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Ridgemark HOA and county at odds over CSA monies being spent on roads

With more than $500k in Ridgemark CSA account, home owners want to use it to repair roads. At first, Supervisor Muenzer said they can't, but county is researching CSA to see if there are options to use money.
Ridgemark HOA members pay dues and property taxes, which Jack Murphy compares to double taxation.
The sign outside Ridgemark says the roads are private, which may exclude them from being repaired by county, using CSA monies.
Ridgemark HOA controls nine miles of roads inside the community.

In San Benito County, Joe Paul Gonzalez, country clerk-auditor-recorder, said there are 55 “financing mechanisms” called County Service Areas or CSAs in San Benito County. Of those, only 31 are currently active, each paying one percent in property taxes toward services the county provides to the communities, such as street cleaning, landscaping, PG&E utility bills and maintenance costs.

The largest CSA, by far, is the Ridgemark Home Owners Association’s (HOA) CSA #9, which was formed in 1972, and includes 660 homes. Jack Murphy, who has lived in the gated community since 1996, and is currently vice president of the Ridgemark HOA, said CSA #9 currently has a balance of approximately $550,000. Murphy said for a little over two years the HOA has been trying to determine how and why the funds are being utilized, because it wants to spend a portion of the money for maintenance of the nine miles of roads it controls.

According to John Guertin, director of the Resource Management Agency (RMA), there is now a total of $3.6 million in separate restricted accounts for all CSAs.

“We’ve been told by county personnel, Brett Barnes [former director of RMA], [Supervisor] Jerry Muenzer, and Louie Valdez [analyst] that these restricted reserves cannot be used to provide maintenance on our roads because they are privately owned,” Murphy said. “We’ve been trying to figure out when that changed. We’ve talked to Supervisor Muenzer primarily for the past two and a half years I’ve been on the board.”

Murphy said he believes, though he can’t prove it, that when CSA #9 was originally formed, street maintenance was included in the services provided by the county.

“Somewhere in the interim period of the early 70s those went away and became part of the General Fund monies,” he said. “The result of that is that CSA tax monies, the 1 percent on our tax bills, continue to accrue. The homeowners are saying they’d like to see those monies have some productive use. Every time we try to get the county, through Supervisor Muenzer, to talk to us about why can’t they be used for roads we don’t get very much of an answer.”

Murphy said Muenzer and Valdez met with the Ridgemark HOA members last September. He said Valdez indicated that they were working on some plans whereby the monies could be used.

“They gave us three verbal scenarios, one of which was they would return the money to us,” Murphy said. “That seemed rather difficult because these monies have been accruing for many years, so how would you go about returning tax money to people who are no longer with us, one way or another, passed away and it’s in their estates or they’ve moved out of the area.”

Joe Paul Gonzalez said monies would not simply be returned to current property owners.

“Under the revenue and taxation code they can actually receive a decrease in their property tax bill,” Gonzalez said. “It would be a temporary reduction in the property tax amount and the difference would come out of the fund. That’s the only mechanism that is available in the statute and the board [of supervisors] could make the necessary changes to what they receive.”

The other two options Valdez gave the association included the HOA compiling a list of services it wants and going through the bidding process themselves. The last option was to hire a consultant to come up with ideas. Murphy said he asked Valdez and Muenzer to present the options in writing to the HOA. Muenzer told BenitoLink that when he and Valdez came to the meeting they were not anticipating the request that the recommendations be put in writing. Since then, he said, County Counsel Barbara Thompson and Gonzalez were researching CSA #9. Gonzalez said he and Thompson, along with Muenzer and Guertin, would present the findings to the HOA in writing.

One thing Murphy asked Muenzer and Valdez was if the monies really exist in separate restricted accounts and not the General Fund, and continue to accrue, do they earn any interest. Guertin said each CSA has its own account and the money can’t be co-mingled with any other account.

“The money can’t go into the General Fund,” he said. “I know people have the misconception that we’re using their money, but that can’t happen. The only way to move the money around would be by board action at a board meeting. The money is part of the cash balance in the treasury, which earns interest, but those specific accounts don’t earn interest.”

When Murphy was not satisfied at the seemingly lack of a timely response from Muenzer regarding his request to come back with something in writing, he reached out to Hollister Council member Jim Gillio, who is running against Muenzer for the District 4 supervisor seat.

“These people have been told over and over that ‘we’re going to get you help and we’re going to figure out how to fix this,’ and they just keep passing the buck,” Gillio said. “We’ve got to think of our residents as customers. If you run the government like a business and you treat your customers right that changes a whole lot of things. If you have a central point of contact, right away that’s going to take away some of that frustration. They’re probably taking the interest and putting back to the General Fund. Why wouldn’t it go back to the residents to be used on their projects? Three million dollars probably earns several thousand dollars a year.”

Regarding Gillio’s concern for a central point of contact, Guertin said the county has not had a full-time CSA coordinator for over two years. He said the county employee who was handling the job for a number of years on a part-time basis left the county for the same position in Monterey County, where, as it turns out, Guertin was employed before coming to San Benito County. Guertin said he has been trying to remedy the situation by hiring a full-time coordinator.

“I’ve done two rounds of interviews and two people have turned it down, so I have to go do more interviews,” he said. “The [part-time] position has been empty for a few years. Now we’ve made it a full-time position. Hopefully, in the next month or so that will be filled.”

Murphy said in talking with other HOAs he was hearing the same complaints about what the county was telling them.

“’We don’t have the resources, we don’t have the money to do this or that,’” he said. “When I reviewed the list of CSAs and the home sites, they have been in touch with the same county people, Jerry Muenzer, Louie Valdez and Brett Barnes, and the situation just seems to have a life of its own.”

He said the last discussion he had with Muenzer, Muenzer said ‘We’re working on it, Barbara Thompson is involved, Joe Paul Gonzalez is involved, we’re going to get you your answer.’ My response was ‘Jerry, this is an election year; I sure hope we see something soon.’ The party line from Jerry has been 'your roads are behind the gates.' There have been a couple of occasions where we’ve pushed back and said we own nine miles of roads and other HOAs here own additional roads, do you want them back? Of course the county says not only no, but ‘hell no.’”

Murphy said of his meeting with Gillio, “He did more work as a non-incumbent than Jerry has done in the last two years. He dug out current financials, talked to various county personnel on what the plan is. This is not a trivial issue. Half a million bucks is not huge when compared to other issues, but it becomes a significant number when you recognize that it’s accruing and just three or four years ago it was in the high $300,000s and now it’s in the $500,000s and there’s no end in sight.”

Muenzer responded that he wasn’t really clear about what CSA #9 permitted as far as road maintenance was concerned.

“It’s questionable whether the money can be used on the roads,” he said. “That’s what we’re trying to ascertain, what the monies that go into CSAs can be used for. We’re trying to present it in writing so they have some options.”

Muenzer explained that when a new development requests to turn over its roads to the county the county typically turns them down, and this is why CSAs are formed, in order to pay for services that the county will be paid to perform. He said if a CSA is inactive and doesn’t pay for county support out of property taxes, the HOAs mostly likely fund any work through their dues. That is what Murphy said the Ridgemark HOA is considering doing.  

“We are about to spend about $300,000 sometime in 2018 for road repairs and we’re proceeding with that because the roads need to be done and we’re not counting on CSA money,” he said. “It’s coming from our dues. It’s like the state double taxing us on gas and then putting it into the General Fund. We’re paying twice in taxes and dues.”

Gillio candidly admitted that as part of his campaign process he is exploring what is happening in District 4 by holding listening sessions to hear what people were concerned about.

“One that I kept hearing was CSA issues and about how the money was being accounted for and how the projects are not being completed,” he said. “I met with the county in late January and got an education about CSAs. Ridgemark has close to $600,000 in its CSA account. If you look at their year-to-date transactions, they have very few expenditures for this fiscal year. Only $327.00 has been expended for storm drains and $23,727 for utilities.”

Gillio said the one thing he heard most from the county was that they failed at communication with the CSAs. Guertin admitted this, too, and emphasized that this was why he was so concerned about hiring a full-time CSA coordinator.  

“Communications needs to be expanded immediately,” Gillio said. “There’s $3.6 million sitting in these restricted accounts and the county owes it to the CSAs to have meetings to set the record straight for everybody. There was a lack of communications in hiring of the full-time CSA coordinator. A lot of the CSAs I talked to did not know there was going to be the hiring of a full-time coordinator. They were wondering where those fees to pay for a full-time coordinator are going.”

Gillio pointed out that there is an administrative line item on Ridgemark of $16,174 a year for administrative support.

“So if you take 31 CSAs, there’s a significant amount of money to cover a full-time coordinator," he said. “If this full-time person is going to be reporting back to the CSAs, perhaps they should be able to get feedback on the services they’re going to get. The concerns they’ve relayed to me is if 'we’re paying for a full-time person with the county, we would hope this person only works on CSAs.' This sounds reasonable.”

Gonzalez said March 17, that he and Thompson continue to research CSA #9 to determine the options for the HOA.

“Once those costs have been formulated so we have something to present to the home owners association, that’s going to happen real soon because we plan on being at the meeting at the Ridgemark Home Owners Association in April,” he said.

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About:
John Chadwell (John Chadwell)

John Chadwell is freelance photojournalist, copywriter, ghostwriter, scriptwriter and novelist. He is a former U.S. Navy Combat Photojournalist and is an award-winning writer who has worked for magazine, newspapers, radio and television. He has a BA in Journalism and Mass Communications from Chapman University and underwent graduate studies at USC Cinema School. John has worked as a script doctor and his own script, God's Club, was released as a motion picture in 2016. He has also written eight novels, ranging from science fiction to true crime that are sold on Amazon. To contact John Chadwell, send an email to: johnchadwell@benitolink.com.

Comments

Submitted by (Stephen Mills) on

My understanding is that a CSA assesses and the County collects money over and above the regular property taxes to be used for specified purposes within the CSA area. Even though the money is included as part of the regular property tax bill, and the county is usually the entity to perform the specified maintenance, the money is over and above property taxes and is therefore not "county money" as Supervisor Muenzer characterizes it. The linked article sets forth a good treatise on how and why CSAs are formed:  http://www.santacruzsentinel.com/general-news/20170329/santa-cruz-mounta...

I do not claim to be an expert on CSAs but if the County Council has some legal authority saying CSA money cannot be spent on private roads, I would like to see it.

Mr. Mills, I too am not an expert, but I did some basic research on the CSA Law and it's complicated.  It appears clear from what I read of a detailed analysis of the law the county can only provide the services on "public" roads.  The word public is in there.

However, there are two potential problems with that, one is that it's not clear what is meant by "public roads."  If a road is open and available for use by the public although owned privately and contracted for repair, that could be a public USE road.  If, however, it's behind a gate or otherwise restricted it would be had to call it public.

The second issue is what does the actual CSA agreement or contract say?  It is very possible that the county at the time did not realize that the restriction was in place and did not specify that the contract only applied to the CSA's public roads and took a contract that just said "roads" - in which case this is probably going to court.  Which takes precedent, the law restriction or the contract?

Everything you NEVER wanted to know on the subject - including an analysis of the law in detail.

https://calafco.org/resources/special-districts-and-lafco/county-service...

Marty Richman

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