Central Basin must wait to get its insurance back after JPIA puts off decision

COMMERCE >> Central Basin Municipal Water District will have to wait until at least December before it can get insurance from a regional joint powers authority that had cancelled the district’s policy two years ago.

A slim majority of board of directors of the Association of Califoia Water Agencies’ Joint Powers Insurance Authority voted Monday to table Central Basin’s request to reinstate its insurance.

“There were too many unanswered questions,” said Alfonso Contreras, president of the Valley County Water Board District.

“There are elections for three of the (Central Basin) board of directors,” Contreras said. “There’s the audit. I felt there was no penalty of waiting.”

Two years ago, JPIA cancelled Central Basin’s insurance because officials with the authority were conceed that the JPIA was taking in less money than it was paying out in liability claims, said Executive Director Walter Sells. Since 1997, Central Basin has had 22 claims filed against it. Eleven of those were related to district employees. Most were filed in the fiscal 2013-14 year.

The JPIA said there was “a sense of dysfunction on the district’s board” that controlled water service to 2 million people in 22 cities and unincorporated areas in southeast Los Angeles County. That dysfunction resulted “in an inordinate increase in litigation against the district,” the JPIA said.

An audit that was released in December slammed the district for a number of bad decisions — including poor leadership and violating state law.

Central Basin General Manager Kevin Hunt said he’s disappointed about Monday’s action.

“It was just one of those confusing things,” Hunt said.

Hunt proposed a deal for the next two years in which Central Basin, in essence, would be self-insured.

The district would put up $1 million to cover any claim in each of the next two years.

“If there were no claims, we’d get it back, Hunt said.

Central Basin needs insurance by May 15. It has one offer for $128,000 with a $450,000 premium. Hunt said he may another, but couldn’t talk about the terms.

Since JPIA cancelled Central Basin’s policy, the district’s costs have nearly tripled.

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Andrew Lara, a Pico Water Board member, said Hunt gave an “excellent presentation.”

“(But) I felt the general sense was that it too soon for them to be reinstated,” Lara said. Pam McVicar, a La Habra Heights water director, said the insurance industry standard would be for the district to go five years without a claim.

The district has gone just two.