The memo states, “Basically, each member entity is charged for ARSA’s cost on the basis of the amount of Wastewater from the respective entities that is disposed of by ARSA.” The joint powers agreement between the entities states, “…each member shall contribute expenses in accordance with the ratio of that member’s quantity of wastewater disposed of through the Outfall, adjusted at the beginning of each fiscal year; …”Hahn said, “Currently, neither the County nor other members of ARSA pay directly for ARSA’s costs…ARSA’s operational costs are paid by AWA’s system users in Martell as part of their sewer charges. The ARSA charges paid by AWA’s Martell users are equal, on a household by household basis, to those charges in Sutter Creek and Amador City…The other entities are billed in the same way for their respective shares.”

However Hahn pointed out; “…who pays if ARSA’s costs are large capital costs or are derived for ARSA’s liability, fines and penalties exceeding ARSA’s ability to pay”? Hahn said that these costs could come from a variety of places: Ruptures to ARSA’s pipeline which may damage private property; incurred penalties from the Regional Water Quality Control Board; repairs or the replacement of the Henderson Dam. However, he also pointed out that ARSA is proposing to purchase the Holboe Ranch to add land for disposal capacity. The price tag to this endeavor is estimated at $600,000. Also, Hahn reported that ARSA borrowed $326,000 from Ione to fund storage improvements at the Henderson Reservoir, the amount yet to be repaid.

Hahn said, “Presumably, ARSA, either directly or through Sutter Creek, would bill the members for their proportionate share. For example if the Henderson Reservoir fixes cost $2,000,000, the county’s share would be 11.8% or $236,000. The County would then request that the AWA absorb and pay the County’s share and over time the AWA would collect the $236,000 from area users. Hahn said, “Jim Abercrombie (AWA General Manger) says that AWA would absorb the initial capital cost and recover it from its Martell ratepayers However there is no specific contractual language in the County-AWA agreement that expressly provides for AWA’s absorption of the County’s share of ARSA’s costs.” The joint powers agreement is clear that the County is a member of ARSA and will have to pay its share of ARSA’s costs.

Those monies would have to come from the County’s General Fund and then the County would have to seek reimbursement form AWA through its users. Hahn said in his memo, “It appears that because of the contractual language there is some risk that the county may have to front non-operational capital costs incurred by ARSA and subsequently work with AWA to get the amount recaptured through sewer bills.” However, this does not end the County’s cause for concern as “Government Code section 895.2 makes ARSA’s members individually liable for judgments based on ARSA’s negligent and other unlawful acts if a judgment against ARSA for such an act is no paid by ARSA,” said Hahn.

ARSA does have insurance for such situations however the insurance is limited and would not cover dam breaks, punitive damages, fines or penalties. Hahn ended his memo by saying that, “The County’s participation in ARSA is not an economic ‘free lunch’.” After discussion the consensus of the board was that these wastewater matters need to be worked through, as well as exploring a regional system. CAO Blacklock pointed out that, “Even without a regional planning effort we are still in a very awkward situation. The County’s agreement has changed significantly but ARSA’s didn’t.” His suggestion at that time to the board is to “give some thought” to the ARSA’s joint powers agreement reflecting the changes which have taken place, as well as a “broader discussion” about the County leaving ARSA. Supervisor Louis Boitano echoed that the County needs to work with their partners to get everybody on the same page while being mindful of changing the contract with ARSA. Richard Vinson then pointed out that it was an informational item and purely for discussion purposes but he charged staff, County Counsel and the CAO to work with ARSA as well as look at other options such as possibly ending their membership with ARSA.