In another sign that this is a different type of Davis City Council, the council on Tuesday night, citing concerns of lack of public outreach and community awareness, have temporarily delayed the implementation of water rate hikes that will come as the result of the large capital projects that have been approved in the last year.
While Council acknowledges that they have started down the path and made choices to upgrade the city’s sewer treatment plant and undergo a costly new water supply project with the City of Davis, several councilmembers, including Mayor Joe Krovoza, expressed concern that the city is not doing enough to educate the public about these rate hikes and also that they must present the public with additional options to conserve water and thus lower their bills.
Mayor Pro Tem Rochelle Swanson moved to table this decision while the staff comes back in the future to include more information about a public education campaign and options for rate relief based on conservation efforts.
The rate increase would also take effect on August 1, 2011, which is at the height of annual water use leading some on the council to express concerns about the added shock of increasing water rates then, rather than perhaps easing them in when usage is lower.
Staff had recommended a “28% water rate increase which for average single family residential customers would equate to an approximate $9.82 monthly increase.”
The Interim Public Works director noted that eventually water rates would be 2.5 times what they are currently.
Sewer would have a smaller 3.5% increase, while sanitation would have a 3 percent increase.
The move, ironically, comes at the same time that the state water resources board approved the City of Davis and Woodland application for state water rights.
Councilmember Stephen Souza reported this at the meeting on Tuesday.
He said that the state determined that issuing this permit was “in the public interest because the water supply will protect, one, will provide a reliable supply to meet existing needs; two, will improve water quality for drinking water processes; and three improve the quality of treated wastewater effluent discharge by the WDCWA [Woodland-Davis Clean Water Agency].”
There had been challenges before the Water Resources Control Board that argued that continued withdrawals from the Sacramento River would stress and endanger a variety of functions of the Delta.
However, Senator Lois Wolk, who has been an outspoken defender of the Delta and certainly not shy about opposing local agencies when she saw fit, argued in favor of the application.
She wrote to the board on January 4, “I believe that the project before you today is a well thought out solution to the challenging need to improve the quality of water that the region discharges to the Sacramento River. Further, it is my view that this project is consistent with state water policies, and is beneficial to efforts to improve conditions in the Delta.”
“These applications will allow the region to meet looming SWRCB [State Water Resources Control Board] discharge requirements by improving the quality of water coming into treatment facilities; benefiting the water quality in the Sacramento River. This project also provides benefit to the fisheries that depend on the Sacramento River by facilitating the screening of one of the largest unscreened intakes remaining on the Sacramento River,” she continued.
“As my experience demonstrates, I am a strong advocate of balancing water demands with protecting the Sacramento River and Delta. In this case, I am happy to support this responsible application that meets both the needs of the community and that provides ecosystem benefits. In improving conditions for both water quality and fisheries in the Sacramento River and the Delta, this project is also consistent with statewide water management goals,” the Senator concluded.
According to city staff, the rate hikes “would generate revenue for anticipated operations and maintenance and needed capital projects.”
Broken down, these water rates would generate $14.0 million in revenue with the proposed 28% rate increase largely driven by the need to provide a revenue stream to support the planned debt service to deliver the Surface Water Project.
City staff adds, “The rate increase assumes $6.0 million for FY 11/12 expenditures related to the surface water project and is the first in what is anticipated to be a series of significant increases over the next five years necessary to fund the construction of the surface water project.”
The sewer rates on the other hand, will generate $13.1 million in revenue for operations and maintenance and needed capital projects.
City Staff argues, “The proposed 3.5% rate increase is largely driven by the need to support the Waste Water Treatment Plant upgrade project. The rate assumes $5.1 million for FY 11/12 expenditures for the treatment plant upgrade project.”
Finally, “The sanitation rate will generate approximately $9.3 million in revenue to support existing services. The rate increase provides additional revenue for a contractual CPI adjustment in the contract services and anticipated increased tipping fees at the Yolo County Landfill.”
This has been an issue that this site has raised for four years now. The issue of water rate hikes and the fact that the council had not prepared the residents of this community for the rate hikes that are to come.
We have seen glimpses of this as the council has approved smaller ten percent hikes in the past. We questioned, given the amount of complaint the ten percent hike generated, what would happen when the council raised the rates ultimately by 150% if not higher.
The city has done a lot to mitigate costs of both projects, but they have refused to space them out to mitigate some of the cost impacts.
The city delaying implementation makes sense, delaying the timing also makes sense, but as someone pointed out during the meeting, at some point, choices were made and we will all have to pay the costs of those choices and that means that our water is going to become much more expensive and that may mean that people on fixed incomes may be priced out of their homes and that has to be something that the council acknowledges and plans for.
Obviously, these rate hikes are coming, but hopefully with some planning and effort on the part of the council and staff, the impacts of these hikes will be moderated, if not mitigated, for thousands of fixed and low income Davis residents.
—David M. Greenwald reporting
I think acknowledging that Sue Greenwald has been warning about this for years is worth mentioning.
dmg: “This has been an issue that this site has raised for four years now. The issue of water rate hikes and the fact that the council had not prepared the residents of this community for the rate hikes that are to come.”
Part of the problem of the city not preparing residents for this rate hike has to do w how this water project came about. There have been discussions/debates for a number of years about the water issue and how to address it. Because there was no definitive decision on the water project, and bc the previous city council did not want to grapple w the problem, water rate increases were not imposed bc there was no specific project to “justify” the rate increase in the minds of the Council majority at the time. On the other hand, the sewer project was definite, a known cost, and so the city started the process of increasing sewer rates over several years. In consequence, there is enough funding saved up so that the increases in the sewer rates will be much less severe. But for the water rates, the city has to essentially play “catch-up” over the next four years now that an actual project is in place. What this translates to is increasing water rates by nearly 30% for each of the next 4 years, and then the city can level the increases off to more modest increases each year. During public comment and later in private I asked city staff if there wasn’t some way we can spread the drastic increases over more than 4 years, to decrease the draconian rate of increase. The answer I received was a “maybe”. A lot depends on funding sources and what they are willing to negotiate. Bottom line though, is water rate increases are going to have to be pretty dramatic over the next four years to pay for the surface water project, pure and simple – bc the process of rate increases was not started long before now.
dmg: “We have seen glimpses of this as the council has approved smaller ten percent hikes in the past. We questioned, given the amount of complaint the ten percent hike generated, what would happen when the council raised the rates ultimately by 150% if not higher.”
I guarantee the public is going to squawk loudly at these draconian water rate increases. This is why I spoke out at public comment Tuesday night, strongly advising the city council to make sure and do some sort of public outreach campaign – for instance putting flyers in the bill. Long newspaper articles are not necessarily going to be enough to explain these extreme rate hikes. Many citizens do not bother to read the newspaper, or don’t read far enough down in the article to get all the pertinent details. But when the high rate increases directly hit consumers in the pocketbook, they have to be made to understand why this is happening, how long drastic increases will have to extend for, and what will occurr if these rate increases are not instituted. The previous city council did not see fit to raise the water rates in preparation for a water project, so the current city council is left w the unenviable task of doing the dirty work, and taking the heat that is going to come along with it.
dmg: “The city has done a lot to mitigate costs of both projects, but they have refused to space them out to mitigate some of the cost impacts.”
Sue Greenwald needs to be given the credit for saving the city at least $100 million on the sewer project. Had she not been so tenacious about it, citizens would be paying that much more for the sewer project. Rochelle Swanson graciously conceded this from the dais, praising Council member Greenwald for saving the citizens of Davis a good deal of money on the sewer project.
dmg: “The city delaying implementation makes sense, delaying the timing also makes sense, but as someone pointed out during the meeting, at some point, choices were made and we will all have to pay the costs of those choices and that means that our water is going to become much more expensive and that may mean that people on fixed incomes may be priced out of their homes and that has to be something that the council acknowledges and plans for.”
The city is only delaying the timing of the notice for rate hikes by several months (perhaps two), but that is about it. The 28% rate hikes per year for the next 4 years are not going to be delayed. Citizens have to pay for the surface water project, which is going to be a costly venture. Whether or not one agrees w the water project, and whether it was the right or wrong thing to do is irrelevant at this point. The surface water project has been approved, and now must be payed for on a fairly quick time schedule to show the city has enough financing to issue bonds for this project (at least that was my understanding of things after chatting w Bob Clark of Public Works).
The other issue is whether some sort of subsidy set aside can be done for law income folks who cannot afford such extreme rate hikes. Particularly those young folks w children and seniors on fixed incomes. The subsidy would have to come out of the general fund, which is nearly impossible right now, since the general fund cannot even support the city services provided currently. However city staff is going to look into the possibility of setting up some sort of subsidy fund, by looking at what other cities have done and how well it has worked. If a family is in danger of being foreclosed on and losing their home bc of a these draconian water/sewer rate hikes, it would be good if the city could at least explores ways it could help out so citizens don’t have to pack up and leave town just so the birds in the bypass can have cleaner water (I’m being a bit facetious – but as I was told by Public Works some years ago, there never really was a cost/benefit analysis done in regard to the new stringent water standards)…
DMG “…The city delaying implementation makes sense, delaying the timing also makes sense,…”
….especially if you want the School Tax to also pass this summer!
As long as the implementation of the fee increase doesn’t get delayed, spending some time on educating the community probably makes sense. However, if there is a delay in the implementation, then the increases will have to be even greater. Similarly, stretching out the increases over a longer period of time may seem desirable, but it will require greater rates in the future to delay such increases today.
The surface water project will permit future peripheral residential development in Davis. Without it, the present water supplies will not permit major development as it is prohibited by current law that demands that additional water supply be available for any new development. How will future developers be forced to pay for the additional water that this project will make available for their future developments?
Where do you believe these peripheral developments are going to occur? And what do you think is going to get Davis voters to approve them?
Rc: “Similarly, stretching out the increases over a longer period of time may seem desirable, but it will require greater rates in the future to delay such increases today.”
Point well taken, but it is much like a mortgage. When people cannot afford to pay for the full amount of the cost of a house, they are willing pay more interest to stretch out payments, in order to be able to afford purchasing the home. Water rates increasing by 100% over four years is going to be more than some citizens can handle financially and could result in them losing their homes…
“And what do you think is going to get Davis voters to approve them?”
The necessity to vastly increase the Davis tax-base to pay for this project will be the only option that Davis voters will have to avoid the unacceptable draining of their individual financial resources to pay for the bonds. The question is… will the developers be paying for this project which will be absolutely critical to them making their multi-millions building residential developments on our periphery?
ERM: [quote]Point well taken, but it is much like a mortgage. When people cannot afford to pay for the full amount of the cost of a house, they are willing pay more interest to stretch out payments, in order to be able to afford purchasing the home. Water rates increasing by 100% over four years is going to be more than some citizens can handle financially and could result in them losing their homes…
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This may be too fine a point, but I actually don’t think your mortgage analogy quite fits the scenario I was describing. We aren’t really talking about stretching out the number of payments by a hypothetical delay in implementation. We are talking about condensing the number of payments, since every month that the payments are not increased, forces subsequent payments to be greater to compensate. It’s like driving across the country and having to get there 10 days from now. For every day we delay in starting our trip, we will on average have to drive more per remaining day. Now, it has been pointed out that in the case of the water rates, we really aren’t talking about a delay in implementation, just a delay in Council action to approve the increase. Also, the window of when payment increases can be levied to service the capital cost of the new water project are largely constrained by when the water project is built. Bonding, which is largely what the rate increase will pay for, will need to be tied to the construction of the water project. Since the bonds won’t be sold for a bit, what the city is effectively doing is building up a pot of money that can be used to reduce the amount of the eventual bond sale, and hence the annual debt service, and hence the future rates to residents. Start that savings process later, and that’s where my driving cross the country analogy fits in.
To Rhinochaser: I talked to city staff about this issue, and they seemed to indicate it might be possible to stretch out payments, but it would largely depend on the bond market and who is financing the project. I know it is a tricky and complicated issue (and far beyond my area of expertise). There is no doubt it would have been far better if the city had started the process of increasing water rates far sooner, but it is what it is. The previous City Council chose to kick the can down the road, in part bc the citizens were already having to pay steep sewer rate increases. I don’t think there are any villians here – this is a tough issue foisted on us by the federal gov’t (and politicians who have been long out of office and don’t have to take the heat for their questionable draconian decisions)…