In the midst of public hearings as the City of Needles prepares to raise utility rates on its citizens, heretofore closely guarded information has emerged that a former city councilman’s business has stiffed the city for tens of thousands of dollars through the nonpayment of electric bills.
Whereas regular Needles residents are hit with a delinquent notice within a month of being late on their utility payments and have their electricity turned off if they allow those payments to lapse past the two-month point, Colorado River Distributors, a beverage distribution company owned by former Needles councilman Jimmy Lopez was over $30,000 in arrears on its electric bill and did not see its service interrupted.
Lopez resigned as Needles city councilman one year ago after six years and three months in that post.
To all appearances prior to his exit, Lopez appeared larger than life in this town at the county’s far eastern end on the western bank of the Colorado River. In Needles, the smallest of San Bernardino County’s 24 incorporated cities population-wise, Lopez seemed too big to fail, with a fleet of big rigs/eight-wheelers lined up at his warehouse on Route 66 and numerous employees. To those on the outside looking in, he was a shining success amidst a town where many businesses are doomed to decline, forced to compete with lower sales tax and costs at businesses just across the river in Arizona, and are still smarting from the economic downturn on a once busy corridor bypassed by the construction of Interstate 40.
But the popular councilman, whose bread found its butter through his beverage distribution company, which included beer and soft drinks, was bullish on California. He expressed the attitude that “Arizona always follows suit to California…if we are taxed here, it won’t be long before Arizona catches up…I’ll take my chances here. I’ll raise my kids here in my home town.” Lopez’s business donated to the sports teams and school functions. His business supported many local functions and he was instrumental in creating the Needles Downtown Business Alliance. He threw extravagant parties and events at his luxury custom home with a megalithic pool and spa overlooking a magnificent view of the Colorado River. For this reason, Lopez seemed beloved among the locals and, when he ran for city council, he was handily elected and reelected. He was a modernist, proud that he had helped to usher in the legalization of medical marijuana into one of the most economically challenged communities of San Bernardino County, making the town the proclaimed unofficial capital of medical marijuana in the county and the state — the first town to tax pot.
But all of the external extravagances and signs of success – not just the lap band and his wife’s tattoos, but the fancy new Harley, the pool, and the rip snorting lavish parties – came with a price. The first sign of affairs going south was a rumor of his wife setting up residence in San Diego, a separation, then a divorce, bankruptcy and then word of employees who were being let go without a promised pension.
Two weeks before Jimmy Lopez announced that he was stepping down from his seat on the Needles City Council last year, the word was on the street – at least in some quarters – that the councilman was in financial trouble.
Indeed, that was the case. At the time of his resignation, Lopez went part, though not all, of the way in acknowledging that times were tough financially. He said he regretted having to leave office but felt it was necessary because the demands of running his company made it impossible for him to provide his constituents with the level and intensity of service they deserve. He said that he had “sold two of my divisions, the ones for distribution and industrial gasses, specifically helium, nitrous oxide and carbon dioxide” but that he was still making a go of the beverage end of Colorado River Distributors, Inc., which maintained its affiliation with Coca-Cola and serviced beverage machines dispensing The Real Thing throughout a territory that stretched from Needles all the way to Barstow and Fort Irwin and catered to restaurant chains – Denny’s, McDonald’s, Chili’s – and casinos. What Lopez left unstated in a semi-state of secrecy was that he no longer employed others to make those deliveries and provide those services, having laid them all off, and now was doing the work himself.
Lopez and the city harbored another secret, one that has only recently lurched out of the bag: Colorado River Distributors was over $30,000 in arrears on its electric bill.
In an apparent shielding of what might be perceived as a “gift of public funds,” nothing was ever said publicly about the circumstance and the city never moved to impose on Lopez the same discipline it routinely applied to others who failed to pay their bills. The indignity of having Colorado River Distributors’ electricity shut off was never visited upon Lopez.
David Buckley, a Needles residence with an established talent for ferreting out information being held close to the vest at Needles City Hall told the Sentinel he learned that something was amiss prior to Lopez leaving office. Buckley said that with the proposal to up electricity rates paid by the citizenry once more, its now time for the information to surface.
“For me, it was timing,” Buckley said. “I heard about it but the timing wasn’t right to question it on the dais before the city council until now. I wanted people to be listening…now that the city is raising everyone’s utility rates, people are going to be listening and speculating why our rates are going up.”
In front of a large crowd at the Tuesday night council meeting, Buckley, during the public comment period, related his tale that while he was visiting the Needles Chamber of Commerce office a couple of weeks before Lopez’s resignation, Mayor Ed Paget’s wife, Jan, approached him. “’I have a news tip for you,’” Buckley quoted Nan Paget. “’Councilman Jimmy Lopez owes the City of Needles, and his company is over $30,000 in arrears on its electric bills.’” Buckley claimed that he told her at that time “You are the 10th to allege that and the second source from Needles City Hall to corroborate.”
Lopez made no mention of the money he owed to the city on the night of his resignation from the council. He said simply that he had downsized his work force and he needed time to take on many of the business responsibilities that his employees formerly did for him.
In reaction to Buckley’s statement at the city council meeting this week, Needles City Manager Rick Daniels asked city attorney John Pinkney to provide some order of an explanation. Pinkney did not deny the allegation and recalled that two weeks before Lopez’s resignation, he, Pinkney, had recused himself from the issue of the city’s collection problem since he was also still representing Jimmy in his capacity as a councilman. Pinkney revealed that the City contracted the law firm of Best, Best and Krieger to handle the case. Pinkney did not expound upon whether civil or collection proceedings were initiated against Colorado River Distributors. The Sentinel has not found any evidence of a collection effort or that Colorado River Distributors has retired that arrearage.
Daniels asserted that there was an item on this week’s agenda that, coincidentally, proposed a policy change and would correct gaps in the city’s utility collection stop loss policy.
Despite its size, Needles is one of only two cities in San Bernardino County that has a full service utility division, with water, sewer and electrical departments.
Daniels said that the deposit on utility connection fees would be increased and the lapse period that the city could cut off electricity would be shortened if the new policy is adopted. Currently, he said, the city has been allowing up to 3 or 4 months given extenuating conditions of the elderly or those who have health related issues. Now, he said, three steps would be taken: 1) the deposit would be increased to reflect the historic highest monthly bill, 2) the lapse period would be cut down to one month and everyone will be treated the same and 3) the city will try to close in on the case of tens of thousands of unpaid bills estimated to be about $350,000. He did not dwell on the consideration that more than eight percent of the total electrical bill delinquency is that of a business run by a former councilman.
On a future date, Daniels proposes to bring forward policy changes that would enable the city to assign ultimate liability to the land owner, not necessarily the tenant and that accounts would need to be with the land owner with a copy to the tenant. Daniels asserted that placing the burden on the property owner is the policy in most other cities in California.
It has been reported to the Sentinel that Lopez leased the property where his business was established. With Lopez’s company in bankruptcy, collection of the debt appears unlikely.
Former City Council member Terry Campbell, currently sitting on the Needles Utility Board informed the Sentinel that the council at the time had not been provided with any information that Lopez’s company, Colorado River Distributors was in arrears on the payments, apparently during the period of time up until Best, Best & Krieger was assigned to the case. He said he did not particularly like the way the former city manager David Brownlee managed day-to-day affairs of the city but that part of the problem was that one of the former employees in charge of the accounts “only kept track of a lot of things in her head.” He also made no comment as to whether there was any criminal investigation or whether criminal charges had been filed for any perceived gift of public funds or allowing bills to go uncollected for a longer period of time than normal.
Calculating the discrepancy between the typical residential meter shut off 30 days after the due date or in extenuating circumstances extending the shut off date 3 or 4 months, a typical estimated bill would be no more than $1,500 – $2,000. In the case of a cold storage/distribution business, the amount of electricity used each month would likely be considerably higher. Based upon an estimated monthly bill for Colorado River Distributors of $3,000 per month, the company is calculated to have engaged in about 10 months of nonpayment. Typically, noticing on utility payment arrearages occur within one month. The city has not disclosed whether such noticing was provided to Lopez.