Morning Report: Water Agency Spent $88M to Swap Out Swap Deals

The agency that delivers water to much of Southern California forked over tens of millions of dollars to get out of a series of bad deals it’d hoped would save taxpayers money.

Our Ashly McGlone found the Metropolitan Water District of Southern California sunk nearly $88 million into its effort to exit so-called interest-rate swap deals. They initially projected those deals would stabilize debt interest rates for a good price. That didn’t happen.

And Los Angeles-based Metropolitan used borrowed money to pay the swap termination fees, meaning past swap terminations will likely cost even more.

Oh, and there’s still another a $71.5 million swap liability on the books.

McGlone discovered Metropolitan was far from the only local agency to invest in swaps – it just invested and lost far more.

SANDAG Board Considers Next Steps

The San Diego Association of Governments board could be ready to take action on the forecasting scandal that’s dominated the agency for the better part of a year.

The board voted unanimously Friday to take a series of steps to rectify troubling findings reported by Voice of San Diego over the last 10 months and an outside investigation released this week.

The agency misled voters on Measure A, a tax increase rejected by voters last year. Staffers had identified significant errors with the measure’s revenue forecast before the election, but leadership failed to act on their findings. We’ve also uncovered serious problems with the cost and revenue estimates for TransNet, the agency’s existing sales tax, which is now facing a $17 billion shortfall. The investigation also revealed that staffers felt they were directed by agency leaders to delete and hide documents related to the scandal as it was unfolding.

The board decided Friday to conduct a performance review of Gary Gallegos, the agency’s executive director, in an upcoming closed-session hearing. Board members will also consider launching another investigation into the TransNet issues and whether to take a forensic look at whether documents were destroyed. They’ll also consider whether to bring mid-level staffers who were witnesses in the investigation before the board to answer questions, and the subcommittee in charge of the investigation will put together a proposal to adopt recommendations from the investigators.

“We need to clean house,” said Supervisor Dianne Jacob. “It appears there was a cover-up.”

“To a large degree, we forfeited the public’s trust,” said Poway Mayor Steve Vaus.

Serge Dedina, mayor of Imperial Beach, also suggested discussing leadership changes on the board.

“Change sucks,” he said. “It’s always necessary, whether it’s in your own family, your own city.”

After the meeting, KPBS reporter Andrew Bowen also asked Ron Roberts, county supervisor and SANDAG board chair, if he was ready to fire Gallegos. He said he wasn’t close to that yet, but needed to weigh the positives and negatives of each decision. Bowen also rounded up the discussion at the highly attended hearing.

Mayor Kevin Faulconer, a SANDAG board member who missed Friday’s meeting, issued a statement saying the public deserves “a full explanation” on the forecasting errors so it can regain the public trust.

The Union-Tribune also covered the hearing.

— Andrew Keatts

Sac Report: New Rules Spell Out How Police Will Collect Data

Both perception and objective reality collide in draft police data collection regulations being hashed out two years after the passage of Assemblywoman Shirley Weber’s bill mandating police collect data on the people they stop in an effort to guard against racial profiling.

Our Sara Libby describes both the objective and the subjective – and thus somewhat controversial – parts of the Justice Department’s proposed regulations in this week’s Sacramento Report.

Also in the Sacramento Report: Contributor Kelly Davis writes about the debate over how to define a violent crime following the 2016 ballot measure that meant to make nonviolent offenders eligible for early parole and Libby wraps up good Capitol reads, including three nice profiles of state politicos you should know.

VOSD Podcast: The Bombshell SANDAG Report

So yeah, about that big report this week …

In this week’s VOSD Podcast, our Andrew Keatts and Scott Lewis walk us through the most surprising findings and interesting takeaways from an independent investigator’s deep dive into the regional transportation agency’s forecasting scandal.

Lewis and our Ry Rivard also caught up with Randy Record, chair of the Metropolitan Water District, about the organizations’ high-profile legal battles with the San Diego County Water Authority.

Quick News Hits

• A slate of proposals from bicycling advocates is getting good reviews from city officials, the Union-Tribune reports.

• inewsource looks at how school districts have adjusted to an increasing focus on personal technology such as tablets or laptops and the challenges that have emerged along the way.

• The Union-Tribune profiles Encanto-based Pillars of the Community, a group that’s hosting a strategy session today to discuss how to oppose laws and policies they believe are negatively affecting diverse neighborhoods.

• San Diego County just put three downtown blocks on the market, the Union-Tribune reports.