By Matt Williams –
If the animation team Warner Brothers or Disney were using last night’s WAC meeting as creative fuel for a short cartoon I imagine that their cartoon would have the appearance of the preparations for a Drag Race. Lots of wheel spinning. Lots of smoking tires. Short forays forward followed by backing up to the starting line. All with the anticipation of a fast and furious race once the starting lights actually flash green.
The last Public Comment also caused consternation, since the speaker was a member of the WAC, who chose to make a statement/recommendation within the confines of Public Comment rather than during the discussion of a specific item on the night’s agenda. That WAC member was me. My statement/ recommendation was heard in its entirety, but in the discussion that followed the consensus of the WAC was that in the future such WAC member statements should be submitted electronically to Dianna Jensen so she can disseminate the statement to all WAC members as meeting materials. I wholeheartedly agree with that consensus, and if I had to do it all over again I would have done so.
In my opinion, both of the above described events fall into the “Storming” portion of the Forming-Storming-Norming-Performing model that is often used to describe the evolution of newly formed groups like the WAC.
More wheel spinning happened as a result of Council’s decision Tuesday night to postpone discussion of the Council Check In until March 6th. Absent Council’s guidance, discussion of “how to structure the agenda of the remaining WAC meetings” was really not possible.
When Doug Dove from Bartle Wells began his presentation for the next item “Rate Study Basics and Conservation Assumptions” the theme of the evening quickly repeated itself. Bill Kopper was the WAC member who asked (but he was only the fastest one of many who would have done so) the question of how the decision in the recent City of Palmdale vs. Palmdale Water District case would affect any and all rate structures in the list of options that Bartle Wells had included in its materials.
Bottom-line the WAC was very clear with both Bartle Wells and Staff that having a water rates expert lawyer present to answer the legal compliance issues of City of Palmdale vs. Palmdale Water District was absolutely essential . . . and that the legal expert needed to be immune from any possible appearances of conflict of interest.
Said a different way, the WAC was saying that City Attorney Harriet Steiner could not fill that legal expert role. How the WAC addresses the issues of City of Palmdale vs. Palmdale Water District will be key to the creation of a fair and proper rate structure regardless of what water solution we go forward with.
There were other issues that fit into the “preparations for a Drag Race” theme of the night, and it is hoped by all parties that future meetings will not leave these “Storming” events in the rear view mirror. I for one believe that will indeed be the case.
Tomorrow I will submit a follow-up article to this one that ties together my earlier article this week on the Housing Element Steering Committee’s Working Draft of Assessment Factors together with my Public Comment at the WAC last night.
Matt: thank you for your comments on the WAC last night. The Palmdale decision merely re-states settled California constitutional law: to have user classes that pay different rates for a unit of water, the supplier has to have documented evidence that supports the disparate charges.
In my situation, I have a small office building with a commercial account next to a residential property. Same city facilities supply identical water to both lots, but one is commercial, one is residential.
There is no way the City has evidence sufficient to support that differential. It’s all the same supply system, and yet the residential class of users is heavily subsidizing the commercial class.
You have to look at the date from when the constitution was amended, and go forward to now.
The Davis rate structure has long favored our homes subsidizing the commerical class users. I am not making a value judgment; it’s just a straight fact of Davis political life.
The point is the law does not allow it, absent a factual basis, which in my opinion is lacking.
Really, the only question going forward for me at this point is when the rate study is done, and the consultant reaches the conclusion that our current commercial subsidy system is unconstitutional, whether the commercial class (ie, the Chamber of Commerce group) which currently largely supports the surface water plant softens their support because they now see that they have to pay their fair share.
To date, from what I can see, the proposed rate structure which the business groups signed off on last August hugely, and I mean hugely, relied on the residential class to support the funding for that project.
Now, the free ride is over.
The exterior land owners, such as Covell Village, Boescken, and their political champions such as Saylor and Souza, really wanted that plant to provide water for the desired exterior developments that some of us would call “more sprawl.” You all know that having a right to water means that the land that benefits get a higher appraisal price, so building the surface plant would have meant an instaneous effective “upzone” in all of the lands without the green boundry of the water usage map (David: post it sometime so others can see it). If we had not qualified the referendum challenge to the Sept 6 rates, these owners of exterior lands would have immediately gotten huge increases in the Fair Market Value of their lands. Overall, Eastern Yolo land owners would have gotten FMV bumps in hundreds of millions, maybe a few billion, of value. All of this private gain mostly paid for on the backs of Davsi residential class ratepayers.
I think the elimination of the residential subsidy to commercial which led to the higher rates that were repealed by the CC on December 6th may mean the death knell for the surface water plant as currently designed. There is now a large split of fiscal interest between the intown commercial, and the exterior land developers, and guess who is going to lose? The residential class and the intown commercial have the votes and political strength over the exterior urban development forces that aligned to produce the surface plant. This is a traditional power conflict that has split the commercial group that were united on that new surface plant.
Then-Mayor Wolk pushed the surface water plant to meet the expected urban growth of up to 150,000 population, and the water rate structures were set up to make residential class users pay for most of it.
(Hey, WAC, ask staff to pull out the older files and look at the time lines.)
Times changed, and the new water rates are probably going to kill the plant as something from the past era of rampant sprawl that is no longer needed or wanted.
The commercial rates should be adjusted. But I don’t think that this discrepancy in rates was some vast conspiracy by staff and the City Council to increase the value of land on the periphery and then specifically enrich land owners. It was most likely set this way to make Davis more attractive to light industry to get them to set up shop in Davis, especially labs and manufacturing where water use is high. That’s my guess, but you’d have to ask people like Mike Harrington about what the thinking was when they approved the difference in water rates for residential vs. commercial customers.
Michael Harrington said . . .
[i]”Matt: thank you for your comments on the WAC last night. The [b]Palmdale[/b] decision merely re-states settled California constitutional law: to have user classes that pay different rates for a unit of water, the supplier has to have documented evidence that supports the disparate charges.”[/i]
Michael, there is enough very disparate legal opinion about Palmdale kicking around that I’m going to reserve judgment until I hear from a water rates lawyer. I made a pilgrimage to the Capitol Building across the Causeway to talk to some folks who have forgotten more about water rate law than you and I will ever know [u]combined[/u]. One of the problem with your comment above has been very well articulated by Bob Dunning . . . specifically that the definition of “class” needs to be factored into the equation as well. There is no logical, legal argument that supports a position that Bob and his wife have to pay more per gallon of water for the consumption of their fourth child than they pay for the consumption of their first child. Nor is there any logical, legal argument that David and Cecelia Greenwald should pay more per gallon for their foster children than they pay for themselves.
Bottom-line, [i]Palmdale[/i] is a whole lot like the recent [i]Proposition 8[/i] decision . . . narrowly defined. My prediction is that time will produce cases subsequent to [i]Palmdale[/i] that will truly define the future of water rate law.
Michael Harrington said . . .
“The exterior land owners, such as Covell Village, [b]Boescken[/b], and their political champions such as Saylor and Souza, really wanted that plant to provide water for the desired exterior developments that some of us would call ‘more sprawl.'”
Michael, I’ve never known someone to attribute so much political power to 20 acres in my life. You must be smoking some of that whacky weed again . . . it impairs both your judgment and your spelling. 8>)
Matt: so, may I ask? Why have I been right about the public’s interest in having the right to vote, the referendum’s positive effect on political discourse, the need for the rte repeal, the need for a public utilities initiative that will set up a good, clean and transparent public process for our utilities so we cannot almost be taken again, and now, how the City of Palmdale decision impacts our water rate system?
I’m moving on from Palmdale now, as the issues are clear.
Steve B owns what he owns. He haunts City Hall. He shows up at all of the important meetings and I usually see him sitting down there with water staff, a member of the team; he is the treasurer for Dan Wolk and Rochelle Swanson’s committees (my understanding, subject to confirmation).
Is that politically powerful? I don’t know; not enough to ram the surface water project through, clearly. Other stuff? Maybe. But I just see it as the next generation coming in of the Covell Village partners who failed in their efforts. The CV project was pretty small potatoes, actually, compared to the much larger and unified group that tried for the surface water plant over the past 15 years.
Everyone: I understand that the sewer plant rates also suffer from being constitutionally defective, and I think the WAC needs to have its mission broadened out to include the other side of the water supply system. I’ll write more about this later The same team who gave us the defective water rates and the surface water sprawl machine also gave us the sewer rates.
Matt said he wants a water lawyer opinion. Why? Harriot said the law is clear: you cannot sell water to the public for a higher price than it cost you to supply it. End of the legal analysis.
The rub, and a water lawyer is not the one to consult about this, is whether the supplier has a factual basis for showing that Davis commercial demand costs less than residential for the same unit of water. That is not Harriot’s specialty. Look at the cost data, which will show, Matt, that I am right again: the City lacks the data or the analysis. Residential rate payers are being ripped off, and have been for years.
Davis did little or no valid rate studies to support the rate hikes of the last 15 years, sorry to say. No one was watching, as we all trusted staff to get it right.
Matt: how do you propose we get the CC to stop paying money to the JPA and end the relationship? It’s our precious money being poured into the sea, as the plant as envisioned will never be built.
Michael Harrington said . . .
[i]”Matt: so, may I ask? Why have I been right about the public’s interest in having the right to vote, the referendum’s positive effect on political discourse, the need for the rate repeal, the need for a public utilities initiative that will set up a good, clean and transparent public process for our utilities so we cannot almost be taken again, and now, how the City of Palmdale decision impacts our water rate system?” [/i]
Michael, to paraphrase Steve Hayes, “[i]one of these things is different.[/i]” You have indeed been very adroit at predicting and manipulating the emotions of a meaningful portion of the Davis populace. The Palmdale decision and its implications have nothing to do with emotion. Further, the stage on which Palmdale will play out is statewide, not local.
Michael Harrington said . . .
[i]”Everyone: I understand that the sewer plant rates also suffer from being constitutionally defective, and I think the WAC needs to have its mission broadened out to include the other side of the water supply system. I’ll write more about this later The same team who gave us the defective water rates and the surface water sprawl machine also gave us the sewer rates.”[/i]
Mike, you are slow on the uptake. There have already been significant discussions about sewer as well as water. Water/Wastewater is a continuum from water source to wastewater discharge.
Michael Harrington said . . .
[i]”Matt said he wants a water lawyer opinion. Why? Harriot said the law is clear: you cannot sell water to the public for a higher price than it cost you to supply it. End of the legal analysis.
The rub, and a water lawyer is not the one to consult about this, is whether the supplier has a factual basis for showing that Davis commercial demand costs less than residential for the same unit of water. That is not Harriot’s specialty. Look at the cost data, which will show, Matt, that I am right again: the City lacks the data or the analysis. Residential rate payers are being ripped off, and have been for years.
Davis did little or no valid rate studies to support the rate hikes of the last 15 years, sorry to say. No one was watching, as we all trusted staff to get it right.”[/i]
Michael, reading is fundamental. Go back and reread what I said . . . “a water rates expert lawyer.”
Further, the WAC isn’t looking at the past, it is attempting to chart the future . . . and chart it in compliance with all applicable California law. You are the one focused on the past.
Said another way, the WAC is attempting to be part of the solution, not part of the problem.
Palmdale Water District will almost certainly appeal the decision, with support from the state water agency association, since this affects dozens of water districts statewide.
[url]http://privatewaterlaw.com/2011/09/13/collision-course-proposition-218-and-conservation-water-rates-in-california/[/url]
From that blog:
“One approach that may satisfy the twin goals of promoting water efficiency and complying with Proposition 218 is the adoption of water rates based on the marginal cost of supplies. Under this approach, a water utility would create commodity rate tiers based on each of its water supplies, with the lowest-cost supply for the first tier, and higher-cost supplies for the following tiers. … Such an approach might be difficult to implement because water supply costs are often fixed regardless of utilization and could not be entirely dependent on customer usage. Very few, if any, public agencies have sought to adopt rates based on a marginal cost approach.”
Be careful what you wish for. Regardless of the source of water, higher-tier users may end up paying even higher rates under this scenario. And remember: the deep wells are a new source of water, so they could arguably be priced at a higher rate for higher tier customers, rather than having water costs averaged.
Mike Harrington: “The exterior land owners, such as Covell Village, Boescken, and their political champions such as Saylor and Souza, really wanted that plant to provide water for the desired exterior developments that some of us would call “more sprawl.” You all know that having a right to water means that the land that benefits get a higher appraisal price, so building the surface plant would have meant an instaneous effective “upzone” in all of the lands without the green boundry of the water usage map (David: post it sometime so others can see it). If we had not qualified the referendum challenge to the Sept 6 rates, these owners of exterior lands would have immediately gotten huge increases in the Fair Market Value of their lands. Overall, Eastern Yolo land owners would have gotten FMV bumps in hundreds of millions, maybe a few billion, of value. All of this private gain mostly paid for on the backs of Davsi residential class ratepayers.”
Mike you are finally getting to the point! I agree with you completely the water makes the undeveloped land around Davis more valuable if developed. The problem has been the no growth proclivity of the locals keeps the elected officials from saying open the periphery and charge the developers fees to pay for the water system. The water being brought to Davis is being under priced to the developers and over priced to the residents but the solution of having development pay is unpopular so guess who is left holding the bag when water quality fails to meet standards.
[quote]And remember: the deep wells are a new source of water, so they could arguably be priced at a higher rate for higher tier customers, rather than having water costs averaged.–[b]Don Shor[/b][/quote]I don’t understand this reasoning at all.
[quote]There is no way the City has evidence sufficient to support that differential. It’s all the same supply system, and yet the residential class of users is heavily subsidizing the commercial class. [/quote]
As I understand it commercial users in this town pay a higher fixed rate fee than residential; and a higher Tier 1 fee than residential; but a lower Tier 2 fee than residential.
Prospectively, the consultant charged with the rate study for Davis will keep the Palmdale case in mind, as will the WAC…
The city water rates are posted on the city web site: [url]http://cityofdavis.org/finance/Utility-Rates/[/url]
Don Shor said . . .
[i]”The city water rates are posted on the city web site:”[/i]
Michael Harrington said . . .
Michael Harrington
[i]”The Davis rate structure has long favored our homes subsidizing the commerical class users. I am not making a value judgment; it’s just a straight fact of Davis political life.”[/i]
Don and Michael, both of you have fallen int what I will call the “Paul Harvey trap.” Specifically, you are only looking at a portion of the whole picture. So as Paul used to say in his radio broadcasts, “And now here is the rest of the story.”
The City website Don has provided only shows the Consumption potion of the rates . . . and indeed when you compare the Single Family Use Tier values shown to the Commercial Use Tier values shown, Michael’s statement has every appearance of being true. However, to get the “rest of the story” you need to combine the Consumption portion with the Fixed Charges portion of the rates.
Looking at the Fixed portion Single Family use incurs a Bi-monthly Total Fixed Charge of between $27.92 and $72.18 (depending on Meter Size), while Commercial use incurs a Bi-monthly Total Fixed Charge of between $72.18 and $1,020.28 (depending on Meter Size). So if you make the conscious decision to only look at the Fixed charges the following statement is true:
[b][i]”The Davis rate structure has long favored our commerical class users subsidizing the residential class users. I am not making a value judgment; it’s just a straight fact of Davis political life.”[/i][/b]
However, when you combine the Consumption Rates and the Fixed Rates together, virtually all “subsidization” goes away, and in fact it is unclear if there is any subsidization, exactly what class is being subsidized and what class is doing the subsidizing.
That Michael is the whole picture, which you have conveniently chosen to overlook.
@ Sue: I was referring the possible use of marginal cost of water in setting tiered rates. As I re-read the blog I linked above, I find I have no idea how it would work.
I see that compliance with the Palmdale ruling would likely result in more tiers and different tiered rates. That all assumes the ruling stands, and there are many interested parties among the water districts of the state.