The period of relative calm that followed the newest incarnation of the Goleta Water District’s Board of Directors into office late last year seems to have dissipated as directors have begun to dispute various issues. The latest controversy centers around the hiring of a new general manager for the district, a post currently filled by former chief financial officer Eric Ford. Director Bert Bertrando and district customer Jack Ruskey, arguably the most vocal critic of district policy over the past several years, have teamed up to bring attention to $1.5 million worth of bonds the district purchased from CIT Group. The two are have been alleging that Ford made the purchase without the board’s authorization, although Director Bill Rosen countered at a special board meeting on July 30 that Bertrando was on the finance committee when approval was given to purchase the bonds. Bertrando demurred, saying that the decision was made after he left the committee.
The open session of last week’s meeting was brief, but didn’t come to a close before a few sparks flew. The trouble began with Bertrando’s impassioned objection, replete with accusations of Brown Act violations, to a meeting having been called without his OK. Fran Farina, the District’s general counsel, pointed out that a special meeting such as this- which had been called by Directors Bill Rosen, Jack Cunningham, and Larry Mills to discuss the transition of Ford from provisional to full manager status – does not require approval of the full board, as long as three Directors vote on whether to hold the meeting. Once that spat was settled, another one began, before the lone agenda item had even been broached. Ruskey, during the public comment period at the beginning of the meeting, launched into a tirade – written copies of which were distributed to the board and everyone else in the room – outlining his opinion that the CIT group bonds were a bad investment and should be sold immediately. Bickering about meeting protocol ensued when Ruskey reached the end of his allotted three-minute speaking time: Board President Bertrando, nostrils flaring and lips quivering angrily, banged his gavel on the bench repeatedly, shouting for silence from objecting board members Rosen and Mills.
Once that excitement had calmed, Bertrando explained that since nobody else was speaking, Ruskey should be allowed to continue. Rosen objected to the time extension on the basis that everyone already had a copy of what Ruskey was saying, and made a motion to stick to the three minute rule. This ignited another gavel-hammering outburst from Bertrando, who traded chairs with a bewildered Director Lauren Hanson to avoid having to sit next to Rosen. Bertrando quieted down when Craig Geyer – a district customer and member of the Goleta West Sanitary Board of Directors who had also turned in a speaker slip – offered his three minutes to allow Ruskey to finish. “In the end, it becomes unfair to anyone else who comes up to speak,” said Rosen, defending the three minute limit. “[Ruskey] is trying to be the sixth member of the board, but the voters [in 2006] made their judgment [when he was defeated in his run for the Goleta Water Board].”
Concern over the district’s investment in CIT Group bonds arose from the $3 billion rescue package the company recently worked out with its bondholders, who were left holding the bag when CIT was denied federal bailout money in the face of financial collapse toward the end of July. With stock prices the lowest they had been all year, CIT narrowly missed having to file Chapter 11 bankruptcy, a move that could have resulted in a complete loss of Goleta Water District’s $1.5 million investment. Rosen said that the district’s financial advisors, Pacific Capital Advisers, recommended holding on to the bonds until they mature on December 15, and that is what Ford opted to do.
As it stands, the $1.5 million in question may suffer losses ranging from minor to complete obliteration of the fund, or it may not lose value at all. Only time will tell. What is certain is that although Bertrando and Ruskey appear to be dead set against Ford ascending the final rung of the ladder to permanent general manager status, he has already been chosen by a committee – composed of Cunningham and, allegedly, Bertrando himself – with the selection ratified by the rest of the board. All that remains is for a formal offer to be extended. “I think Eric is a very qualified guy,” offered Rosen.