[Placer County] Grand jury report finds that Lincoln overcharged customers for water, Report estimates $41-million surplus

Blog note: this grand jury report is getting a lot of media attention.

The Placer County Grand Jury released its final report May 9 that found the Lincoln Water Connection Fund (WCF) “unlawfully collected water connection fees in excess of its reasonable costs for providing such services.”

The grand jury found that between overcharging homeowners and developers, along with loaning out money to other city funds between 1998 and 2019, the city now has a surplus of $41 million in the Water Connection Fund.

The grand jury came to that number after it found the $26 million in excess funds that the city had, along with $15 million that the city loaned out to other funds.

“My first response was that this is what we have been saying all along,” said Tony Manning, a Lincoln resident and one of the founding members of Lincoln Citizens for Integrity and Fiscal Transparency or L.I.F.T.

Manning was part of the team that originally filed a lawsuit against the city, which evolved into a state audit and then a Placer County Grand Jury report.

“The biggest lessons I’ve learned from this entire situation is that the civic lessons of what organizations are out there to help people who are kind of left with nowhere to go when their city leadership is letting them down and the grand jury is one of those areas,” Manning said.

In 2017, Lincoln changed its rate structure to model that of Placer County Water Agency (PCWA), according to the grand jury report. The city made this change without conducting any studies or hearings with City Council because the change was expected to lower rates.

However, the new rate structure increased rates by approximately 20 percent in some areas, according to the grand jury report.

“The funds were never passed through and they were just collecting the money and we have so much water we don’t need to go buy it,” Lincoln City Manager Jennifer Hanson said.

Again in 2019, the city made changes, this time modifying its water connection fee with Placer County Water Agency without any formal studies because it was again expected to drop rates.

It did drop rates but the rate increases were not amended from the changes in 2017, according to the grand jury report.

Hanson said the reason the city did this in 2019 was “because we were collecting money at such a large rate and staff was getting concerned that we were over-collecting money so we immediately went and did a study to lower the fees.”

Fellow L.I.F.T. founder and Lincoln resident Chuck Schmidt said that “they were well advised that it was illegal but it was passed anyway.”

As for resolutions to this issue, Hanson said that the current Nexus study must be completed before the city knows what to do with the surplus money and that offering refunds is a possible recommendation that City Council can act on.

Hanson said that any refunds would be made from the Water Connection Fund.

“I’m just delighted that it’s coming to the attention of our citizens because, for so long, the city has been hiding these funds,” Schmidt said.

May 9, 2019

Gold Country Media

By Matthew Nobert of The Lincoln News Messenger