As a City Council candidate, Claudia Jimenez should take an interest in the wastewater system operated by the City. She has just written her own version of the recent history of the system, which can be found at https://jimenez-claudia78.medium.com/richmond-ca-sewer-system-and-the-history-of-bad-deals-156b885abfe1.

Unfortunately, her version is dramatically inaccurate, appears to be mostly made up and perpetuates many myths that continue to be repeated. This lack of accuracy does not bode well for a potential city council member.

I have copied her version below and annotated it with red highlighted comments to correct the many inaccuracies.

For a more accurate history, see http://www.tombutt.com/forum/2020/20-10-18.html and other included hyperlinks.

2000
In 2000, the City finally asked EBMUD and STEGE if they would be interested in operating the sewer system. At the, Sege did not and still does not operate a complete system. It operates only a collection system and pipes the effluent to EBMUD for treatment. Studies were conducted and proposals evaluated, but negotiations did not take place. The City Council decided that EBMUD’s proposal would be too expensive. This is not accurate. In 2000, the City Council solicited proposals to operate the wastewater treatment plant. It received three: (1) US Filter (now Veolia, (2) EBMUD and (3) City staff.
Tom Butt and Nate Bates pressured the City to contract with Veolia, one of the world’s largest utilities and waste management company, solely profit-driven. Butt and Bates knew that, in return of their lobbying efforts, they would get campaign donations and support from Veolia for their seat bids. This is not accurate. US Filter was selected on a 5-2-2 vote of the City Council because it was less expensive than the City staff proposal. EBMUD would not guarantee their bid price.
Connecting Richmond wastewater/sewer system to EBMUD would have been challenging and the City would still have been responsible for properly discharging treated effluent and pay for the costs of the sewer system’s upgrade. This is not accurate. EBMUD’s plan was to pipe the sewage to its Oakland plant and treat it. However, many residents suspected (and still do) that, with EBMUD, the renovation process would have been faster and cheaper in the long run — less intermediaries/third-party charges, less bureaucratic costs, better tracking record, better chances to hold contractors accountable, to name but a few of the reasons why negotiating with EBMUD should have been pursued. This is not accurate. EBMUD never considered operating the Richmond treatment plant.
In any case, the dialogue was cut short without EBMUD having had the opportunity to present a proposal revision. This is not accurate. EBMUD presented its final amended proposal in 2001. As for STEGE, it was concerned that the entire sewer system be merged under one single system/company, something that Stege did not favor.

2002
Led by Tom Butt and Nathan Bates, the City of Richmond signed a contract with Veolia/US Filter Corp — Veolia had bought US Filter in 1999. Under Veolia/US Filter, the Richmond sewer system encountered numerous administrative, managerial, operational and financial difficulties. Veolia being a profit-based corporation, it did not adequately maintain the sewer system’s infrastructure. In addition, Veolia, Tom Butt and Nate Bates have always relied on property taxes to pay for the sewer system’s upgrades. Looking at property taxes over the last five years, the fee for Richmond Sewer (Veolia) has increased by 40%. See Appendix 1 for further details. Today, Richmond property owners are increasingly upset: why should they pay $900 (an additional $100) per year to this profit-based corporation and still not have a functional long-lasting sewer system? None of this is accurate. US Filter changed its name to its parent company, Veolia, in 2004 (http://waterindustry.com/New%20Projects/usfilter-30.htm). Property taxes have never been used to fund the wastewater system. People don’t pay taxes or fees to Veolia; they pay fees to the Wastewater District, the largest part of which is used for capital improvements, not to pay Veolia to operate the system.

2006
Over the previous three years, Richmond had spilled more than 17 million gallons of raw sewage overflows into the San Francisco Bay. In Fall 2006, the environmental watchdog Baykeeper filed a lawsuit against City of Richmond, Veolia, WCWD and JPA over continuing raw sewage spills into the bay. The lawsuit was settled out of court late 2006, with a Settlement Agreement requiring the City to spend $20 million dollars over five years to repair, replace and improve the wastewater collection and treatment system in the City of Richmond. This is not accurate. The Settlement Agreement was in December 2009. http://www.ci.richmond.ca.us/DocumentCenter/View/53702/Veolia-Settlement-Agreement?bidId=.  To this day, the totality of repairs, renovations, upgrades required by the Settlement Agreement have not been completed, and the City is still being charged for the costs of a great many Capital Improvement Projects (CIP) related to raw sewage overflows. Those costs are passed on to Richmond property owners, who keep on having rates increases on their tax bills, without any guarantee that the sewer upgrade will ever be completed and the terms of the Baykeeper Settlement Agreement reached, which could potentially lead to yet another lawsuit in the very near future, additional judicial costs and Virtually al of the spills and overflows are the result of inflow and Infiltration from ground water into old and deteriorated city-owned mains and privately-owned laterals, not from operation of the wastewater treatment plant.

2008–2009
In July 2008, the City of Richmond filed a lawsuit against Veolia: A City’s investigation had showed that Veolia had faked inspections of the sewer system and collected payment for services it had not performed. In December 2009, both parties signed a Settlement Agreement by which Veolia paid the City $1,992,260. See http://www.ci.richmond.ca.us/DocumentCenter/View/53702/Veolia-Settlement-Agreement?bidId=.

2011
Veolia began the process of terminating its contract with Richmond. Residents, especially in Point Richmond, had been complaining about odors coming from the plant and the overflows — SSOs, extra flow of water the stormwater system takes in during rainy months — was a recurring unresolved issue. Veolia said it had inherited a very old, dysfunctional sewer system, and the company had already spent a lot of money to fix some of the problems.
However, Veolia’s claim is debatable because, 1) a lot of the money Veolia spent was to pay for the 2008 lawsuit, 2) most of the sewer upgrade’s costs are paid by the City and tax payers (not Veolia,) and 3) Veolia’s true motives to terminate its contract with the City were unclear; the company might have wanted to pressure the City into revising its contract’s terms. Once again, Tom Butt pushed to keep Veolia when the City could have explored cheaper, better and greener alternatives. In the end, the City Council voted to keep Veolia, with a different contract and a higher fee for maintaining the sewer system. This is mostly inaccurate. The impetus to terminate the contract was from some RPA City Council members, not Veolia. Ultimately, it became clear that there were few, if any, options for the City. EBMUD made it clear that they did not have capacity in their existing pipeline from Point Isabel to receive Richmond’s sewage and that they were not interested.

2020
A new sewer rates increase was voted on June 2. See Appendix 2 below. A rate increase was approved by the City Council after several detailed presentations, including http://www.ci.richmond.ca.us/DocumentCenter/View/52457/Sewer-Rate-Study-Report-2020?bidId=. A group of concerned residents and property owners started acting as watchdogs, requesting solid data on Veolia and the sewer system. See areas of concerned in Appendix 3. The watchdog group is in communication with the Planning Division to improve transparency: all information and data should be readily available to the public on the City’s website. Progress has been made but a lot of information is still missing.
The Planning Division explained that the City is currently in the design phase by the Engineers for the 1st St Relief Sewer and Pipeline CIP Project.
It has been said that, during recent City Council meetings, the City has been proposing mediation with Veolia. This information is neither publicly confirmed nor denied. The people of Richmond need the City to publicly outline the terms and content of this mediation. In addition, the City needs to order another comprehensive audit of Veolia. The City completed a mediation with Veolia on September 21, 2020, which was not successful. The City Council needs to provide direction on whether to demand arbitration.
The Planning Division has publicly confirmed that the sewer rates are not covering any future cost(s) for the Point Molate development. Those cost(s) would be covered by SunCal, the developer. However, no supporting data is available to sustain this claim and clearly outline how the proposed Point Molate development would impact the City’s sewer system. This is not accurate. All capital costs for Point Molate will be covered by the developer. All operating costs will be covered by fees from the ultimate users.

PRELIMINARY CONCLUSIONS
If there’s a new Veolia’s audit, it should be comprehensive: performance, inspections, expenses/billing, management and administration. Also, it should take into account past audits and all steps (if any) taken by the City following those audits. People need to know what the City of Richmond did to address any issues described in the audits. Finances of the Wastewater District are covered in each year’s CAFR, the lasts available at  http://www.ci.richmond.ca.us/DocumentCenter/View/52475/Richmond-CAFR-2019-Final.
It would seem that it’d be less costly and more efficient — because you’d eliminate Veolia as third-party who does a lot of subcontracting — to create a Richmond Sewer Department of our own.
Looking at subcontracts, quite a lot of money is spent on inspections. Veolia does some but other companies also do inspections. Inspections are needed, but would the audit tell us who inspects what, at what costs and who is paying for those costs? When Veolia’s contract ends in 2025,the City Council can decide what type of future operation to pursue.
The people of Richmond need to know why the City has been spending, for decades now, so much money on a service that did not and does not perform as expected, per contract agreement. The latest rates increase has been voted but the City needs to clearly explain where our tax money has been going all these years and where it will go in the future. We don’t need another expensive report filed without being carefully reviewed, commented on and followed up. The people of Richmond deserve true transparency of and accountability for their wastewater/sewer system. This information is all available in Budgets and CAFRs from previous years.
We must find green alternatives! Today, the entire wastewater system must be carefully and thoroughly reexamined. The current 5-year contract between City of Richmond and Veolia could be the last one. The City needs to eliminate redundant, duplicated, unnecessary charges and expenses, and ensure that the sewer upgrade will be durable, environmentally-friendly and the right choice for the people of Richmond, as a whole.
The City should open a dialogue with the people of Richmond. Together, we need to explore durable, ethical, environmentally safe, cost-efficient alternatives to Veolia. When Veolia’s contract ends in 2025, the City Council can decide what type of future operation to pursue.

APPENDIXES
Appendix 1 — Veolia’s Rates Increases Chart



Appendix 2 — Sewer Fees: Rates Increases, Comparison Chart
The latest Sewer Rates Increase was voted on June 2, 2020. All Councilmembers voted in favor of the increase. Ordinance No 09–20 N.S. Melvin Willis and Eduardo Martinez thought it would better to vote for this increase than to have the Board of Directors impose on Richmond tax payers an even bigger rate increase.
Sewer Fees (Sanitary and Wastewater) are charged on Property Taxes.

VEOLIA SANITARY AND WASTEWATER USER FEES:



WEST COUNTY WASTEWATER USER FEES:



STEGE SANITARY & EBMUD WASTEWATER USER FEES:
Property taxes 2019:
STEGE Sewer Charge JK: $271.00
EBMUD Wet Weather KO: $111.24
Total Annual: $382.24

Appendix 3 — Main Areas of Concern

Looking at the original contract and subsequent amendments, as well as the overall work performance of Veolia on the Richmond sewer system, several important points should be noted:
The way the Company fulfills some of its duties and responsibilities is to write all kinds of reports: priority projects, master plans, surveys, studies, project designs, risk assessment analysis, and updates. The question is: how efficient, financially and operationally, this bureaucracy is? For instance, the Monthly Operating Reports (MOR): Who reads them? The MOR reports are posted every month on the City’ website and on the City Council Agenda. Anyone can access them and have a public discussion about them. Does the City have regular meetings with Veolia to discuss and act upon those reports? If not, what purpose other than more paperwork and material for potential audits do these reports serve? Also, some of the repairs, renovations, constructions part of CIP are not completed in time. There are almost always amendments to resolutions to approve increases of project costs. In the meantime, projects are not completed. City staff has constant meetings with Veolia staff.
The City’s standard timeframe for each set of work projects requiring rate increases is between 3 and five years. However, each time a 3- or 5-year period ends, the City votes for another rate increase. No reports are available to show that the work was adequately performed. The last increases go as follows: 2006, 8% annually for 5 years; 2010, 8% annually for 3 years — because of public outcry, this proposal was changed to 5% annually over 3 years; 2015, 7% annually; 2020, 6–7% annually. People are losing patience: when will all this end? People do not want another 5-year rate increase in 2024.
In the original contract and its amendments, it is difficult to understand what “managing, operating and maintaining the Facility” entails, since so many other costs are added to the regular Service Fee. Why does the City of Richmond pay for such an expensive managing, operating and maintenance , if a vast majority of the highest costs are added to the annual Service Fee paid by the City?
Veolia’s markups are one area of major expenses that could be eliminated or significantly reduced if the Richmond sewer system did not have so many intermediaries (third-party, sub-contractors.) Depending on the nature of the project, Veolia’s markups for sub-contracts range from 9% to 24%. There is a cost for managing contracts regardless of who does it. Typically, the city retains construction management consultants to manage large projects.
Sub-contracting also means that record tracking and work reliability and accountability are more difficult to perform accurately.
The spreadsheets available on the City’s website lack important information: What did Veolia do and what did subcontractors do? Depending on the kind and amount of work subcontractors did, there might be an issue with costs to the City being excessive, unnecessary, duplicated. We need detailed data on the work listed in the spreadsheets, with contractors’ names and itemized costs billed to the City.
Searching for information on the sewer system is quite difficult as information is not located in one single folder or webpage. Most particularly, financial information (distribution and allocation of funds) is almost impossible to find. One has to contact the Planning Division, often several times over, to obtain this information. Even then, information is either not at all or only partially provided. All of this information is a public records, available to anyone with the time and interest of digging into it.

Written by
claudia jimenez