It was only a week ago, when writing a column like this, we asked where the business community was on the proposed water rate increase. Now we are starting to hear rumblings of discontent, at the moment brewing just below the surface.
Last night at the City Council meeting both Bob Schneider and Randy Yakzan spoke at public comment. Mr. Schneider has been a strong supporter of what he has called a visionary and pioneering water deal that the city was able to negotiate for water rights with Tsakopoulos.
However, he still believes that the project can go forward at this time, despite these concerns. He urged the council to work with the community to come up with creative solutions. He further suggested the possibility of creative financing and pushing the costs of the water project further out.
Unfortunately, from our conversations last night, it does not appear that the city can push the water costs further out through refinancing. The Vanguard was told by one source that they were surprised by the diminishing cost-saving returns as they tried to push financing from a 30-year payback to other options such as a 50-year payback. Basically, there is no functional difference in these rates.
Developer Randy Yakzan also indicated support for the project, but was concerned about the extent to which rates were going up, and admitted that would be a problem. He went so far as to imply, who knew.
But we have known about this problem for some time. It was only last year that a large number of people came forward when the council modestly bumped up the rates by 10 percent. At that time, I warned the council to take note and think about the response when people find out their rates will double – little did we realize they would actually triple.
We are still examining this issue further, but we told that these rate hikes will hammer a lot of restaurants and other businesses that consume a large amount of water. To illustrate the problem, one person indicated that Sudwerks currently spends around $100,000 on water and that would go up to $400,000. A different figure was give later of $68,000 and going up to about $180,000 by year three.
That is a huge potential blow to business. The city is now reeling by what looks to be a decision to liquidate all Borders stores, despite the fact that the Davis store, according to Sarah Worley at the City’s Economic Development Department, was turning a good profit. Earlier this week there was optimism that Borders would survive, now that appears to have changed.
It seems unlikely that a Prop 218 protest, even with the council’s revised mailing and simplified protest form, could be successful. However, as we argued last week, there are other alternatives, including a referendum where a group of people would need to collect signatures, place it on the ballot, and it would require a simple majority of voters who cast their ballots.
The Prop 218 process is very difficult. It requires 50% plus one of all homeowners to submit written protests. If a property or homeowner does not vote, it counts as a vote in support of the project.
While the council seems to be holding strong on the current situation, there is a huge ripple in the community and an idea may be brewing that the city may need to go to the state and explain that there is not community support to finance this project at this time.
The city would then need to build the funding over a longer lead-in, something that frankly should have been done since this idea was first posed a decade ago. Slowly building in the cost increases would mitigate at least some of the impact, both on residents and businesses.
As the rate increases stand now, a number of struggling restaurants, laundry places and other consumers of large quantities of water could see their margins, which are already being stressed, pushed past the breaking point.
Moreover, as others have pointed out, how are you going to bring new businesses in to Davis, as is the goal, if the cost to do business is so high?
A lot of these decisions were set into motion well before this council took office. Despite repeated warnings, past councils did little to foresee these challenges and prepare the citizens for these massive rate hikes.
It is clear that the council needs to re-think their strategy going forward, and hopefully they will not be too stubborn to do so.
—David M. Greenwald reporting
Lets get the apartment dwellers to pay there fair share , paying pennies on the dollar hurts all homeowners .
Isn’t that up to the apartment owner as to whether to pass those costs to their renters?
Passing on the costs , or paying all the costs , it doesn’t matter as long as they pay their fair share , which right now is pennies on the dollar .
[quote]Lets get the apartment dwellers to pay there fair share , paying pennies on the dollar hurts all homeowners .[/quote]
What makes you think that water costs to the owner of apartments are not passed on to the renters? Do you honestly believe landlords will not pass on the increased water/sewer rates to renters? LOL
[quote]It is clear that the council needs to re-think their strategy going forward, and hopefully they will not be too stubborn to do so.[/quote]
Rethink their strategy and do what? You just mentioned that extending financing from 30 to 50 years does not really decrease the water rate increases significantly. So exactly what are you suggesting as a solution to not doing the surface water project now?
[quote]While the council seems to be holding strong on the current situation, there is a huge ripple in the community and an idea may be brewing that the city may need to go to the state and explain that there is not community support to finance this project at this time.[/quote]
And what is your feeling as to the state’s reaction when our representatives say “there is not community support to finance this project at this time”? Don’t you think if one community says this, the floodgates would be opened for mass refusals from all communities, which the state will not care to allow?
[quote]Lets get the apartment dwellers to pay there fair share , paying pennies on the dollar hurts all homeowners .[/quote]
This may be the most naive comment I’ve read on here to date. Of course property owners will pass these costs on. They’ll probably mark it up, even.
I continue to be amazed at the opposition to the water project without there being a concrete alternative. Drilling ever deeper wells is not a solution and “Do it later” only kicks the can down the road. Does any rational person really believe it will be cheaper later? Vanguard, you and Bob Dunning keep beating the drum to kill the project–what will happen if you succeed? Be careful what you wish for.
Wish there was a like or +1 option for Observer’s comment. =p
[i]I continue to be amazed at the opposition to the water project without there being a concrete alternative….what will happen if you succeed?[/i]
That is exactly right.
There absolutely is an alternative, which I have been suggesting for years. The alternative is phasing in the sewer/water projects so that ratepayers will only have to pay for one project at a time, or at least so that the overlap period when they are paying for most is far shorter.
Our water rates are good for at least 40 years. We can pay of our new waste water project off in 25 or 30 years. We can go ahead and purchase easements now for the pipes. We can institute rates that encourage conservation and replumb our shallow water aquifer for parks and greenbelt landscaping to preserve the deepwater aquifer. We can drill more deep aquifer wells (a fraction of the yearly cost of the water supply).
The idea that we have absolutely no choice at this point in time is manufactured. We have done absolutely no due diligence about Woodland’s ability to raise their rates to pay for their own huge sewer and water costs to see the project through the completion. I have concern about how the clean water JPA is handling the (lack of) true competitive bidding for the project.
I don’t think that people realize the magnitude of the risk to our absolutely crucial city and school supplementary taxes if we have to pay off $300 million dollars worth of projects at once, during an ever worsening recession with so many houses under water, particularly in Wooodland.
It also surprises me that David did not mention my discussion of this last night.
Just to clarify: you are advocating that the surface water portion of the project be put off for 25 to 30 years?
Ooops! I’m in a rush today.
I meant to say “our water rights our good for forty years”.
Don, I don’t think we know at this point in time when would be the best time to go forward. To be cautious, I would suggest paying off the waste water project in 25 years. I would encourage Woodland to figure out what they have to do with their waste water plant (they have numerous issues, I have been told) and to raise their sewer rates to start paying off their own waste water plant. We if we start running into problems, we could do the project in 10 years, hopefully with an improved economy and city and school budget situation. That would give us only 15 years of extraordinarily high rates. Or perhaps we will have no problems and we could wait until the project is paid off in 25 years, keeping future increases to a manageable amount.
We can’t put our heads in the sand and pretend that $2,500 a year or more in single family rates within five years is not going to have devastating effects on the city and schools. There are ways to phase in these projects, while preserving are options if we run into problems.
Sounds to me as if Sue has studied the issue thoroughly as she is known to do and has a very solid alternative option. If we do not need to develop this system at the same time we pay for the treatment system, why would we not spread out the cost and do 1 at a time.
As for apartments, I do not know what their rates reflect, but they should reflect their usage, like everyone else’s. They charge enough per unit already to cover their usage and are making a lot of profit if their rates are disproportionately low for their usage. Of course tenants often do not care about water usage if they are not paying by their individual unit ‘s usage, but I realize the infrastructure needed to calculate that is probably prohibitive. But still, the apartment complexes should pay according to their total use.
The Council Majority for the last decade was also “deaf” to the desires/concerns of the community. The Covell Village project was vigorously and stubbornly advocated by no less than 4 of the 5 Council members. The Measure X referendum soundly rejected that project. This water project will be soundly defeated in a future citizen-initiated referendum. Much like the Covell Village project, citizen resistance can be characterized as a perfect storm of multiple citizen concerns,i.e, a growth-inducing “gift” to developer special-interests,drastic rate increases for all, a significant Davis population that will see no improvement in their water quality as well as reflex resistance to Tsaklopolous’ hand on Davis’ future water supply.
[quote]Our water rates are good for at least 40 years. We can pay of our new waste water project off in 25 or 30 years. We can go ahead and purchase easements now for the pipes. We can institute rates that encourage conservation and replumb our shallow water aquifer for parks and greenbelt landscaping to preserve the deepwater aquifer. We can drill more deep aquifer wells (a fraction of the yearly cost of the water supply). [/quote]
It was my understanding, based on the two UCD experts testimony, that the surface water project needs to be done first and foremost. Depending on how that goes, and the degree to which Davis is able to conserve water, will drive the extent to which the city has to make changes to the wastewater treatment plant. If we put off the surface water project, wouldn’t that cloud the issue of the extent to which we must make changes to the wastewater treatment plant? It is my understanding that these two projects are very interdependent. Please clarify…
Don:
[quote]Just to clarify: you are advocating that the surface water portion of the project be put off for 25 to 30 years?[/quote]
Sue:
[quote]Don, I don’t think we know at this point in time when would be the best time to go forward. To be cautious, I would suggest paying off the waste water project in 25 years.[/quote]
I am not clear on what exactly you are proposing Sue. Is it your position that we should put off the surface water project for 25 years?