Politics & Government

Flushing Money?

Sacramento's water meter install is one of the costliest city projects ever. And the most expensive aspects may not be necessary.
A trench cut in Land Park, Sacramento.

This fall, workers from Teichert Construction, the company awarded the contract to install Sacramento's new water meters in Land Park, descended on the neighborhood. There are a lot of ways to describe the city's water-meter plan. Low impact is not one of them.

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Diesel trucks dart through the neighborhood. Jackhammers pulverize concrete, backhoes tear out sections of streets. The air at times is filled with dust. Hard hats pop out of freshly dug 6-foot-deep trenches in streets and sidewalks. Some roads are closed, while bigger thoroughfares like Land Park Drive are partially shut down by workers directing traffic.

Some residents say the project is leaving a big mess in its wake. “This was a nice neighborhood. Now, they're digging big holes and doing a lousy job patching them up,” said resident Marcelo Dacosta.

It's ironic that Sacramento's water-meter project has come to have such an impact. After all, this is the city that always said never to the idea of water meters. The city's charter was even amended in 1920 to declare its inalienable right to unmetered water. But 10 years ago, the state Legislature slapped a water-meter mandate on Sacramento and a few other holdout cities.

Flash-forward to this year: Only half of the meters are installed, and the project isn't slated to be complete until 2025. It won't be cheap: The price tag to install more than 100,000 meters and replace pipes and water mains, according to the Department of Utilities (or the DOU, the folks in charge): $474 million — though that number jumps every year because of steep construction inflation. City council approved the sale of $234 million in bonds last year partly to pay for the install.

To pay for some of the project, water rates ticked skyward 10 percent each year over the past three years. The DOU acknowledges the rate hikes will continue. According to local watchdog group Eye on Sacramento, a family of four could well pay a utility bill of more than $250 per month by 2025, about twice the current bill.

“The business community, the middle class and the poor are all being killed by these rate hikes,” says Craig Powell, executive director of Eye on Sacramento.

How did Sacramento's water-meter install get so expensive?

One cost driver is that the city's paying $50 million more to install water meters in sidewalks, rather than landscaping them into lawns or dirt, the way it's done in a majority of California cities subject to the state mandate. A former high-ranking DOU official, who ended up being sentenced to federal prison for accepting kickbacks, played a role in convincing the city council of the merits of the sidewalk plan in 2005.

But the biggest expense, at least $350 million according to the city, is jackhammering up streets and replacing water mains. The DOU's justification for this cost is that the water mains are in bad shape and have to be replaced before meters can be installed. They also want to abandon water mains in backyards and put new ones under streets out front.

One former DOU engineer told SN&R these replacements are “incredibly wasteful” and blasted the department for not studying the water mains it was replacing. Civil-engineering experts also say a lot of this work seems unnecessary. And even Sacramento's auditor said in a 2011 report that the DOU was replacing water mains “irrespective of their condition or remaining service life.”

And the project also might be dangerous. Gaffes last year by water-meter contractors in Curtis Park and East Sacramento risked setting off explosions, including one at a house with a pregnant mom and a 2-year-old.

In East Sacramento, a broken gas pipe leaked until a local resident stepped in and dialed 911. And in Curtis Park, one contractor just drilled right through a gas line.

When Sacramento's water-meter saga began 10 years ago, Angela Anderson was the DOU's water-conservation officer. She still works to conserve water, but these days for the Federal Bureau of Reclamation. She says she left the DOU because of what she viewed as a lack of commitment to water saving and concerns about “corruption.”

Her fears proved to be well-founded. Her immediate boss, longtime Water Superintendent Barry Holland, pleaded guilty to bribery charges in federal court in 2008 (after Anderson left). An FBI investigation revealed that Holland for years had been accepting kickbacks for selling the DOU's used-water-meter stock out the back door to an unscrupulous contractor.

Anderson said that, when she first heard about the water-meter mandate, she was excited by the prospect of conserving water. She says she urged her superiors to accept the mandate and install meters as quickly as possible.

It was a tough sell. DOU director Gary Reents instead lobbied against the mandate. And when that effort failed, he successfully pushed for an extension of the deadline, from 2009 to 2025. He says all his efforts were at the behest of the city's elected leaders.

“The city council, not publicly but behind closed doors, were adamant that they did not want to see water meters ever, and that they wanted to have as much time as possible to put them in,” he told SN&R.

Had the DOU opted for a fast-track approach, it might have saved Sacramento ratepayers a lot of cash.

When it comes to meters, quicker appears to be much cheaper. Fresno installed its meters in less than two years. Part of what made that city's approach so much cheaper is that the project was vastly simpler. There were no water mains replaced and water meters were placed in front lawns or in backyards rather than in sidewalks. The entire project was done for $73 million, a whopping $400 million less than Sacramento's cost. The number of meters required in both cities was nearly identical, approximately 105,000.

Photo: Joe Rubin

At a City Council meeting in March of 2005, DOU officials presented their plan to meet the water-meter mandate. Reents told the city council that, because of the costs and complexity of the job, he had “pushed hard” for the 20-year timeline.

What made the job so expensive and difficult, according to Reents, was that before they could install water meters in 35,000 older homes, the city would first have to abandon every backyard water main and place new ones out front, underground in the streets. His rationale was simple: He said that, by 2025, “all of them will have to be moved anyway because they are going to wear out and they are old.”

City engineer Dan Sherry provided a little more detail, saying the mains they would be replacing are mostly “thin walled steel, around 70 years old and will be exceeding their life expectancy within the next 20 years.” But according to the city's own data, only 4 percent of the city's mains being replaced are steel.

The majority of backyard water mains are concrete pipes (61 percent), known as transite, and cast iron (34 percent). Multiple studies show those pipes could last 50 years from now, or even longer (more on this later).

Ray Tretheway, council member at the time and who today runs the Sacramento Tree Foundation, said that he and his colleagues should have asked tougher questions. “In retrospect, we trusted too much,” he said.

While other cities and utility districts, such as several in the East Bay and San Diego, have hired third-party civil-engineering companies to study aging water mains, Sacramento has not. The city has instead largely relied on its claims of industry standard lifespans to justify backyard water-main replacements. For example, the city says that concrete transite pipes have a lifespan of 65 years, after which they are at risk of imminent failure.

On a few occasions, the city has had a third party study other aging pipes. And when they have done so, it's saved ratepayers millions.

Last year, the city hired an outside consultant to analyze a 1915 concrete sewer pipe. Residents in Curtis Park were concerned that if it burst, the damage could be extensive. According to an email sent to neighborhood residents from the DOU, a third party found that the “main is in remarkable condition with no structural distress and little evidence of corrosion.” They wrote that it could last another 90 years before needing to be replaced.

Civil-engineering experts such as the Colorado-based Water Research Foundation argue that a replacement policy based on a pipe's age and material, rather than detailed study, is bad policy. “Back when many of these pipes were first put in the ground, we were in an era of massive expansion,” said senior researcher Frank Blaha. “The estimated lifespans of things were just guesstimates. There just isn't some national standard of 75 or 100 years when we say all pipes need to be replaced.”

Blaha says that many water mains and pipes installed in the 1920s still work just fine today. “The name of the game is to identify the pipes that are serving well and to replace or rehabilitate the ones that are not.”

In California, from Fresno to Woodland to Bakersfield, cities subject to the state's water-meter mandate all have opted to landscape meters into lawns. In Elk Grove this past spring, workers carefully put green lids (meant to match grass color) over water-meter boxes sunk into the ground. The workers then re-landscaped the area. “We haven't had any complaints. It's meant to just blend right in there,” said worker Richard Salas.

The approach used in Elk Grove is at least $600 cheaper per home and a lot less invasive than cutting out and then replacing entire sections of concrete and embedding water meters in the sidewalk.

DOU officials openly acknowledge today, as they did back in 2005, their preference for water meters placed in sidewalks. In an interview last month, DOU Acting Director Bill Busath said that his department prefers sidewalks because they don't want to have to deal with the complications of people doing work on private property.

Holland also played a role in persuading the city council to chose sidewalk installations. At a 2005 council meeting when meter placement was discussed, Reents deferred to him as the expert on the topic of water-meter placement. Holland told the city council his crews would need to spend a lot of time searching for water meters placed in lawns. He even said they'd have to use metal detectors.

During a 2004 city council meeting Steve Cohn suggested that residents could become angry if the choice of where meters were installed was made unilaterally and suggested a focus group. So, the DOU paid a private consulting firm $35,000 to survey attitudes about the coming water meters. Three groups of 10 residents provided input in focus groups.

Jessica Hess, longtime spokeswoman for the DOU, said she could not provide any reports from them because she disposed of “things like that” after two years. An appeal to the city clerk's office, however, yielded results.

According to an executive summary of the focus groups, many participants agreed with the DOU and said they preferred the sidewalk option. But there was one problem: Sacramento residents can be a thrifty bunch, hesitant to approve additional spending. And cost was reportedly an issue for the majority of residents. So much so that, according to the executive summary, when faced with the reality of added price, the focus groups went with the lawn option.

The executive summary reads: “Respondents were told that to have meters installed in sidewalks would cost $300-400 per home. Most were reluctant to pay the added cost and instead begrudgingly accepted the yard location.”

That concern over cost was de-emphasized when it came time to present the findings back to the city council. Reents told the council that residents “unanimously, overwhelmingly chose the sidewalk option.” City council approved the sidewalk plan.

Reents says he stands by his presentation. Busath also defended the accuracy of the focus-group results, saying “the question to the focus group was 'Are you willing to pay more to put the meters in sidewalks?' And the answer was a resounding yes, and council agreed with that and approved that plan.”

When told of the conflicting executive summary, Busath said “They got it wrong.”

Former Councilman Trethaway said knowing that residents had serious cost concerns would have likely changed his vote. “Accuracy, truth and trust is paramount when you are gathering information to make decisions like this,” he said.

Another former city councilman, Robbie Waters, said he was also troubled to learn that the focus-group results appear not to have been accurately relayed to council. “I already had concerns about this, the patchwork look that the sidewalk water meters would create.”

Waters told SN&R last week there were enough questions about the overall water-meter program that he thought it would be worthwhile for the grand jury to examine it.

In 2011, Sacramento's city auditor Jorge Oseguera said, as part of a larger audit, that the city should stop the sidewalk installs. He called them too costly and unnecessary.

In a written response to this audit, the DOU rejected that recommendation, arguing that this was settled ground: The focus group made its choice, and the city council voted for it.

The Elk Grove Water District serves the older part of Sacramento's neighboring city. Many homes are 75 years or older and the infrastructure is aging, and a lot of the backyard water mains are similar to those in Sacramento. But when the city finished its water-meter install this fall, general manager Mark Madison left 90 percent of his city's backyard pipes in place. He deemed them in serviceable shape. He even says some, particularly concrete pipes, are in excellent shape.

“It certainly saves us a lot of money to leave the backyard main in place. But that is not the biggest benefit. Main replacement is very disruptive socially to the entire community,” Madsen said.

The section of water mains being replaced in Land Park today is served primarily by cast-iron pipes installed around 1915. A report by the American Water Works Association says that the average life span of those types of pipes is 120 years. But that report and others underscore the need for testing and analysis, stressing that water mains can last much longer, or shorter, than that average. According to the DOU, those same cast-iron water mains have a rigid useful life of just 87.5 years before they are on the verge of imminent failure.

At a July community forum to discuss the Land Park neighborhood's big dig, DOU Construction Coordinator Chris Powell showed images of badly decayed pipes. He told residents that other cities not taking aggressive action like Sacramento could be “headed for trouble.”

Part of the DOU's rationale to spend so much on the water-meter project is that getting water mains out of backyards is imperative. But water mains that run through backyard easements remain common throughout California and the nation, from Houston to the Bay Area. Officials who service them routinely say doing so needs not be a nightmare.

At the Contra Costa Water District, spokeswoman Jennifer Allen says her department gets “creative” when it comes to backyard mains. “If there are impediments like trees or structures, our crews are skilled at digging around them. We have maps of the water mains, keys to backyards, so we can get back there quickly in an emergency.”

Allen says that her department deals with decisions around backyard mains mostly how they would with any other main. “If it's in the ground and performing well, we leave it alone. Once we have had an issue, we study it and determine if the pipe is generally in good shape and needs one or two repairs, or if it needs to be replaced.”

If backyard water mains are deemed to need replacement, like in Sacramento, Allen says the preferred method is to move them to streets. But, Allen stressed, “because of the expense and impact on people's lives, its not something we do lightly without studying the pipes.”

But a chart included in a 2012 review of the water-meter program shows that 58 out of 82 areas in the city slated for water-main replacement had no water-main breaks requiring repair in recent years.

Indeed, some mains the city is replacing are clearly problematic with a history of multiple repairs. But the DOU defends replacing problem-free mains based on what they say are “industry standard” life spans.

That stance apparently troubles some employees within the DOU. A former engineer with more than a decade of DOU experience says there are people within the department “who know that the water mains we are replacing have not been studied, and that it's incredibly wasteful.

”They think it is wrong, but they don't have enough power to alter what's happening,“ said the source, who agreed to speak with SN&R but did not want to be named for fear of reprisal.

In 2011, the city audited the DOU. It was actually the third audit in as many years. The first two were spurred by the Holland scandal. Those audits exposed problems such as 4,000 missing water meters ($250,000 worth never recovered). Hundreds of thousands of dollars in contracts were dispersed without competitive bidding. Plus, city debit cards were used inappropriately, for things like a $1,400 retirement plaque. The city even inexplicably, and without a contract, bought new water meters from the same troubled firm that Holland illegally sold used water meters. It remains unclear who authorized those purchases.

City Auditor Oseguera comes across as thorough, polite and non-confrontational. His DOU audit reflected that style. Rather than belaboring past misdeeds, he looked forward, focusing on cost-savings and efficiency recommendations.

Oseguera's primary finding was that was that water mains were being replaced ”irrespective of their condition.“ He called on the DOU to stop the practice and to install water meters in backyards.

This audit could have radically altered the water-meter project and transformed it into a simpler, lower-costing program like the install in Fresno. But Sacramento's audits are not binding. They serve only as recommendations. This is despite the fact that a team of respected consultants — including Dennis Diemer, the longtime former general manager of the East Bay MUD and the current head of the Davis Yolo Clean Water Agency — helped forge the recommendation.

Diemer told SN&R that the audit team called for a rethinking of the water-meter project because it seemed that Sacramento was not investigating the actual condition of its water mains. ”It's important to look at each set of pipes rather than having a one-size-fits-all, blanket replacement policy. There are important questions to ask like is the pipe experiencing leaks? Is there clear evidence of corrosion? Could they be repaired?“

In reaction to the audit, the DOU hired engineering firm CH2M Hill to do its own review. The firm backed the DOU's plan.

Busath oversaw the review and says the conclusions reached were independent. But SN&R's investigation of hundreds of emails exchanged between CH2M Hill and the DOU, obtained through California's public-records-request laws, reveal that department officials guided the review away from areas that risked confirming the audit's findings.

The emails show that CH2M Hill initially sought to explore whether Sacramento's water mains need to be replaced at all. The firm recommended comparing Sacramento's plan to how other cities handle pipeline replacements.

DOU engineer Sherry responded to these proposals in an email to CH2M Hill, ”Justifying the mains to be replaced is our highest priority and should be the first task completed.“

Sherry and others at the DOU also nixed a comparative analysis that could have revealed how Sacramento's water-main-replacement approach differs from other cities across California.

For example, 61 percent of the water mains being replaced in Sacramento are concrete pipes commonly referred to as AC, or transite, pipes. AC pipes are common, particularly on the West Coast. Some cities like San Diego have thousands of miles of them underground. A senior engineer from San Diego says that the city is finishing a three-year study of its AC pipes. They seem for the most part to be ”fine,“ according to the engineer. Only 4 percent are slated for near-term replacement. The engineer stressed that number could go up once the analysis is complete.

Like in San Diego, most of Sacramento's AC pipes are between 40 and 60 years old. But the DOU claims that the pipes have a lifespan of just 65 years. If that were the case, replacing all of them as part of their water-meter program would be logical and sensible.

To help make its case that Sacramento's AC water mains have a lifespan of only 65 years and are on the verge of imminent failure, the CH2M Hill report cited the website of a Palo Alto-based firm called Exponent. The firm specializes in helping utility companies make smart decisions about when to replace water mains. The review implies that Exponent's research would back up the DOU's blanket replacement of all AC water mains in Sacramento.

But Exponent's website essentially makes the opposite case, stressing the importance of testing to determine pipe conditions and debunking set age limits.

Recently, Exponent conducted a multiyear study of the Alameda Water District's AC pipes. Utilizing extensive lab tests and computer modeling, the firm determined that most of the AC pipes are in good shape and helped pinpoint ones that need to be replaced. Exponent also released a statement about its research being used to justify water-main replacements in Sacramento, saying that the 60-year-lifespan claim ”does not reflect Exponent's research findings or opinions.“

Exponent senior engineer Matt Radlinski told SN&R that some of Alameda's 60-year-old pipes were still in ”great shape, virtually non-deteriorated, almost in pristine condition.“

He didn't want to put an exact life span of those pipes, but he said it wasn't inconceivable they could last another century.

A study released last year by the Water Research Foundation cast even more doubt on Sacramento's wholesale replacement of AC water mains.

”Our study was prompted by the concern by many utilities that AC pipes were about to fall off the cliff and suffer a huge number of failures,“ senior researcher Blaha said. ”What we found was that they're not about to fall off the cliff and that most of the water mains had significant life left in them. It is very likely that that could be the case with Sacramento.“ How long is significant life?

Under the most ideal conditions, the study found that AC water mains could last another 250 years.

The DOU continues to insist the water mains they are replacing are at the end of their ”industry standard“ useful life. In an interview last month, senior engineer Sherry repeated this. ”There are industry standards depending on the different types of pipe. So we have guidelines for the different pipes, for transite (AC) it's 60 or 70 years,“ he said.

When asked whether transite pipes with potentially decades of service life remaining actually need to be replaced, Busath responded that SN&R was ”overlooking the bottom line.“

”We do not want the pipes in the backyard, we want to get them out of the backyards. We want to replace them and put them in the streets.“

One complaint by residents of neighborhoods that have gone through the water-meter install is things never really get back to normal.

In Curtis Park, which underwent installations in 2013, a black stretch of slightly uneven pavement now runs down the middle of streets where work has been ”completed.“ This kind of road work is called a trench cut. It's usually temporary. But because of the scale of the water-meter replacements, the DOU acknowledges that repaving will have to wait for its typical cycle, something that happens every 15 to 20 years. A common complaint is that the neighborhood feels scarred.

And there are problems — from the mundane, like broken sprinkler heads, to the terrifying.

For Shannon McKinney's family, the experience was a nightmare — and almost a tragedy.

First, a sharp pipe was left exposed in their Curtis Park backyard for months. When workers finally came to fix the problem, it seems they cut the roots of a grapefruit tree, badly damaging it.

Then one morning in January of last year, McKinney awoke to the unmistakable whiff of a natural-gas leak. She was pregnant at the time, home with her 2-year-old. When a PG&E crew arrived at the house, they were alarmed as well, telling the family to evacuate immediately, even putting them in a hotel so the house could air out and a new gas line could be installed.

Brandi Ehlers, a spokeswoman for PG&E, says an investigation showed that the company installing water meters in Curtis Park, T&S Construction, was ”definitively at fault.“

Ehlers said that PG&E had marked the gas line and made clear that it should be ”potholed,“ or exposed using a hand shovel, before any serious digging took place. Instead, according to PG&E's investigation, T&S failed to expose the gas line. When they used a boring machine to vertically install a new water line, ”T&S severed a half-inch gas line, causing a buildup of gas.“

T&S owner Anthony Spinella did not dispute this account, but said his firm takes the safety of residents and workers very seriously. He acknowledged that, because of the enormous amount of digging, some problems are inevitable. ”In Curtis Park, we installed 27,000 feet of water mains. … When you have that amount of exposure it can happen. Every contractor that does what we do occasionally hits gas lines,“ he said.

Spinella acknowledged that it was possible some of the water mains they were replacing could have useful life left on them, but still described the overall approach as valuable. ”What are you going to do, leave a third of the water mains in backyards?

PG&E's Ehlers said that the leak could have ignited an explosion along the lines of a deadly 2008 incident in Ranch Cordova, when a house was reduced to rubble and neighboring homes were also damaged.

Two months after the Curtis Park incident, the DOU awarded T&S Construction a new $4 million contract to install meters in East Sacramento. Calamity almost struck again there: One of T&S's subcontractors cut another gas line. This time, a section of Elvas Avenue was evacuated. According to PG&E, the contractor was again at fault, this time not bothering to call a hotline to check on the location of gas lines before saw-cutting on the street.

T&S said the blame was PG&E's, however, for burying its line too shallow.

A PG&E spokesperson cautioned that gas lines can shift over time and that contractors are legally mandated to hand-dig around gas lines to expose them.

East Sacramento resident Tony Lobue was home at the time of last year's gas-line break. He didn't initially pay much attention to the commotion outside because he was used to the construction and digging. But then he smelled gas.

“I work in construction. I know how serious this could have been,” Lobue said.

He says he called 911 himself. When the firemen arrived on the scene, he says they told him not to start his car because it could ignite an explosion.

Tony Labue, with his wife, Kim, smelled gas last year during water-meter construction on his block. Photo: Robert Mull.

Michelle Carrey, coordinator for the city's water-meter project, defended T&S, saying that in her experience the company does good work.

City Councilman-elect Jeff Harris, who will represent East Sacramento and is also an experienced contractor, says he's already been hearing from constituents about the project. He said the broken gas lines add a new wrinkle. “The fact that these incidents have happened raises questions about how these projects are being managed,” he said.

The DOU's Busath said earlier this month that he had no knowledge of any gas-line mishaps during the water-meter install.

Sacramento's water-meter project is loaded with water-main replacements over the next decade. The bulk of them, and 175 miles of road work, is planned for the next 10 years. As the project is presently conceived, at least $350 million still needs to be bonded to pay for it.

But the DOU says that comparisons to how other cities, such as Fresno, performed their water-meter installations for a fraction of the cost and impact aren't a reason to change course.

“You're assuming that Fresno has done this right, and we disagree with that. We think what they're doing is not cost effective in the long run. If they want to leave their pipes in the backyard forever, then I guess that is OK,” Busath told SN&R.

Fresno's Robert Andersen, who headed up that city's water-meter job, says he and the city take very seriously the issue of replacing problematic water mains. Every year, his team replaces a few backyard mains, moving new ones to the street. But he stressed, “we don't replace pipes that are not in dire straits.”

Busath called the second-guessing of Sacramento's approach to installing water meters pointless: “This has all been presented to council. Council knows exactly how much this is costing. They know all the circumstances, and they agree.”

But several members of city council say they now have questions about the project.

Harris said he is very concerned about the expense of the program and the impact of rising utility rates. “This is a big project, which requires new votes on bonds. I'm a believer that more information is good,” he said. “And moving forward on a project of this size, it's very important to assess how it's going. Is the money being used well?”

Councilman and Assembly member-elect Kevin McCarty says he is concerned about the impact on residents. He said that before any new bonds are passed, the city council should “take a hard look at the program.”

And Councilman Steve Hansen, who represents Land Park and the central city, also hinted at the need to investigate. “We need to know more about what is going on in this program to make sure that we have proper oversight of our contractors, our staff, and to ensure that the public is receiving the value they deserve,” he said.

Eye on Sacramento's Powell says he would favor a moratorium on the project until safety and wastefulness concerns are ironed out. “If we don't take a long pause, it would be the height of recklessness. Individual wrongdoing needs to be looked at,” he said. “They need to bring in outside technical and financial auditors to do a complete assessment.

”And then we should restart it, only once the public has confidence that their interests are being protected.“

This story was reported in partnership with The Investigative Fund at The Nation Institute, now known as Type Investigations.

About the reporter

Joe Rubin

Joe Rubin

Joe Rubin is an award-winning producer and investigative journalist.

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