch if the city fails to maintain a minimum water flow. The city is required to maintain a rate of flow of one cubic foot per second or risk losing ownership of the Arroyo Ditch.
12. There was damage to the Plymouth pump. The Sheriff's Office investigation was inconclusive and could not prove vandalism. Wear and tear on the pump may have caused the damage. The city did not submit an insurance claim.
13. No organized veterans group exists in Plymouth.

Conclusions

1. The city was not in violation of the Brown Act when it negotiated a development agreement with Sutter Home Winery.
2. The water rate charged to Sutter Home Winery is reasonable and provides additional income to the city.
3. The water rate charged to Sutter Home Winery creates an inequity for other commercial users. The city charges all other users a metered rate. This occurs because there is currently no way to supply untreated water to most other commercial users.
4. The city followed its general plan concerning Sutter Home Winery. An EIR for the property was not required.
5. There is no evidence of misappropriation or co-mingling of water funds. The city’s new time reporting system will more accurately reflect actual charges for work in each of the four water budget categories.
6. Faced with extensive damage to the Arroyo Ditch and high repair costs, the city acted responsibly when it looked for other alternatives. The process of determining the feasibility of a lift station and the application for funding through a grant is ongoing and appropriate.
7. The budget error of $111,000 occurred because of a software error with the city’s accounting program.
8. The county’s assistance with a grant application to install a pump/lift station indicates the county’s desire to ensure ownership of the Arroyo Ditch remains with the City of Plymouth.
9. The cause of damage to the city’s pump was not conclusively determined in the Sheriff's Office report. Therefore, an insurance claim was inappropriate.
10. The county cannot release funds for a veteran’s hall unless a qualifying veterans association is established.

Recommendations

1. Contract with large users needing untreated water to generate additional income for the city.
2. Establish a more equitable water rate for commercial users needing untreated water.
3. Continue pursuit of a long-term solution to Plymouth’s chronic water problem.
4. Encourage the formation of an organized veterans group.
5. Explore methods to improve communication between the council and citizens.

Comment Requirements

The Grand Jury requests that the Mayor responds within 90 days from the official filing date of this report as required by Penal Code 933(c).

Authority to Investigate

Penal Code Section 925(a) provides that the Grand Jury may look into the misconduct of public officers and examine the books and records of any city. Because of its deliberations and a vote of at least twelve members as required by Penal Code Section 916 to conduct this investigation, the Grand Jury determined the investigation would focus on alleged:

• Brown Act violations with regard to the development agreement between the city and Sutter Home Winery
• favorable water rates given to Sutter Home Winery
• mismanagement of the Arroyo Ditch
• co-mingling of water accounts
• misappropriation of funds for a veterans hall

Method of Review

Members of the Grand Jury conducted interviews with the following people:

• Mayor
• City Clerk
• City Planner
• City Engineer
• Amador County Director of Public Works Agency
• Amador Water Agency General Manager
• 5th District County Supervisor
• General Manager of the Amador County Fair

Grand Jury members also reviewed:

• the city’s file on the Sutter Home Winery project
• the development agreement between the city and Sutter Home Winery
• zoning ordinance
• the lift station study
• agendas, minutes, and other documents

The Grand Jury also toured the Arroyo Ditch with the City of Plymouth Public Works Director, city employees, and Mayor.

Background

The Grand Jury received three citizens’ complaints against the city officials. The complaints alleged that the City Council violated the Brown Act with respect to the development of an agreement between the city and Sutter Home Winery. The complaints further claimed the city failed to maintain the Arroyo Ditch, choosing instead to pursue an ill-conceived plan for a pump-lift station.

Development Agreement

The City Council signed a development agreement with Sutter Home Winery that allowed them to build and operate vineyards and a winery on lands zoned PD. The City Council held several public meetings regarding the development agreement. Part of the agreement provides that Sutter Home may purchase untreated city water for $45 per acre-foot. Most of this water previously overflowed onto the property from the city’s water treatment plant. Sutter Home Winery also agreed to provide shared funding for one city worker for ditch maintenance.

The water rate is not available to all commercial users because the city cannot deliver untreated water to all locations.

City Budget Issues

The city collects money from the sale of water and meter charges. These monies and other receipts form the basis for the water budget allocations. Generally, municipalities allocate monies collected for specific services to support those services. In the case of Plymouth, the city allocates water receipts to four budget categories.

Prior to 1998, the city distributed employees work time for salary purposes against the various budget allotments based on the best estimate of actual worker’s time spent on various activities. Starting in 1998, the city changed to a time reporting system based on actual hourly work performed by its employees. This system more accurately determines how to charge each city account for employee work.

The city also experienced problems with its accounting software that caused the books to reflect an $111,000 over-expenditure when in fact no such expenditure occurred. The program error persisted despite efforts to cancel the error. This error gave the appearance of a significant budget error when no error occurred. The city is working with the software provider to correct this programming error.

Arroyo Ditch

The city receives much of its water from the Arroyo Ditch. Unusually heavy storms in the two past winters caused significant damage to the ditch. Particularly hard hit was the flume at the upper reaches of the ditch. Of the 4400 feet of flume damaged during 1997 and 1998, the city received funds totaling $22,000 from FEMA to repair only 400 ft. of the flume. This work also included removal of debris and road repair. Estimates of actual repair costs for this and other damage range up to $2,800,000.

The city decided to explore other means to solve its water problems. One approach is to reduce the length of the ditch by installing a lift station closer to the city. The lift station would pump water directly from the river into the ditch. By placing the station closer to the city, city officials reasoned they would have a reliable water source and save the money currently spent to maintain the full length of the ditch.

Several citizens claimed the city’s plan was flawed. They felt the city should repair the damage to the ditch and that the repair cost estimate was too high. They also felt that failure to maintain the ditch threatened ownership of the ditch. Originally built in the 1850’s, the county operated the ditch for many years. When ownership transferred to the city, the transfer was conditional on the continued maintenance of the ditch. Technically, the county could reclaim ownership. In discussions with county officials, including the fifth district supervisor, the Grand Jury found the county has no interest in regaining ownership. In fact, the county is actively assisting the city to acquire a grant for the lift/pump station.

The city, using the County of Amador as its agent, obtained a grant of $500,000 from the state to install the lift station. Part of the grant required a feasibility study to determine whether the plan was workable. This study is in progress. Amador Water Agency presented preliminary findings at its Board of Directors meeting in April 1998. If the project appears feasible, the city plans to proceed with the pump/lift station.

Veterans Hall

The County of Amador holds about $135,000 in a fund for veterans to use to build a hall. Two competing groups of veterans from the area proposed a veteran’s hall. Neither of these two groups qualified to receive the funds. Legally, veteran halls must be open to all groups including all veterans associations. The fifth district supervisor met with the two groups to explain the legal requirements. The veterans are forming a non-profit group comprised of the two groups and three members at large.

One proposal asked the city to deed over the Lodge Hill property for the hall. Because the existing building is condemned, a new structure is required. Also, the Lodge Hill site is too small and has other problems. The veterans are exploring other sites as well.

Supplementary Information

The development agreement between the City of Plymouth and Sutter Home Winery

Reconnaissance Report on the Proposed Middle Fork Pump/Lift Station for the City of Plymouth and Amador County Water Agency, David C. Willer, March 1998

The Brown Act, Open Meetings for Local Legislative Bodies (Attorney General’s Office, Public Inquiry Unit, 1994)

The Brown Act, 1997 Supplement, California Attorney General’s Office, State of California, 1997