Ironically for critics of the council pushing the rate setting discussion to the Utility Rate Advisory Committee (URAC), they got exactly what they wanted when the body failed on three consecutive votes on various substitute motions to get majority support for any of the options.
The critical issue that divides the URAC is, frankly, the critical issue that will divide the council and possibly the community – the seeming tradeoff between social equity versus the need for revenue certainty and drought resilience. If this meeting was any reflection, these issues will not easily be resolved.
In the end, the URAC was unable to bridge this gap, despite efforts by Frank Loge to craft a motion that would have the council attempt to implement a rate that has an 87 variable charge and a 13 percent fixed charge, finding a way to create the cash reserve that Mark Northcross stated on Tuesday that council would need in order to get approval from bonding agencies.
However, Mr. Loge attempted to hedge the bets by having bonding agencies evaluate the plan in advance. Rate consultant Doug Dove echoed much of what Mr. Northcross stated on Tuesday – that the rates could work, but they would require a cash reserve and may result in higher interest rate charges.
Donna Lemongello, in a comment yesterday, explained how the process could work: “Initially [the $4 million reserve fund’s starting balance] could be borrowed from the Wastewater fund which according to Matt has $29 million in cash at the moment. If we use the same amount of water in 2015 as 2013 our structure will generate a $5.4 million surplus in that one year.” Ms. Lemongello’s idea was that the Wastewater fund could quickly be paid back the $4 million and then the reserve fund would be self sustained by water rate revenues.
Doug Dove would explain that the original CBFR protected against this revenue problem by having the six-month look back that would ensure that there was a fixed reserve of cash each year moving forward. So if revenue suddenly diminished, then the look back would supply the fixed portions of the charge. However, he stated that, while this worked in an extended drought situation for years 1 and 2 of the drought, a third year of a drought was problematic.
Sandwiched around Frank Loge’s motion were two motions that were similar to one another, one from Elaine Roberts Musser and one from Greg Clumpner. Both Ms. Musser and Mr. Clumpner were of similar minds for the need of a conventional 40% Fixed and 60% Variable rate structure, believing that the difference between 60-40 and 87-13 was not sufficient money to make a huge difference, but the need for revenue certainty was critical.
Ms. Musser pushed Option 3, a conventional with uniform tiers, and Option 1, a conventional with tiers, in her case breaking at 18 (rather than 10) ccf. Mr. Clumpner pushed 3, 1, 2 in that order. All of these were conventional, the only difference was tiering at 10, 18, or uniform tiers.
Both of those motions would fail 2-4-1. Ms. Musser and Mr. Clumpner were the only supporters of those motions.
Mr. Loge’s motion fared only slightly better, but he could not get a fourth vote, either from Richard McCann or Lorenzo Kristov.
In the end, Mr. Loge, Mr. Troost, and Mr. Bourne supported the 87-13. Ms. Musser and Mr. Clumpner supported a conventional structure. Richard McCann held out for a seasonal summer-winter rate, which he put forward as a substitute-substitute motion, but he could not get a second for that motion and it died as a result. Mr. Kristov abstained on all three votes. Some of the people who attended the meeting wondered if in abstaining all three times, Mr. Kristov wasn’t really saying that this was really a decision of the Council rather than a decision of the URAC.
While the members of URAC seemed to take their impasse all right, there was a conversation that followed the third failed vote. The conversation was led by Johannes Troost and, to a lesser extent, Frank Loge, that wanted to be sure that the voting that had just been completed was reflected in the minutes of the meeting, so that council would understand better both the concerns of URAC and the positions that had been advocated for and against during the motion and voting process.
This conversation actually dovetailed back to the meeting’s opening salvo where Mr. Niederberger refused to make an audio recording of the meeting despite the URAC members’ clear desire to have such a recording made. At the council meeting on Tuesday, Mr. Troost had expressed his concern at the lack of video or audio recording and the unavailability of minutes for the meeting. He argued strongly that there have been periodic misconceptions about direction given and discussion at these meetings that he believes these misconceptions are detrimental to the process.
As a point of comparison, the WAC was both audio and video recorded. In fact, the Vanguard made a very strong play for the meetings to be recorded – at that time over the objections of people like Chair Elaine Roberts Musser (she has chaired both the WAC and URAC).
During the discussion about recording the meeting last night, Frank Loge noted that members of the Measure P committee actually went back through the WAC meeting recordings to discover discrepancies between beliefs about what was stated and what was actually stated at particular meetings.
As the discussion with Mr. Niederberger of recording the meeting evolved to impasse, Mr. Troost moved to adjourn the meeting when Mr. Niederberger emphatically stated that the meeting would not be audio recorded for the purpose of minutes. Mr. Loge seconded Mr. Troot’s motion. The vote would fail 5-2, but the point was made.
Ironically, during last night’s discussions, the issue of accuracy came up at multiple points in time, when members were trying to reconstruct comments made by Mark Northcross on the viability of the Williams-Lemongello model. This happened when URAC Chair Musser departed from normal meeting protocol where the Chair waits for all the members to speak. She called on herself to make comment, and then selectively quoted only the beginning of the comments made by Mr. Northcross on Tuesday. Members of the public and some on the URAC members themselves noted that Mr. Northcross actually hedged his bet later in his remarks on Tuesday, stating that achieving fiscal resilience in the eyes of the financial markets might be possible after all.
There were also remarks that recollections from the WAC were recalled incorrectly, along with questions about Elaine Roberts Musser’s comments about the Williams-Lemongello model where she indicated that specific changes had been made to the model where no such changes had been made.
It was an evening that was full of drama, including a point in time where Chair Musser gavelled down Sue Greenwald for exceeding her 3 minute public comment time limit. The rapid fire sound of the gavel striking the block in one second intervals for close to a minute was so loud that the members of the Parks Commission meeting in the next room stuck their heads in the door of the URAC meeting room to see what all the commotion was.
Ultimately now, the council will be asked on Tuesday to act on a rate structure. They will have to wrestle with these precise issues – all the while, opponents are licking their chops at the possibility of running another opposition campaign against a 60-40 structure that quite clearly asks the lower user classes to subsidize higher usage classes.
—David M. Greenwald reporting
Why aren’t the URAC meetings on video; seems a no brainer for a number of reasons. Why didn’t the URAC keep meeting going until they did get a motion with support? Seems they have failed their mission and now put the CC in a real time crunch and set up for a late night, policy from the dais nightmare.
it’s going to be interesting to see what happens because at the council meeting i thought council was clear to herb that they wanted clear records of what happened.
heard elaine had a fun time with sue greenwald last night. tried to kill the williams-loge model and couldn’t get the votes.
CC was clear. Herb just does what he wants, and I don’t think he has any respect for his employer.
for once i completely agree with michael harrington
Set the social justice part of the brain aside and pick a rate structure that is simply fair with respect to consumption only. It can be done.
With respect to the people demonstrating the urge to help the financial burden of lower income people and also attempt to force a specific environmental worldview through public policy and the structure of rates, there is a lot of inconsistency and incongruity. Specifically, what is their position on growth? For example, are they in favor of more residential growth to help lower the cost of housing? Are the in favor of urgent and rigorous economic development so that the city can fund more of the services that it is now asking the citizens to pay for?
Where we get caught up in all of this is the tendency for some to over-complicate the determination of fairness. We are a community of diverse souls. No one family is the same. But for some reasons some people cannot get to that enlightened point of treating each one the same. They are consumed with class bias and a constant need to categorize and measure and compare… and act upon it. Is this a personality disorder? Is it a dysfunction caused by childhood trauma being on the shorter receiving end of some reward or perceived entitlement?
I don’t know the answer, but I do know it is troubling. It looks impressive on paper, but in practice it is really destructive altruism.
What these folks are mistaken about is that everyone else values their views and actions. The rest of us have just kept our mouths closed so as not to be labeled uncaring or mean. We have excepted the greater costs and impacts only to satiate those driven to save so that they calm down and go away.
The problem today is that all of us are tapped out. And everyone but a very small minority of people are strongly feeling the accumulative effect of so many negative discounts and taxing premiums used to satiate these savers. And one more thing… we have leaned that the savers are never satisfied. It is not ever going to be good enough. We give trillions to them to spend on the groups they have categorized as needing saving, yet every year they cry louder that it is not enough.
it is time to go back to simple. Simple rates. Simple taxes. Simple government policies.
Stop trying to get so creatively complicated to try and extract some perceived maximum social justice value. Use a gallon of water, pay for a gallon of water.
Being able to easily predict and budget for that gallon of water is 90% of the problem and the main reasons that Measure P passed.
And if you really want to help residents and the city save lower income people, you will demand urgent and rigorous economic development. This leads to greater tax revenue and gives us more money to use for these types of social justice causes.
“The problem today is that all of us are tapped out. ”
In Davis lingo I’m already giving up 12 lattes and 8 Coronas a week and I never drank anymore than that so I have nothing more to give up in order to pay the escalating taxation.
The death by a thousand cuts story.
Eventually you recognize that you are bleeding to death.
“Set the social justice part of the brain aside and pick a rate structure that is simply fair with respect to consumption only. It can be done.”
that’s what the 87 – 13 mix does. the problem is the more you put into fixed costs, the more the distribution falls on the low end users. the more you put into variable costs, the closer to per gallon equity you get. but the less insurance you have if consumption drops. trying to bridge those gaps is where complication arises. this isn’t a social justice cause, it’s a math issue. people don’t like math.
I would be fine with a higher initial variable cost to create an operating surplus that would then be used to address any fee shortfall caused by conservation in excess of estimates.
Then ongoing variable rates set on a formula that ensures adequate surplus.
The federal lending programs I work with have similar design. Because of the federal Anti Deficiency Act, there can be no expenses without appropriations. Therefor, programs with risks of unplanned revenue and expense swings require a risk-mitigation surplus/pool. Any over-funding can be returned as a rebate to rate-payers, and any under-funding would be made up in the subsequent year rate calculation.
This stuff is not rocket science. If the Federal government can do it, Davis should certainly be able to figure it out.
BINGO!!!!
The provisions adding a Revenue Stabilization Reserve Fund to the 87-13 proposal are not rocket science. As Mark Northcross stated to Council at the 3:08 point of Tuesday’s Council meeting, the reserve fund provisions Donna and I wrote into our proposal are “Commonly used in utilites throughout the United States […] used since World War II, coast to coast.” I
There is a good argument that these Revenue Stabilization Reserve Fund provisions should be included in any rate that Davis adopts. Mother Nature doesn’t modulate her drought effects on the basis of what water rate structure a city has put in place. All rate structures are subject to the revenue erosion risks associated with drought. 60-40 isn’t a magic bullet. It too is vulnerable. If having a reserve fund and Stage 3 and Stage 4 surcharge provisions allows Davis to get lower interest rates, then all the ratepayers benefit from the lower borrowing costs. It is really a very simple mathematics problem … one that should be central to Davis’ presentation to bond rating agencies like Standard and Poors.
Matt – what is the objection to this?
In some cases we have “objections to” and in other cases we have “concerns about.” Elaine Musser made an impassioned plea to her fellow URAC members to dispense with any consideration of 87-13. She cited a litany of reasons, some of which were misrepresentations and others were spin and others were her personal perspective. The bottom-line that she summed up her speech with was that change causes a political firestorm. She noted that she voted against CBFR while on the WAC because she felt it would create a political firestorm, and then noted that the firestorm did indeed come. She then said that she opposed 87-13 for the same reasons … that it was an invitation to political firestorm.
In a much more dispassionate fashion, Greg Clumpner and Frank Loge raised very valid concerns. The bottom-line of their concerns is that any decision to create and fund a reserve has economic consequences (costs), and that unless there are equal or greater financial rewards as a result of reduced interests and reduced borrowing costs, then creating a reserve fund doesn’t make economic or practical sense.
In a conversation on Tuesday Robb Davis said something very wise … we need to get the professional advice of experts in this field. Mark Northcross is an expert in this field and having him do a detail review of the cash flows and surplus/(deficit) results that the 87-13 proposal creates is what is needed to make an informed, practical and fiscally wise decision. Why staff doesn’t want a sit down with Mark to happen is a bit of a puzzlement. The reason for the sit down is so that he can ask any questions he may have about the proposal prior to diving into and completing his professional analysis.
elaine and herb are the objection to this. why? it’s not clear.
Why are we asking community volunteers, with varying levels of knowledge on this particular subject, to come up with a rate structure? This seems like something we might want to pay someone-maybe who does this kind of thing for a living- to do.
Is that the same as asking community volunteers with varying levels of knowledge who sit on a NRC Commission to come up with community recommendations. No?
You are right, what was I thinking, coming up with rate structure to pay for 100,000 million plus water project that services a community of 65,000 people is totally on par with making a wood smoke ordinance recommendation.
that’s pretty expensive a 100,000 million dollars, that’s like $100 billion.
joking aside, i tend to agree, there are different levels of expertise needed.
that said, it’s not like they put layman on there. i mean i don’t know what the hell elaine knows about water policy, but some of the other guys on there are experts.
Typo’s. One of the risks of typing while parenting.
I realize that some of the people on URAC are experts, but I’m not sure why coming up with a structure is falling on volunteers that meet a couple of hours a week. I imagine we are not the first community that needs to figure out a way to pay for its water. Feels like we keep reinventing the wheel.
i agree. the council needed to determine this and the fun part is that there was nothing that came out of last night that gets them closer to their goal.
whose idea was it to take this to the urac?
Michelle wrote:
> You are right, what was I thinking, coming up with rate
> structure to pay for 100,000 million plus water project
It is not that hard and every day someone in America (often an immigrant without much formal education) opens a gas station or mini market and is able to come up with a price he needs to charge for a gallon of water, milk or gas that will pay his bills without charging a “monthly fee” knowing the “water meter, fridge or gas tank size” of the customers or needing to know how much water, milk and gas they used in the “previous summer”…
They have Michelle, hundreds of thousands of dollars, and got 5 versions of a 60% Variable/40% fixed status quo structure that gouges low users and subsidizes water hogs. So Matt and I stepped in because we had ideas, good constructive ideas. But some who pull strings don’t want ideas, they want business as usual unfair rates and don’t even want our ideas to be analyzed, because CHANGE is SCARY, or whatever the obstruction and sabotage is about. And I am not talking about URAC members causing that, let me just make that clear.
They should have used choice voting.
wouldn’t have worked, there were two sides that dug in and wouldn’t budge. they tried choice voting, they just all voted no.
The rates are only a piece of the legal and political drama.
LOL, says the man behind the curtain. What have you got up your sleeve there Michael?
“Renew Davis.” What a brilliant idea for what we all need to work on, together. It came from Mayor Pro Tem Dan Wolk.
Did Mike Harrington attend the meeting? If so, did he speak or make any kind of suggestion about a rate system that he would support? Did he take this opportunity to participate in any way?
The Enterprise has Mike’s contribution:
“Meanwhile, Michael Harrington, a local attorney who helped sue the city over its old water rates and put together Measure P, told the committee to slow down and wait on recommending a water rate. Otherwise, the citizens committee that defeated the old rates is ready to go again, he said.
“We’re fired up and ready to go if it’s not done right,” he said. “… You have the authority of the committee to push back (on the City Council).”
Harrington said a conventional rate with a 40 percent fixed base was definitely too high, but that he had not looked at the 13 percent fixed-rate version.”
““We’re fired up and ready to go if it’s not done right,” he said. “”
Well Michael has been very clear about one thing. His statement for purposes of clarification and consistency with his actions would have more accurately read ” We’re fired up and ready to go if it’s not done our way.”
I find this particularly ironic in view of his previous statement during public comment that he thinks it important that
“we all work together”. My definition of working together does not include filing law suits every time one does not get one’s way. But then, I am not a lawyer.
BP: I’ve been clear about my concerns. None of this is particularly difficult.
you’ve gone from part of the solution to part of the problem.
How can any committee work under such threats? No wonder they just gave up.
they largely ignored the threats and tried to figure out the best rate, they just couldn’t come to agreement on what the base rate was. not that hard to discern.
I went to the last hour of last week’s URAC meeting. I was underwhelmed. They were re-discussing issues that had been discussed for years and seemingly some didn’t understand basic issues. I don’t think I’d want that meeting on video either. It was explained to me by someone after the meeting that this wasn’t the same people as the WAC so some were learning about water rates. At several points the person running the meeting Elaine M. and Sue G. got into very annoying, uncivil, high-toned and loud non-discussions; I won’t take a side on this except to say it was about as pleasant as watching an episode of “The View”.
I have an idea: How about 70-30?
Both “sides” claim fairness, yet really aren’t all parties really expounding selfishness (what’s “best” (cheapest) for “me”), even if a “me” is claiming to be looking out for the need of some not-present “someone else”? I asked in my testimony that the term “fair” be dropped from all future discussions. There is nothing inherently “fair” or “socially just” about a low fixed cost, nor anything inherently unfair about someone *on average* paying more per gallon. These are just POLICY issues.
Should people pay a fairly high rate for access to the system, or a low one? Should people pay a high rate for each gallon used, possible more for more-use gallons, or less per gallon? One balances the other, and there are pros and cons to each. If you benefit “low end users”, you charge more for those with large families and gardens and leaking toilets. You can’t figure out who is doing what, and “we” value some of those things but not others. *Fair is NOT Fair*. Both sides are claiming “fair” and they are both wrong.
Keep it simple. The URAC should figure out a *structure*, not rates. The structure must balance fixed and variable and predict with any balance between 60-40 and 83-17 that the numbers add up and have a method of having reserves if the rates do not bring in enough income. The let the City Council decide the POLICY issue of where that balance is. (Like compromise on 71.5-28.5 for instance.)
What is wrong with whatever Woodland is doing? Seems whatever they are doing it is simple and isn’t causing a community implosion. Are there objections that they have a higher fixed rate? If so, why aren’t their low-end users revolting? Are there restrictions to access to their City Council? In Davis, is it the low-end users who are complaining about a higher fixed rate, or those who think they know what is best for low end users? (Google: “True Confessions: How I became a Poverty Pimp”). I don’t know the answers, and I’m not even sure whether I use a lot of water or not relative to average. All I want rates made simple; I don’t care if the fixed rate is higher or lower. Maybe in Woodland life is just plain simpler. (This is where some anonymous snark tells me if I like things better in Woodland, why don’t I move there.)
One more thing, I don’t get the “drought surcharge”. Is this not a misuse of language? Is it not actually a “lack of revenue” fund, not a “lack of water” fund? Is there not already a structure proposed to deal with making up a lack of funding? So if there is, why a “drought surcharge” — and isn’t that term itself enough to make any proposal containing it DOA due to perceived or real complexities added to such a rate structure?
And to those of you who post “Really, I don’t understand why this is so hard for people to understand”: Go F— yourselves.
Ditto to what you just said. Thank you.
i don’t understand when you say, how about 70-30? if you’re not basing it on real calculations, why throw out a number? is 30% enough to meet the revenue needs? does does 70-30 as opposed to 60-40 handle the equity?
Any combination will work because to generate the right revenue you assign the right $ amounts to be collected accordingly.
Alan, like many established terms, “drought surcharge” is misleading. It is simply a “loss of consumption surcharge” regardless of the reason for consumption dropping. The WAC had, and Matt and I have, brought forth structures with 20% loss of consumption relative to 2011 (an average rainfall year) already figured in. A “drought surcharge” is to protect revenue if consumption falls even further than 20%.
Alan, Don Shor made the same point yesterday and the wheels are already in motion to eliminate the drought reference. Unfortunately the answer to your question, “Is there not already a structure proposed to deal with …” is, no there is not such a structure. Further, while there may be examples of such structures in some communities/water districts around the state, the recent example of Roseville is almost surely the rule rather than the exception. In 2009 the Roseville City Council passed an addition to their Municipal Code that incorporated such a program.
.
.
The challenge that they may face is that that 2009 Municipal Code addition was not incorporated into their April 2013 Prop 218 Notice. By being proactive about including that kind of provision in the actual rates that are noticed in a Prop 218, we will remove any chance of that kind of challenge. Herb Niederberger told me last night that he wanted to take that provision out of the Prop 218 Notice, but I believe we are unnecessarily exposing ourselves to litigation risk if we do that.
Most of you do not know that the poor URAC is being commanded by the CC to recommend a rate structure when the updated Rate Study is not even completed! Nuts.
I told the URAC last night that they could push back on the timeline set by the CC with Herb’s input. Sort of like “jury nullification.” They did not do that, and look at the mess made in the motions.
Whatever the City does with the rates package, it simply has to be on the November ballot. The voters have demanded that twice now. The Measure P repeal was just that; it was not an opinion or expresion of desire for a particular rate structure going foward. The rates were repealed; develop a new set; and put them on the ballot. If the City won’t, we will. I will.
The October 1 deadline set by Herb is not realistic, and in fact is yet more of his “sky is falling” scare tactics.
you told the urac? you’re in a position of authority now?
Mike – Blah Blah Blah Blah.
Suggest a rate structure that you would support.
“Most of you do not know that the poor URAC is being commanded by the CC to recommend a rate structure when the updated Rate Study is not even completed! Nuts.”
Most of us can understand that the City Council has no ability to “command” that the URAC do anything at all.
A request was made for a recommendation. The URAC was not successful in meeting that request. That is all that has happened here and to try this as some imperial dictate on the part of the council is simply ridiculous.
you said what i wanted to say, but in a much nicer way.
Whatever. The point I made is the Herb-driven October 1 time line is not realistic. And the URAC was asked to make a recommendation yet they lack the updated Rate Study. The process is all balled up. Get mad at me if you are having a bad Friday afternoon, but I am right about the defective process. It’s been like this since August 2011.
I think the CC means well, but the senior water staff are blind. Or they act like they are.
The URAC was not successful because of the lack of a Rate Study and the timeline is too fast. It’s not the URAC’s fault; they are just citizen volunteers stuck in a hard job, maybe even impossible. But thanks to all of them for trying.
i’m not sure what to believe that herb says – that’s a problem.
i don’t know that an updated rate study was the problem – what info do you believe would have come that would have impacted the rate structure the urac selected
you take the kitchen sink approach of throwing everything up against the wall and then when something sticks you hop around yelling look at me. but it’s almost by accident like a broken analog clock.
herb missed diana jensen and to some extent pinkerton
the urac was not successful because they were asked to do something they were not designed to do, and do it it in a short period of time, and do it with people like you and sue pointing guns at them and making threats.
Well said DP.
The fact that Bartle Wells was in the room sharing updated numbers is pretty clear evidence to me that an updated rate study is in the works.
Michael
“Get mad at me if you are having a bad Friday afternoon, but I am right about the defective process.”
I do not know if you were referring to me. I am having a lovely afternoon, and I haven no idea what I might have said that would have led you to believe I am angry if I was the object of your comment. I have never been angry with you. Disgusted by your tactics which I see as disruptive, disrespectful ( not only of our council, but of our entire community) and ultimately destructive…..yes. But angry with you…..no.
The way to deal with a defective process is, in my opinion to state objectively what problems you see with the process in a respectful manner, and then, to propose your alternatives for discussion. This is how adults problem solve if their goal is to actually work together. I believe you are an intelligent man. This leads me to the conclusion that your goal is not to work together, but rather to obstruct whenever possible.
Tia: sorry you are having a bad day. Please don’t be so angry.
I have told the City that there simply has to be a rate study before the rates package. I told the city about the high summer rates, and the look back. I have told them that the large fixed fee makes the rates unfair. This goes back to August 2011; same sky is falling; same bad process; same too short deadlines; same disrespect for the voters. (The CC approved CBFR in spite of not complying with Measure I’s second condition precedent.)
I know you are frustrated because uppity voters can and sometimes should reverse 5/0 CC votes. Sorry about that; I didn’t make the facts, and I don’t pass the laws. As an advocate for the poor and middle class in Davis, I would like to see fair, lawful rates that don’t kill the little users to subsidize the big irrigators.
I ddn’t tell the City to keep taking our sewer and water services for free for years after the 2010 Howard Jarvis suit against Sacramento stopped them. THat case was about a 15% conversion of the funds; the City of Davis did it at the 100% level. Angry with me for uncovering and seeking to help Davis conform to state law that our water professionals and counsel certainly knew about?
So please, settle down, and have a friendly dialogue with me. I was not intending my earlier comments to be directed to you and your lovely afternoon, but I’m happy to chat with you if you like.
Michael
Here is the issue about a chat as I see it. Having a friendly dialogue presupposes that each party will respect what the other has to say even if they disagree. If I say that I am not angry and you insist that I am, I do not consider this the basis for a mutually respectful conversation, but rather a very condescending and paternalistic statement.
Not very amenable to chatting.
Come on Tia, don’t you appreciate it when other people tell you how you actually feel?