Davis Implements Water Assistance Program

The city of Davis announced formally that in conjunction with new water rates, which take effect this month, the city of Davis “has introduced a Water Assistance Program to help low income homeowners offset water costs.”

It is not a huge discount, and only a small number of people would be initially impacted by what could be called a pilot project.  According to the release, “The first 250 eligible homeowners to apply for the program, will receive a $5 discount on their water bill every month.”

“Homeowners who meet the income qualification requirements and who are enrolled in Pacific Gas & Electric’s (PG&E) CARE Program are eligible,” the city release explained. “A homeowner is the owner-occupant of a parcel in Davis who is listed on the County Assessor’s tax roll.”

That means that anyone living in affordable housing or rental housing who pay their own water bills are not eligible for the rate reduction.

To apply for the program, a homeowner must submit an application to the City that includes proof of participation in the PG&E CARE Program.

Eligibility will need to be recertified every year. Currently, the income levels are approximately $30,000 for a household of two or $46,000 for a household of four.

The city estimates that a monthly bill for a typical single family home in 2013 will equal approximately $30.86. “For City services bills generated beginning May 1, 2013, 40% of the water bill will be determined by a monthly base rate based on water meter size (most households have a ¾” or 1″ meter, which would cost $17.33 or $27.13, respectively, in 2013),” the press release explained. “The remaining 60% of the water bill will vary based on consumption, with rates ranging from $1.23 to $2.33 per one hundred cubic feet of water delivered.”

By 2015, the formula for calculating water bills will change to a consumption-based fixed rate, where a typical single family home in 2015 is estimated to have $52.31 in monthly water costs.

The Davis City Council back in 2011 began investigating the options for establishing a Low Income Lifeline Utility Rate Program.  As the staff noted, “The five year sewer rate plan was approved in 2011, and updated water rates will be considered in 2013 that could increase water rates beyond normal annual adjustments. Therefore, staff is recommending that the City Council approve this program now so that the community will have access to a utility rate assistance program when updated water rates are considered in 2013.”

A number of communities have put low income utility rate programs in place to assist their low-income ratepayers to cover increased monthly utility bill charges.

The problem is that the city cannot use the enterprise fund, i.e. water fund revenues, as the funding source.

Wrote city staff, “In accordance with articles XIIIC and XIIID of the California Constitution (also referred to as Proposition 218) which establish the procedures required to adopt changes for certain property-related charges, including water rates, fee revenues are only used for purpose of the fee; fee revenues may not exceed the cost of providing service; and the amount of the fee shall not exceed proportional costs of service to each parcel.”

That means the city will need to utilize limited general fund monies or grants to subsidize.

COMMENTARY – As the Vanguard argued in February, the limitations of this program become obvious.  The first year funding would only be $15,000.

Under the program, the only eligible residents would be homeowners in owner-occupied parcels who are listed as the owner in the tax roll or a resident-owner in a “limited equity housing cooperative.”

That immediately precludes any renters who live in single-family homes and may therefore directly pay their water rates.

Worse yet, “Homeowners who meet the low-income requirements would be eligible to receive up to $60 per year discount on their utility bills.”

In other words, people whose water bills will triple will be eligible to receive $5 a month in subsidy.

And the income eligibility is very low, as well.  A household of one is only eligible if they earn less than $25,400.  That goes up to $29,050 for a family of two, $36,300 for a family of four and $47,900 for a family of eight.

At the rate we are looking at, $15,000 would fund a total of 250 families up to $5 a month, or $60 a year.

In a city of 65,000 thousand, that is 0.38 percent of the people.  To get the subsidy to a more realistic number of people, 2500, you are looking at $150,000 a year.  5000, you are looking at $300,000.  That means to get the subsidy to a more realistic level, you are looking at between $1.5 million and $3 million, not $15,000.

While that it is not an impossibility, in the current budget climate, those kinds of expenditures seem extremely unlikely.

The city has clearly given some thought to the impact on low-income people, but, as we noted previously, these rate hikes are going to have a huge and detrimental impact on people of low and fixed incomes.

The Vanguard opined during the campaign that, while the city spent a tremendous amount of time structuring the water rate hikes in a more equitable manner, the cost increases over the course of the next five years and the next decade are going to be staggering.

The city did take some steps to slow the rate increases, which could buy time to look into more permanent solutions to the detrimental impact of the rate hikes on low income residents, and in particular those residents who earn low incomes or do not own their homes, and thus are not eligible for assistance under this program.

—David M. Greenwald reporting

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