Oxnard Gains $2.5 Million From Mistake

Financially beleaguered Oxnard has received a windfall of about $2.5 million from Southern California Gas Co., which discovered that it had mistakenly underpaid city fees for six years, officials announced Tuesday.

A three-month internal audit at the gas company uncovered the “clerical error” that led to the mistake, said Marty de los Cobos, the company’s district manager for Ventura County.

Between 1983 and 1989, the gas company underpaid the city’s franchise fees for gas pipelines beneath city streets by about $1.8 million, de los Cobos said. The city was paid an additional $700,000 to account for interest that it would have earned on the $1.8 million, he said.

The company gave city officials a check for more than $2.5 million last Friday, which was deposited in Oxnard’s general fund reserve account, Mayor Nao Takasugi said.

“It’s a good Christmas gift,” Councilman Manuel Lopez said.

Five months ago, city officials were forced to use another financial windfall and to eliminate 18.5 city jobs to avoid a $2.8-million deficit. To balance its 1990-91 fiscal year budget, the city used the $1.4 million it had earned by investing money paid by city employees into the state-run public employees retirement program.

The gas company discovered its error two months after the council had asked staff to analyze revenue sources--including franchise fees--to make sure that the city is receiving all the money it is owed. But city officials had not gotten around to reviewing the gas company’s franchise fees.

“Although these additional fees remain subject to verification . . . it has significant benefits for the city,” the mayor said.

Takasugi said the council will meet Dec. 4 to review the city’s first quarterly financial report for the 1990-91 budget year. It will discuss at that time whether the money should be spent or should remain in the emergency account, he said.

Over the past two years, the city has been forced to dip heavily into the reserve account because of financial problems. The account’s balance has been reduced from $9 million in 1988 to slightly more than $4 million today.

De los Cobos said the gas company’s error occurred after additional meters were added in 1983 to record natural gas used at its Mandalay steam-generating plant.

“Through a coding error, usage through these new meters was not recorded as being delivered in Oxnard and, therefore, our computers did not credit all gas usage at the plant to the city’s franchise fee account,” he said.

In the past five years, the gas company has paid Oxnard more than $6.7 million in franchise fees, he said.