City officials explore misuse of funds

By Andy Gates - Argus Observer
Sunday, June 10, 2007 12:46 AM PDT

ONTARIO - Ontario residents pay a fee on their municipal water bills, and it seems the city may have misspent some of that taxpayer money.

“An investigation is underway to determine if there was a misuse of funds,” Ontario Mayor Joe Dominick confirmed.

Dominick is just one elected city official now concerned that Utility Capitalization Fee (UCF) money — a water tax residents pay to Ontario — may have been spent in ways not allowed under city ordinance.

The city typically places the revenue from the UCFs — which is a 17 percent charge on water bills — into the Capital Projects Fund.

The UCFs were created in a 1997 ordinance, Ontario Public Works Director Steve Gaschler confirmed in an e-mail. That ordinance, No. 2391, stipulates UCFs should be used to fund capital improvements, not routine maintenance.

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“It’s designed to use only for new structure or infrastructure, not maintenance,” Ontario City Councilman Bruce Tuttle said.

However, some of the water consumption UCF money may have been used for chip-seal and crack-seal projects in fiscal years 2005 through 2007, according to a 10-year UCF report from the city provided by the mayor.

Efforts to obtain a copy of the report directly from the city were unsuccessful.

Gaschler confirmed via e-mail that UCF money cannot be used for chip-sealing and other maintenance work.

“UCFs are to be used for increasing capacity, if they were used for something else it would of been an oversight and not intentional,” Gaschler said Thursday in the e-mail.

The Ontario City Council tabled an ordinance Monday night that Gaschler presented because too many questions remain unanswered. The ordinance proposed to split where the UCF revenue would go — 10 percent to the Streets Fund and 7 percent to the Capital Projects Fund.

The ordinance was prompted by an increased need for major street repairs, according to Gaschler’s proposed UCF ordinance.

Ontario City Manager Scott Trainor told the council Monday night the city’s attorney was reviewing the proposed ordinance.

A lawyer for the city advised that the UCF is tied to water and should not be used for streets, Gaschler said Thursday during an Ontario Public Works Committee meeting.

“ ... Fees shall be applied only to capitol improvements associated with the system for which the fees are assessed,” according to Ontario Ordinance No. 2391.

More legal research on the issue is underway, Gaschler told the committee members.

The argument that UCF money cannot be used for street work is not new. In fact, one Ontario resident brought the issue up in an Argus Observer Letter to the Editor in April 2004.

“I would also question the judgment of the city even considering using Ontario city residents’ water-based UCF funds for improving a city street,” Ontario resident Gene Messinger stated in the letter.

Trainor was unavailable Thursday and Friday for comment. However, in 2004, he told the public how he thought UCFs could be used by the city.

“The UCF, as implemented, is assessed against the water portion of the utility bill for the express purpose of creating a capital improvement fund to be used towards improvements specific to water, sewer, storm sewer, streets and/or parks ... Any City Council could certainly make the decision to earmark all the UCF monies to use entirely for water improvements,” Trainor said in his Argus Observer City Scene column in March 2004.

Former Ontario City Mayor LeRoy Cammack agreed with Trainor.

“There was a common misconception in the community that the UCF was for water, and it was not. It was for all utility type work ... It was really not set aside just for water,” Cammack said, according to Ontario City Council Meeting minutes from April 19, 2004.

The balance for UCF charges on May 9 was $75,307, according to the municipal document provided by the mayor. The city projected a UCF revenue of $441,000, according to Gaschler’s proposed ordinance.

The most recent budget has apparently been modified, with the UCF investigation underway.

For example, transfers from the Capital Projects Fund in the 2005 to 2007 budget have apparently been reversed by Ontario Finance Director Rachel Hopper, according to an e-mail correspondence between the mayor and Hopper, provided by Dominick.

Hopper was unavailable Friday for comment.

“I didn’t know she could reverse transfers in the budget,” Dominick said.

Tuttle said the issue may just be a “wording problem.”

“Yes, this is something I’d like to get fixed. It needs to be fixed before we go forward,” Tuttle said.

Ontario City Council members will meet at 10 a.m. Monday in City Hall to discuss the budget. Tuttle and Dominick said they did not know if UCFs will be discussed.

“I want to be careful and look into everything,” Tuttle said.