They will not say it publicly, perhaps they are too polite, perhaps they know no one will really care. But they all know. Some have said it privately. The bottom line is that previous councils have left a huge mess that the current council now has to clean up.
This could be an article about employee compensation and the fact that during the last decade, salaries rose dramatically, spurned on by a booming real estate market and double figure increases in property tax revenues on a yearly basis. That coupled with increases in the pension formulas to 3% at 50 for safety employees and 2.5% at 55 for miscellaneous employees have left the city in a huge bind that it will have to undig itself from.
However, this is not another story about employee compensation, this is a story about water.
This week, we are finally coming to the day of reckoning. We have had a council that has pushed relentlessly to create a water supply project. Everyone knew that water supply project was going to come with a price tag.
Last summer, we were told that our water rates would double.
By last December, Stephen Souza and Joe Krovoza published a guest commentary in the Vanguard entitled “Rebuilding Davis’ Water Utility.”
At that time, they wrote, “Our current average residential bill of about $40 per month is approximately half the statewide average. Assuming current demand levels, our average is projected to climb to $90 per month by 2020, when the statewide average is predicted to be $100 per month. This news isn’t great, but without a new system we delay the inevitable and costs will increase.”
Less than three months ago, they were talking about increasing our water rates to $90, about 2.4 times the current rate.
According to Mayor Joe Krovoza, those numbers came directly from staff and he had asked them to give him a full and accurate figure to present to the public.
Now we are talking about, not $90 by 2020, but $111 by 2016. A tripling of our water rates in just five years.
What changed in the cost estimations in just three months? Staff has not said. But those are the numbers that they gave.
Moreover, we have spin. The argument is that our water rates will still be in the lower third of the water rates across the state. But that is misleading.
The city graphic shows among comparable cities, our water rates right now are average, and will rise to the highest level. Throw out Southern Californian cities, and Davis will be near the top of all Northern Californian cities.
But the biggest problem is not this. The biggest problem is that past councils knew this was coming, and failed to act. The public has no idea what is about to hit them.
Our methods for informing them are largely inaccurate. The Enterprise has not published a story on the fact that water rates are tripling. And a pamphlet by the city, which will fulfill Prop 218 requirements, will not be read by many in this community.
But, moreover, this is not a new issue. Back in September of 2002, the Davis City Council approved recommendations of the 2002 Water Supply Study and Alternative 5.
Councilmember Ted Puntillo was quoted in the Davis Enterprise saying, “If we don’t act, we’re going to be put in the back of the bus there, and I don’t know if we’ll ever get to the front again.”
However, despite the fact that council at that time had approved Alternative 5, the city went ahead with Alternative 7: “Supply all demands using treated surface water from a new Sacramento River diversion and a new water treatment plant… Under this alternative, water from the Sacramento River would be diverted from a location north of the existing diversion point for Bryte Bend and would be pumped to Davis/UC Davis. A transmission pipeline would be constructed to convey water from this location to Davis/UC Davis…”
Moreover, UC Davis would pull out of the process, but be replaced by Woodland.
Despite the fact that the staff report acknowledged the costs, the city never once at that time tried to build in costs for the project.
Instead of raising water prices by $10 a month, then $20, etc., the council waited and did nothing. We have lost eight years of potential to build in higher water prices because of the failure to act by that council. In short, that action was akin to an unfunded mandate by a past council. They started the ball rolling but left it to future councils to fund it.
Now, nearly nine years later, after the project was approved by the last council and a deal was reached by this council, the bill is starting to come due. Instead of having banked nine years of rate increases to mitigate the hit, we are looking at 28% water rate increases each year for the next four years, and then another water rate increase.
All told, this will move water rates from an average of $35 per month to $111.
Not only did past councils fail to fund it, they largely failed to inform the public of the true costs of the water project. As I just mentioned, just a year ago it was doubling the cost, now it is tripling the cost. We have not even hit the construction stage and the cost is going up.
Obviously, the current council is not happy that the buck was passed to them, in terms of funding the project. But then again, it did not stop them in December from pushing it through.
We can acknowledge that not doing this water project would also have costs. We can wait and see if the current water project was the best that we can do, but no one can realistically dispute the fact that for nine years the capital costs of building this water supply project should have been built into rate costs.
What would that have done? First, it would have generated a fund to start paying for construction. That would lower the total amount of the increases to the water rates. Moreover, it would have avoided sticker shock.
Because of the way we bill water, people at some point are going to be getting $500 or more water bills. And no matter what happens, that will lead to anger and resentment. It is not enough to list the increase in the paper, have a public forum, and publicly notice the rate hikes per Prop. 218.
Those are minimal standards that most people will miss. At some point this council is going to face a packed house of angry and frustrated people caught unaware that this was going to happen. And the council will look back at 2002 and every council between then and now, and wonder why they could not have foreseen this problem when they first started the ball rolling.
—David M. Greenwald reporting
If you spend an hour or so reading through the survey of water rates compiled by the California Municipal Utilities Association [url]http://www.cmua.org[/url], you will see quite a range of rate structures.
If the council is not happy with the proposed rate structure that staff has provided, perhaps they could give the staff more guidance about what they want. They might even seek outside advice on two aspects: the cost projections, and how best to finance them through rate structures. Organizations such as CMUA may even have advisers who can help with this.
Such guidance to staff could include the general principles of:
— minimizing impact on low-income households
— maximizing conservation through rate incentives
— paying down the infrastructure cost as quickly as possible
I don’t know if the rate structure proposed by staff meets these objectives, and (since I haven’t looked at the agenda packets on this) I don’t know if council was given options or just asked to sign off on one particular rate proposal. There are many different ways rates can be structured. In the absence of guidance, staff will set their own goals. Those might not be what council want.
They might also address whether other funding sources can be used to reduce the infrastructure cost. One example would be redirecting RDA funds to this project.
Did Sue Greenwald & Steve Souza just get elected recently ?
Apartment dwellers need to be paying just as much as home owners !
From a historical perspective, this is a great article: “Shudda,”cuda,” wudda,” It doesn’t help. Don Shor offers suggestions on how we might, as a city, move forward with dealing with the cost of the water we need. Unfortunately this and the plastic bag type debates draw attention away from the deeper, more fundamental problems that we, as citizens, actually can have some control over: unfunded city employee retirement and benefit costs. If you think a hundred bucks a month for water is a problem, wait until you get to start paying the retirement for the fifty-one year old fireman chilling out in Cancun.
dmg: “Moreover, UC Davis would pull out of the process, but be replaced by Woodland.”
Woodland was always part of this process in so far as I am aware, or are you referring to the more recent formation of the JPA here in which UC Davis pulled out but Woodland became a partner w Davis?
dmg: “Despite the fact that the staff report acknowledged the costs, the city never once at that time tried to build in costs for the project.
Instead of raising water prices by $10 a month, then $20, etc., the council waited and did nothing. We have lost eight years of potential to build in higher water prices because of the failure to act by that council. In short, that action was akin to an unfunded mandate by a past council. They started the ball rolling but left it to future councils to fund it.”
At the time we were not paying for water rate increases, we were paying for steep sewer rate increases, and there was lots of squawking about the sewer rate increases…
dmg: “Not only did past councils fail to fund it, they largely failed to inform the public of the true costs of the water project. As I just mentioned, just a year ago it was doubling the cost, now it is tripling the cost. We have not even hit the construction stage and the cost is going up.”
This is just not true… we have been warned repeatedly that the cost of water and sewer would go up by double, triple and possibly quadruple. The problem was there was there is not an easy way to tell this kind of news to the public. Flyers were sent out repeatedly, but people tend to toss those sorts of things in the trash. But I attended many a City Council meeting when these matters were discussed. And repeatedly there were warnings that we could face as much as a doubling or tripling of water/sewer rates. Others like me warned of a possible quadrupling from what we had heard… Sue Greenwald particularly warned of what was coming and was the Councilmember who facilitated the two UCD experts who pushed for doing the water project first, and these two also recommended an upgrade to the wastewater treatment plant at about $100 million dollars less than what had been proposed.
And on this issue the Davis Emptyprize lived up to its moniker.
“wait until you get to start paying the retirement for the fifty-one year old fireman chilling out in Cancun.”
“And on this issue the Davis Emptyprize lived up to its moniker.”
These are some funny as hell posts. Thanks for the laughs.
Will the water rate increases schedule as proposed pay for the water supply project? If not, what other methods will be used to raise funds and what would that cost the public? What is the estimated cost of the water supply project at this time?
NP: “Will the water rate increases schedule as proposed pay for the water supply project?”
It is my understanding that if the water rates are increased 28% each year for the next four years, that will only partially pay for the water project. This cash reserve that is built up through the water rate increases will allow the city to borrow the necessary money to pay for the project in its entirety through the issuance of bonds.
Again, it is important to be accurate about this. Our water bills will be among the highest in Northern California. They could well be the highest within five years.
To the staff guidance I listed above, I would add:
Provide information about low income rate assistance programs and how they would affect the rate structure. Example: [url]http://www.calwater.com/your_account/lira.php[/url]
What are we going to do when we have another drought and the Sacramento River dwindles down to nothing more than a trickle? Is there a backup plan? I don’t think throwing hundreds of millions of dollars towards sucking water out of the Sacramento River is the right decision.
If we are going to put ourselves in debt to this degree we need to direct our attention towards watersheds to collect water as well as reservoirs to store the water to get us through the rough times.
Musser writes: This is just not true… we have been warned repeatedly that the cost of water and sewer would go up by double, triple and possibly quadruple. The problem was there was there is not an easy way to tell this kind of news to the public. Flyers were sent out repeatedly, but people tend to toss those sorts of things in the trash. But I attended many a City Council meeting when these matters were discussed. And repeatedly there were warnings that we could face as much as a doubling or tripling of water/sewer rates.
Comment: Since when have we repeatedly been warned??? I have lived in Davis 11 years and I don’t remember any warning about quadrupling of water rates till circa 2008-2009. Even if I am a year or two off David point stands in this very good piece. As Musser was perhaps the first to point out on this blog, this is a 1972 mandate!!! Perhaps Musser could cite the dates of these warnings publicly conveyed (flyers or whatever) by the council and staff re this issue for those of us unable to most council meetings because of our jobs and families. And what dates did these council meetings occur at which there was a serious discussion of water alternatives and their costs for that matter?
Davisites have always taken a ridiculous pride in what an educated populace it has, and by almost explicit extension or assumption, how expertly we are governed by our council and city staff. Are we really governed any better than Vallejo or Stockton or for that matter Corvallis or Portland? I don’t think so.
DMG: I like how you begin an article about water rates by using the tried and true red meat issue of city employee compensation. Guaranteed to warm up the crowd, get them in the torch-and-pitch-fork mood and mad at the current city council. Thank God for city employees: The gift that keeps giving to blogs everywhere. Not so good when as the discussion inevitably devolves into employee bashing and narrows your audience to the usual three or four haters.
Today, however, Don Shor started off the comments on point and pretty much said it all. The only real mistake the City Council has made is not going for river water decades ago. The idea of pumping groundwater, even the stuff that Davis pumps, has never been a long-term solution to water supply. I don’t like the idea of rates going up, but what is the alternative? Don is right on when he says we need to build in incentives for conservation. There is a lot that can be done by the city and by private citizens if we focus on that. Conservation is too often overlooked. It is the one approach that puts our future in our own hands as individuals and collectively.
I also believe there are alternatives to the waste treatment plan devised, but it might take some out-of-the-box thinking. The wastewater problem is half of the rate increase problem, so I’d like to know that there aren’t some lower technology solutions to the current plan in the same way that conservation is an alternative to supply.
Sue Greenwald: “Again, it is important to be accurate about this. Our water bills will be among the highest in Northern California. They could well be the highest within five years.”
craised: “What are we going to do when we have another drought and the Sacramento River dwindles down to nothing more than a trickle? Is there a backup plan? I don’t think throwing hundreds of millions of dollars towards sucking water out of the Sacramento River is the right decision.”
According to the draft Prop 218 notice, if 51% of the property owners submit a written protest to the proposed increase in water rates, the city cannot impose the rate increase. Sue is correct, that if this increase is approved, Davis will ultimately have one of the highest water rates in all of Northern CA.
davehart: “Conservation is too often overlooked. It is the one approach that puts our future in our own hands as individuals and collectively.”
Water conservation will not make a bit of difference in regard to the water rate increases. That is bc the capital costs of the water project have to be paid for, no matter how much water is or isn’t used. Sue Greenwald has pointed this out again and again… We cannot conserve our way out of the rate increases, period.
Herman: “Comment: Since when have we repeatedly been warned??? I have lived in Davis 11 years and I don’t remember any warning about quadrupling of water rates till circa 2008-2009.”
Obviously you are one of those many citizens w busy lives who have:
1) thrown the public notices of water rate increases in the trash;
2) does not listen/pay attention to/follow city council meetings
So your only recourse now is to pull together a grass roots effort to get 51% of the property owners to see things your way and file written protests to stop the rate increase…
Don Shor: “To the staff guidance I listed above, I would add:
Provide information about low income rate assistance programs and how they would affect the rate structure. Example: http://www.calwater.com/your_account/lira.php
It appears Davis is not a part of this program, so city staff most definitely needs to look into whether the city should become part of this program or not. In other words, what will the cost to the city be to belong to this program?
I was out of town this weekend, and didn’t have time to sit down with this. A lot misinformation is still floating around.
First, David, I don’t think that raising the rates earlier would have made a dent in the approximately 200 million estimated cost of our share of the infrastructure for the surface water alone.
These payments will be spread out over 40 or 60 years. And remember, this council couldn’t even bring itself to raise rates a few weeks ago.
To Don Shore — I couldn’t find the formula for low-income state relief, but it states that, for example a retired couple could make a maximum household income of $31,300, and in Dixon would get a rebate of around $10 a month.
Again, conservation won’t help much because everyone is likely to conserve when rates go up this high, so rates will have to go up to cover the fixed infrastructure costs.
Thanks Sue, for weighing in again on this issue… and I agree w your assessments wholeheartedly…