Employees of water district say city reneging on promises made to fund vested coverage

April 19, 2012 9:04 AM
Natasha Lindstrom, Staff Writer

VICTORVILLE • Current city employees and retired employees of the water district absorbed by Victorville in 2007 are suing the city to protect their benefits, arguing the city is reneging on promises made to fund their vested coverage.

The six plaintiffs charge that Victorville is not standing by agreements it made to some 49 employees who’d worked for the former Victor Valley Water District.

The complaint, filed in the U.S. District Court for the Central District of California on April 9, alleges that Victorville and its water district “threaten to completely disregard their mandatory duty under binding public entity resolutions and contracts issued by multiple agencies.”

A May 2007 agreement between the VVWD Board of Directors and Victorville City Council stated that workers would continue to receive the same level of benefits they had always had, which for some included lifetime coverage for themselves and spouses. A July 2007 resolution by San Bernardino County’s Local Agency Formation Commission stated that Victorville would either retain the employees’ existing benefits or offer them a one-time payout of $10,000 to waive the benefits.

Nearly five years later, the city hasn’t established an irrevocable trust to fund those retirement benefits. Some retirees have been told their benefits will be cut off unless they switch to the city’s reduced coverage plan.

“Plaintiffs are at risk of losing retiree health benefits on which they and their families already or will soon rely, or alternatively being forced to spend hundreds of additional dollars per month to maintain this level of coverage, rendering them unable to cover other critical expenses,” the April 9 complaint states.

However, city officials say the lawsuit appears to be without merit.

“The city believes it has acted in accordance with the LAFCO action and until the complaint is reviewed by legal counsel will have no further comment,” City Manager Doug Robertson said via email Wednesday.

Until Tuesday, the City Council hadn’t approved doling out the $10,000 buyouts — something Robertson told council members “should have” happened in 2007.

The process of offering the buyouts and creating a trust stalled after the city found out the retirement liability was nearly double the $5 million city officials had been told to expect, Robertson said at Tuesday’s council meeting.

“No one has any final resolution on where it ended up or why it ultimately sort of stopped or faded way, other than perhaps other priorities came up,” Robertson said.

The City Council took action Tuesday to offer the $10,000 buyout to seven willing candidates, along with redoing an actuarial study to identify the current liability of the remaining employees. That agenda item was solely about the buyout program and did not address the lawsuit.

During the item’s discussion, Councilman Jim Kennedy raised concerns about the original VVWD resolution for stating that the retirement liability would be paid for out of asset replacement funds. Kennedy — who was president of VVWD’s board at the time — said he didn’t think anyone paid close enough attention to that provision.

“I’m no lawyer, but my guess was that was an illegal decision,” Kennedy said during Tuesday’s meeting. “We had no authority to use those kinds of funds for that purpose. … I don’t think that decision can stand the way we made it.”

“Councilman Kennedy, I think ‘illegal’ is too strong a word for it,” Robertson quickly responded.

The lawsuit was not agendized on Tuesday’s meeting because staff received the legal documents after posting the agenda and there was no immediate action required, according to Robertson. City Council will receive the documents in closed session after a review by legal counsel.

The 20-page complaint cites six plaintiffs: DeZwart, Jonnie Maddox, Timothy Whelan and Linda Whelan, who retired from the Victor Valley Water District before it merged into Victorville; and Wade L. Pieper and Steve Borrowman, who are now employed by the Victorville Water District.

The plaintiffs’ attorney, James P. Stoneman of Claremont, did not return a Wednesday call for comment.

Natasha Lindstrom may be reached at (760) 951-6232 or at NLindstrom@VVDailyPress.com.

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