Sanitary District Needs A Clear Plan

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I grew up in the restaurant business. We provided good service and fine food to grow our volume. We controlled our expenses to make a profit. After getting a business degree at Michigan State, I got into health care contract management. We managed hospital departments, made them more efficient, lowered cost and increased the financial contribution of that department to the organization.

At that time, several decades ago, I got very frustrated with the financial culture of the hospital industry. They encouraged us to spend more money each year or the government would cut our reimbursement. (By the way, that has changed). However, today I see a strong resemblance to that culture in The Northern Gila County Sanitary District. They have the ability to charge us property taxes, quarterly service fees, hookup fees, capacity fees and others. Yet as a monopoly, a “Special District” of the state of Arizona, they have virtually no over sight beyond the board of directors. I’m sure that they will tell you they lost money this year. It’s amazing how accounting works sometimes. They had a net gain of $925,184, while showing a net operating loss of ($19,308). One of the reasons is because of an accounting change they made in 2009 that treats the capacity fees as a capital asset and not income as in prior years.

Would it not be wonderful to manage a publically funded monopoly where up until this year you selected your board members to be appointed by the county because you held the election in house and there was no competition? Then in 2009 a major piece of revenue moves below the income line to treat income as capital. You might even set up a retirement plan where “The District may make a discretionary profit sharing contribution to the plan.” They keep telling us they are a non-profit company, yet they have an incentive to make money beyond making sure they add close to a million dollars to their bank account every year. “Profit sharing” is a quote right off their financial report.

By the way, as of June 30th the district had $15,486,726 in cash and cash equivalents. Unfortunately it only made $28,793 investment return on that money during the year. They have averaged 0.21% return on investments over the last 3 years. Either that is bad financial management or we need to change the laws that may limit their investment options.

As I think back to the restaurant business, I wonder what kind of success we would have had if we had no public over sight on what we charged. You see, our customers looked at our menu every day and we had competition.

The Northern Gila County Sanitary District has no competition. As a “Special District” NGCSD has virtually no government over sight and it appears that the board information is limited to the information given to them by Sanitary District Manager Joel Goode. I wonder how strongly the board has analyzed their finances.

At the November NGCSD Board Meeting, I was not surprised when Mr. Goode declared that other sanitary districts could not be compared to them because “they were different.” I guess that Mr. Goode is proud of the fact that his operation has some of the highest capacity fees in the state. Well, Mr. Goode, we can compare — and your fees are HIGH!

Maybe the fees are correct. When I was in business and one of our concepts did not perform to standard, we looked for alternatives. Well, Mr. Goode, as we need to expand are there more effective systems for processing sewage for the town of Payson?

Mr. Goode, we are just asking that you show the public a plan. What are these Phase II, III, IV plans that you have? Why are they necessary? How much will they cost? It may take 40 years to double Payson’s population at our current rate. Will the expansion plans happen in our lifetime or is this a future dream in another lifetime?

And before I close, if the chairman of the board appears to defend the board vigorously, he should. He is indirectly paid about $1433 per meeting, which adds up to $17,193 in the 2012 fiscal year due to his 17 years of seniority and being grandfathered into the insurance and health care premium plan.

I never thought that I would ask the government to take a closer look at business operations, but that is what I will be doing. Senator Crandell, Representative Barton, Supervisor Martin, here is another item for your busy schedule. There have just been too many years with no real accountability!

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