Water Rate Advisory Committee – Paper Tiger or Meaningful Oversight?

Pressure on the Davis City Council to do something about the magnitude of water rates continues to mount.  At the largely ceremonial August City Council meeting that met in the morning yesterday and fulfilled the statutory requirement for the council to meet at least once a month, Councilmember Stephen Souza asked to agendize on the next meeting’s agenda an item about creating a Water Rate Advisory Committee.

Mr. Souza told the council it should be styled after Dixon’s committee formed this spring in response to concerns about rate hikes there.

Mr. Krovoza said that Mr. Souza would need at least three councilmembers to sign on in order to get it on the agenda. However, all councilmembers agreed.

Mr. Souza’s suggestion followed comments from Randy Yakzan, a business owner and developer who is increasingly concerned about the water rate hikes.

“The shocking part of the story is the impact on the commercial and business rates because of the way that the proposed model is set up it will transfer the savings, if there is a savings, to the commercial rates,” he said.

He said that they ran their numbers and found that “our numbers are not 28% percent, they could be up to 50% which would be implemented in December 2011.”

“The businesses that can’t conserve immediately – the breweries, the restaurants in town will be impacted tremendously,” Mr. Yakzan added.

Their goal is not to kill the project but rather to moderate these raises.

The question is whether the proposal by Mr. Souza that the entire council seems to be on board is really a viable suggestion, or an effort to placate the growing chorus of critics.

Back in April of this year, the Dixon-Solano Water Authority voted by an 8-1 margin to create an advisory commission that was to be made up of rate payers at different levels of water usage, in advance of plans to increase water rates in Dixon by 79 percent.

Recall that in Dixon, the water authority has already proceeded on a water project, but the voters by referendum have voted to reject the rate increases.  Such a situation may present itself in Davis should a referendum come forward.  The Water Authority in Dixon is said to be in dire financial condition should it not get the funding back on track.

However, by all measures, the Dixon Water Rate Advisory Committee is far from some known entity.  When the committee was formed in April, it did not have a clear directive, as the Water Authority had not even discussed how it would be used.

According to published reports, possibilities included using it as a sounding board for ratepayers, an oversight capacity that would oversee expenses and revenues.

However, from the start it was beset by problems. For instance, one group that refused to take part in the commission was instrumental in creating it, and that was the Solano County Taxpayers Association who refused to participate without getting answers.

There is very little information available on the commission. However, we do note that in early July there was supposed to be a meeting of the Advisory Committee to elect a chairperson and a vice chairperson and give the public an overview of the Dixon-Solano Water Authority’s budget.

However, that meeting was cancelled and there is no evidence it was re-scheduled.

It seems difficult to model a Davis advisory group on a Dixon model, that would at least appear never to have been used.  Naturally, this leads to some measure of skepticism that had existed when the council was quick to move toward this type of body as a relief valve to the growing pressure.

The focus of this emerging movement seems to be to find a way to hold down the rate of increase.  That certainly is a good start, but as Sue Greenwald noted on Monday at the Council meeting, it is not clear how much power the council will have to hold down costs, though apparently there are some ideas about reducing some of the cost buffers the council and staff built into the current rates.

When I met with Mr. Yackzan last week, he told me that he had long known that there were going to be rate increases in the water project.

He also told me that he supports the water project and understands that we need to do it.  Two things floored him, however.  First, he could not believe how much the rates were going to go up under this plan.

Second, he told me he asked Public Works if they had looked into what the impact on business would be, and to his utter amazement they had not.

Mr. Yackzan then showed me his number, simple numbers that showed what he was paying now for his commercial properties versus what he will pay in five years.

Those who somehow believe that these increases will not be passed on to renters are fooling themselves.  But even there it is problematic, with the housing downturn and the building of new units in West Village.

The bigger problem is what happens to restaurants like Sudwerk, that uses water for all sorts of purposes.  Mr. Yackzan asked me not to disclose the numbers, but the viability of some of these restaurants that operate on margins as small as one percent, particularly during an economic downturn, should give everyone pause.

The council is clearly now understanding the magnitude of the problem they face, but it is not clear what they can do about it.

From the council’s view, Mayor Joe Krovoza is quick to respond that Davis ratepayers pay far less than other cities and they have gotten away with low rates for quite some time.  He said he hopes to have continued talks with businesses and citizen groups and find creative ways to make the rate increases less burdensome for businesses and ratepayers alike.

At the same time, he shut down some of the alternative suggestions, such as building in the rate increases over a longer period of time, or delaying the process a decade in hopes of softening the blow and it occurring during better economic times.

He told the Vanguard that other cities such as Sacramento have tried this, taken it to court, and lost.

He is also quick to point out the shortcomings of past decisions over which he had little control over.  Past councils were willing to build the Wastewater Treatment Project costs into rates over time, but they failed to do the same for the water supply project.

That means that, instead of increasing rates slowly over a decade, where businesses and ratepayers could adjust their spending, we are increasing our costs in just five years.

But, there is a disconnect here that people like Joe Krovoza and some of his colleagues are only now seeming to get.  These policies threaten to put businesses out of business during the heart of the worst economic struggles to hit Davis.

The question at this point is whether this has gone too far.  The citizens have a lot more tools at their disposal than simply the antiquated and overly-cumbersome Prop. 218.  The council finally seems to be getting the message, but they have a long way to go in order to satisfy the growing voice of critics.

—David M. Greenwald reporting

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