A little over a year ago, on September 6, 2011, the city of Davis thought it had the ability to push through a water project that had not been appropriately vetted – not by community and not by city staff. The city council thought this could be done without any sort of rate study or review by independent hands.
The citizens of this community rose up and said no, stop, slow down, study the project. Partly because they had no other choice, and partly to their credit, the council listened, they backed off, and they created an independent body called the WAC (Water Advisory Committee).
As the Vanguard will report later this week, critics will tell you that the WAC did not have the time to study critical issues regarding the water system and our needs. However, they do acknowledge that the study of the rate structure was very thorough.
The WAC voted by an 8-2 margin to support the Loge-Williams proposal, that carried within it the CBFR (Consumption Based Fixed Rate). While there are still some tweaks that remain in terms of the cut point for the tiers and the timing of implementation, the rate structure itself is not only innovative, it is fair – or at least far more fair to the vast majority of people than the alternatives.
As the chart posted this week conclusively shows, the vast majority of people will be advantaged by this model over either of the Bartle Wells alternatives.
Council got spooked, and whether it was the fear of Bob Dunning’s criticism or the pressure put on by Alf Brandt, or for reasons still unknown to us, the council decided to scrap that model for a more conventional model that will cause 75% or more of the ratepayers to pay more, sometimes a lot more than they would have under CBFR.
We have covered this point extensively, but it is worth noting that staff was not initially on board with this.
In mid-October, Steve Pinkerton told the Vanguard, “While I’m not opposed to reviewing new methodologies, I would want it to be fully vetted before implementing a rate model that will eventually be requiring the City to generate over $25 million per year in revenue.”
He expressed concerns both about lawsuits and bond underwriters.
However, while attorney Kelly Salt, Steve Pinkerton, Herb Niederberger, and Doug Dove all had initial problems with the model, by the time the WAC passed it, and by the time the council had it reach their dais for the first time, those issues were gone.
In October, Doug Dove wrote, “CBF is an untested, experimental rate structure and should not be implemented when the city is already facing a very large increase in cost to fund the surface water supply” and added “CBF Rate structure has unpredictable customer impacts. Can’t know what your cost will be for next year.”
This week, he changed his tune, arguing that he was fully on board with the proposal, having run the numbers and strengthened the plan.
Mr. Dove, in an email he forwarded to the Vanguard written to Alf Brandt of the WAC, said, “Following the outcome of the vote at the November 15th WAC meeting, Cat and I have been working very closely with Matt, Frank, City staff and the City’s attorneys to develop and refine a ‘Hybrid Consumption Based Fixed Revenue’ water rate structure.”
He continued: “The refined rate structure we’ve developed combines the best elements of a traditional rate structure with the innovative CBFR charge to make an even better water rate structure for Davis.”
He believed it could be simple and, as he illustrated on Tuesday night, easily explained to the voters.
In the end you had the WAC, which has spent nearly a year on the project, the vast array of very competent experts on water policy – including rate consultant Doug Dove, Mark Northcross (the city’s bond consultant), city staffers Dianna Jensen and Herb Niederberger, and City Manager Steve Pinkerton – all aboard with the rate model, when none of them were aboard two months ago.
Finally, the two council members on the JPA were on board with this – Mayor Joe Krovoza and Councilmember Brett Lee.
On Tuesday, essentially three councilmembers, evaluating this model for the first time, at least formally, overturned the judgment of the people who had been spending well over a year on the project.
They sent it back to the WAC, asking that they evaluate Bartle Wells again, but the WAC could not recommend Bartle Wells. So they returned now with a 6-3 vote, bucking the directive of the council, and told the council in no uncertain terms that this is the best rate structure.
As we have argued more than once this week, the numbers are clear. The council expressed concern that the most educated voters in the nation will be confused by this rate model.
All the voters have to do is look at this chart and there will be no confusion whatsoever. This is not complicated, the chart makes it very clear that this is the best and most fair system that we can offer. Then it is up to the voters to decide what they want to do.
At the same time, the council has undermined the work of their advisory body and city staff, and serious procedural issues loom for the election.
So far, the bulk of the criticism of the city’s surface water ballot initiative by Bob Dunning and others is that the water rates are not on the ballot. However, that may not be the only, nor the biggest flaw with the current ballot schedule – a schedule that has the ballot measure voting close on March 5, but the Prop 218 rate process close later in March.
The Vanguard has learned that because the Prop 218 process is separate and distinct from the ballot measure, the water rates that would be approved through the Prop 218 process could be placed into effect by the council regardless of the outcome of the ballot measure.
The problem of rate transparency pales, however, when compared with the political problem that the city now faces, because legally there is no direct linkage tying the Prop 218 process to the voter initiative.
That means if the voters vote down the surface water project in early March, but the Prop 218 process is approved – as it almost invariably will be, given the high hurdle a challenge faces – the rates still could go into effect, rates whose financial underpinnings are based on incurring the capital costs of the surface water project.
The Vanguard will have a full story on this later this week, but this presents a serious political problem, if nothing else, because it presents the possibility at least that the ballot election is secondary to the Prop 218 process.
The council will no doubt point out that the Prop 218 process only sets the maximum rates for a five-year period and that if the surface water project is rejected by the voters, they will need a rate hike that will be lower than the Prop 218 set maximum, and that implementing a rate hike that is below the minimum will not violate the letter of the law. That is strictly true in a legal sense, but we seriously doubt it is true in a political sense.
There is also little doubt that the council will tell the public that they need to trust the council when it says that they will not go forward with the five-year rates hikes approved by the Prop 218 process, absent the surface water project.
The political problem with such a “trust us” statement is that council, city staff and the WAC have all made it clear that water rates will go up regardless of the outcome of the March 5 vote.
At a recent council meeting, Herb Niederberger estimated that rates would increase roughly 62% even without the surface water project. “Even if the City does not participate in the surface water project, the WAC was informed that rates could still increase from approximately from $34 to $55/month by 2018 (a 62% increase). The water utility is currently running at a deficit due to the deferral of rate increases scheduled for 2011. In addition, with the loss of a viable surface water supply, the City will still be obligated to invest in additional groundwater production facilities and infrastructure as well as demand side management tools to meet consumer demands.”
In the best of times, the water project is projecting a short-term rate increase that will more than double people’s present water rates. That will be a tough-fought political battle.
Add in the rate structure chart and the questions about the legitimacy of the voting process and this election will go down to defeat handily.
Leaders who wish to avoid this need to take quick steps to rectify the situation, or face the prospect of having to seek an alternative water solution when the same leaders are convinced that this is the best solution for Davis.
—David M. Greenwald reporting
Better Headline: The Election Needs To Be Fixed Now, If Water Process Is To Succeed ”
Biddlin: Chicago style fix?
Watch it Michael, saying “Chicago” is now considered imbedded racism by the left.
Biddlin: respectfully disagree. It remains to be seen on the water project.
After reading The Vanguard, I wonder that adoption of the Gregorian calendar isn’t on the the ballot there .
Here is the form to calculate what one would pay with a Distribution-Supply-Use rate model. Tier 1 was proposed by WAC to be 0-18 ccf instead of what the chart says.
One just needs to know how to add and multiple. It is NOT complicated. Davis voters are NOT stupid. They can add and multiple. We do not need to know the mathmatics of the rate model. We just need to know what is it going to cost me for better, long term, reliable water that meets our obligations of being good stewards of the envionment. Keep the rates fair, equitable and if it can be a little visionary, great we have never as a community been afraid to do something new. In fact it is part of our community ethos.
“[i]The Vanguard has learned that because the Prop 218 process is separate and distinct from the ballot measure, the water rates that would be approved through the Prop 218 process could be placed into effect by the council regardless of the outcome of the ballot measure.[/i]”
There is no cheap option. The rates will have to go up regardless of how we choose to move forward to address our water needs. The fact that Bob D., David G., Michael H. and others, are unwilling to recognize what has been obvous for some time does not change the situation one bit.
You are welcome to vote no on the water project if that what you think is best, but if you use the rates as the reason for your vote, then you are simply deluding yourself. The rates will go up regardless of the outcome of the vote on the water project for the very simple and obvious reason that they have to. This is true even if all we want to do is maintain the [i]status quo[/i]. The only important question that remains is, what do you want in return for our investment?
Stephen: post the link again or email it to me at donshor@gmail.com and I’ll edit it in.
Stephen asked me to post this
[img]https://davisvanguard.org/images/stories/Water-Rates_Calculations_Chart.jpg[/img]
To see it full size click on this link ([url]https://davisvanguard.org/images/stories/Water-Rates_Calculations_Chart.jpg[/url])
“The fact that Bob D., David G., Michael H. and others, are unwilling to recognize what has been obvous for some time does not change the situation one bit. “
I think you misstate my position. All I’m arguing here is that the Loge-Williams rates are more fair than the Bartle Wells rates. That point has nothing to do with the point you raised – rates will go up no matter, the question is how to do so in a way that is fair and does not put the lowest water users at a huge disadvantage.
David: As should be obvious since I included the quote, I was referring to your comment about the rates being put in place regardless of the outcome of the vote. How can I misstate your position when I cut and pasted what you wrote?
You, Bob and Michael are all continuing the fallacy that voting against the project will keep our rates low when nothing could be further from the truth. Every time you tie the two items together you are confusing the discussion of the issues.
Issue 1: Do we want the proposed water project.
Issue 2: What is the fairest rate structure we can devise for paying for our water system moving forward (regardless of the structure of that system).
These two are not codependent and therefore should be discussed and argued separately.
First, “You, Bob and Michael are all continuing the fallacy that voting against the project will keep our rates low when nothing could be further from the truth. ” I’ve never made that claim or at least haven’t in over a year.
Second, I have bracketed that discussion, arguing regardless of what you think of the project, we need to implement Loge-Williams and then let the voters decide if they want the project. Without LW, I don’t see anyway the voters will approve it.
Stephen Souza said . . .
[i]”We do not need to know the mathmatics of the rate model. [b]We just need to know what is it going to cost me for better, long term, reliable water[/b] that meets our obligations of being good stewards of the envionment.
Keep the rates fair, equitable and if it can be a little visionary, great we have never as a community been afraid to do something new. In fact it is part of our community ethos.”[/i]
Regarding the bolded words above, the two questions everyone wants answers for are:
[b]”How much am I paying?”[/b] and [b]”What am I paying for?” [/b]
The Supply charge in the WAC-recommended rate structure provides each and every rate payer with a level of transparency that they have never previously had.
In a traditional two part Fixed-Variable rate structure answering, “How much am I paying?” is straightforward, but answering “What am I paying for?” is [u]impossible[/u].
Why? Because capital infrastructure costs (like the $113 million for the surface water plant) are subdivided and allocated piecemeal to both the Fixed charge and the Variable charge. In the WAC-recommended rate structure everyone’s individual share of the surface water plant costs will be provided to them as the Supply charge on their water bill.
I’m willing to pay fair rates for well thought out and vetted public utility projects. I want them on the ballot.
Mark West: is it true that Herb and our water staff are living under the delusion that they can lose on March 5, and still adopt higher water rates the next week? I’ve heard rumors … all I can say is, if the CC thinks it can do that, then there will be another referendum, and we will add a recall campaign to boot.
If the project loses on March 5, the City water staff can come back with a new study of the current water system, long term maintenance and costs, and a new rate proposal to fit the package.
BTW, our inititiave is going to require an independent audit of our water fund going back to 2000, so I suggest the CC and water staff be careful how they spend our dough. We are going to get the details, all of them.
Matt: I know you try hard to explain your system. It has a lot of interesting features, but I’m not sure it is ready for prime time yet.
The BWA rate system is like an old shoe: well worn and understood. Too bad it may have those issues about low versus high volume users. Maybe there is a way to fix that?
Wish that our CC did not think it has to follow Woodland’s ridiculous schedule.
With time, I am sure that the Davis rate structure could be improved somewhat from the current proposals.
Well, it’s up to the CC this Tuesday night. Another night of high drama.