If Tuesday night is the final tale on the epic surface water project – a project the Vanguard has been covering since our inception back in 2006 – the ending is anticlimactic. The steam was clearly taken out of the opposition during the March 5, 2013, vote that gave Measure I a narrow but decisive victory.
Tuesday night’s Prop. 218 hearing, in which the public, mainly the ratepayers, were allowed to register their opposition to proposed rate hikes, constituted merely a murmur of protest.
And while a number of people came forward to speak and register their objections and concerns about the character-altering nature of these rate hikes, just 12 additional protests were received, pushing the total still well shy of a 2000 protest mark, which itself was well shy of the more than 8000 protests needed to stop the rate hikes.
With the past concluded and the rates in place for five years, the city council turned to the decision of what to do with the WAC.
The discussion focused on continuing their services until the end of the year and then transforming the mission to that of a Utility Rate Advisory Committee. The council clearly believed in the work of the WAC and wished to continue with the institutional knowledge already gained.
In the process, the council declined to formally conclude the work and, instead, directed staff “to return to the City Council with a proposal to form a Utility Rate Advisory Committee. Provide input to staff regarding the number of appointees, method of solicitation and possible minimum qualifications of candidates.” Rochelle Swanson was very explicit in her inclusion of the word “and” and even emphasized the use of that added word by referring to it at another point in the discussion with the word “ampersand.”
As Dan Wolk and Rochelle Swanson noted in their collaborative piece that appeared in Tuesday’s Vanguard, “We recognize that two of our colleagues – Brett Lee and Lucas Frerichs – have not had an opportunity to appoint any members to the WAC. Because of that, it’s our recommendation that the Council set in place a reconstituted WAC by May 1, 2013, and work over the next few weeks with staff and the community to do so.”
To their credit, both Brett Lee and Lucas Frerichs expressed the thought that continuity was more important to them than being able to name their own membership at this time.
However, when Dan Wolk expressed the idea that he wanted to be able to replace any of his nominees with picks of his own, a sentiment expressed by Mayor Krovoza as well, Brett Lee politely took exception, noting that while he believes that continuity and institutional knowledge are important, that should not ultimately preclude him from selecting his own picks.
That was an issue left to future discussion and debate.
When the council created and appointed the members of the Water Advisory Committee (WAC), the Vanguard was highly skeptical, to say the least.
Back in November of 2011, we wrote, “Whatever name and scope the council eventually chooses for the utility committee, the question is what value will be gleaned from such a committee?”
The Vanguard continued, “All of these are good people, and this is not meant to disparage any of them, but other than Stephen Souza who appointed Michael Bartolic, it’s not clear that any of the appointees diverge in position from the people who appointed them.”
The fear was that the appointees would simply be captive to the views of those who appointed them. We questioned whether the tough questions would really be asked.
Some people believed that they were not asked.
One WAC member, Mark Siegler, told the Vanguard recently that, other than on the rate discussion, the WAC really did not have time to delve into the type of analysis he would have liked to have seen.
While Mark Siegler voted as a WAC member to support conjunctive use in general, he had a question about the timing and the need to do this right now. Long term, he said, conjunctive use would be good, as it would give the city multiple sources of water.
“All of the process has been rushed,” Mark Siegler said. “I don’t think the WAC really had time to look at what the fundamental issue, what the fundamental tradeoffs were.”
And he may well be right, with regard to some of the issues. Certainly, we believed at several points that the project would have benefitted from additional consideration and that a June date would have made more sense. As it was, the election was basically truncated, crunched between the December holidays and the early February arrival of the ballots.
But as I attempted to explain on Sunday and the words never reached the paper for some reason, Matt Williams told me recently that the rate structure following the September 6, 2011 vote was an unmitigated disaster. There were too many political compromises to get the rates approved and the result is that they may well have been thrown out in a legal challenge.
To me, it is the rate structure that the WAC can point to as its crowning achievement – and not just with the formation of the innovative and much more fair CBFR, but also the willingness of the WAC to stick to their guns when the council overruled their advice, as well as the advice of staff and consultant, in December.
When the city council, in early December, voted 4-0-1 to have the WAC look at the Bartle Wells proposal, despite the committee’s 8-2 vote to recommend Loge-Williams and the more innovative and fair Consumption Based Fixed Rate (CBFR), Mayor Pro Tem Dan Wolk did not even allow a substitute that would have allowed the WAC to re-examine Loge-Williams.
In our view, it was on Thursday, December 13, 2012 that the WAC proved once and for all that they were not simply a rubber stamp for the council that some, including this writer, feared they might be.
As WAC member Michael Bartolic noted, if they were simply going to reaffirm what the council wanted, they might as well let the council make that decision.
Chair Elaine Roberts Musser told the WAC that she was there for the entire council meeting that Tuesday night: “I believe if we were to pass this motion it will be overturned by the city council. The City Council made it very clear that they were not going to accept CBFR initially.”
“I don’t think we have the votes on the city council. We will be at odds with the city council,” she said. “This will be absolutely pointless. It will cause a lot of dissension in the community and then there will be the possibility that the project will be voted down.”
Matt Williams, in responding, told his colleagues, “My own personal feeling is that I have an obligation to do my best to give the city the best advice possible.”
Mark Siegler argued that the council might need to think about the political issues, that their job is to figure out the best and fairest rates.
“It’s hard for me to believe that a rate structure that offers lower rates for the bottom 90 percent of residential users is necessarily a bad thing,” he argued. “It just seems to be much fairer.”
When the WAC voted 6-3, in a way, they bucked the will of the council – a dangerous move. But, in a way, they did exactly what the council asked them to do – gave them independent advice on how to proceed, even if it was not what the council wanted to hear.
A week before, Mayor Pro Tem Dan Wolk had pushed through the motion that moved away from CBFR, and he held firm even when his colleagues attempted compromise.
However, following the 6-3 vote, it was Mr. Wolk who looked for compromise and found it in a 2-3 split whereby, for two years, the council would adopt Bartle Wells before transitioning to CBFR after the second summer.
We need to remember and remember well that on the issue of the overall water project the community was closely divided – and some would say that the 54-46 margin, which was close, was a lot closer than that when a number of other factors came into play.
The bottom line for me is that, as the result of the WAC’s work, we have a much more fair rate structure, a more modest project and modest costs, and a longer ramp-up for those costs to take effect.
The one area I remain disappointed with in this whole process is that the we have not done nearly enough to cushion the financial blow to lower income renters. The program put into place by council last night provides a small subsidy but only to official ratepayers – there are probably thousands of people who pay the water bill to the city directly in everything but name.
Herb Niederberger defended the policy of billing the owner of the property, noting that the delinquency rate is very low in Davis. But it leaves people who rent their homes and pay their water bills without a solution.
Will this, as John Munn argued last night, fundamentally change the nature of Davis? It may well. It is easy to dismiss the impact of a rate increase on a person of low or fixed income, but it is no small thing.
In retrospect – as well as at the time – I wish we would have spent more time figuring out the overall economic impact of these changes on the city, as well as the impact on the individual resident.
We did a rate study that looked at the fairest way to assess the costs, but not a study to see if the people could afford those costs.
If Davis does not want to become a wealthy-only community – more so than it already is – it needs to look at this issue and look at it closely.
The biggest question is whether we can now move on and address very important issues impacting the city’s finances, and that will depend on whether the lawsuit gets filed in the circular file or whether it gets served on the city in the next two weeks.
—David M. Greenwald reporting
Yes, agree, the WAC mtg which the majority of the committee stood firm on their direction for the CBFR was a high point. To reiterate my post of a couple of days ago, I hope that many of the 6 in the majority for that vote will agree to continue serving. They showed clear vision and were empowered to stand firm.
I was not in attendance the night Dan Wolk pushed the issue of not even letting the WAC consider CBFR going forward, so I do not know what the dynamic of that was. But I find it troubling that somehow that was able to prevail over the seeming intent of other council members to still consider it. It is by far the better structure and I am so glad the WAC stood firm rather than being intimidated.
As for last night’s discussion of rate relief for lower income people, it is clear that although it is very hard to implement, it is precisely those who do not own property who will need the relief. It almost goes without saying that most likely if you own property you are of higher income than those who don’t, unless you bought it a long time ago. To qualify, the criteria at present will be that one has qualified for the PG&E CARE program. Knowing what proportion of those are owners and what proportion of those are renters would tell a lot of the story.
Yes, my guess all along (only a guess) has been that a high proportion of ratepayers who are landlords (and therefore probably own more than one house – another sweeping generalization from me) will not qualify for assistance. And my guess has been that a high proportion of landlords will not want to tighten their belts and cut into their rental profits – they will simply raise the rents. There has been speculation that many may have done so already. Therefore, an additional water source and the cost that comes with it may not affect them at all – their rental properties will have the benefit of the new water, essentially getting that for free. Many may not even wish to put city utilities into tenants’ names (and i can understand that), which would probably be necessary in order for a tenant’s income to be considered in a CARE-type program.
I am fairly sure that the city does not even allow w/s/g bills to be in tenants names.
Yes, that may well be right!
I would like to add some info about last night’s discussion of rate relief for those who were not there. The council members were all trying to find a way, or ask staff/attorney to try and find a way, of extending this to renters. I think, though they did not exactly say so, that they are aware of precisely the situation I mentioned in my 9:25am post, 2nd paragraph. Also, Brett Lee especially led on this discussion and stressed the issue of a meaningful subsidy as the rates rise to triple over the next 5 years.
[quote]I am fairly sure that the city does not even allow w/s/g bills to be in tenants names. [/quote][quote]Yes, that may well be right! [/quote]100% guaranteed that city bills ONLY property owners (NOT tenants). The arguable reason is, that’s the only way unpaid utility bills can be a recoverable lien on the property.
hpierce: I don’t know if you ever got my email that I sent you with a scan of my bill, but it illustrates that while you are correct – the bill goes to the landlord, in effect, it’s no different for SFR renters than owners.
Apparently, I did not get the scan. I DO know of many landlords who make the obligation that of the tenants, as either a part of the lease, and/or have built the historical cost of the utilities into the rent. Two bottom lines: the property owner is responsible for the payment, whether they or the tenant write a check; many (if not most) landlords will, at the end of the lease term either ‘suck-up’ the discrepancy between their estimate and actual, bill the tenants for higher charges, or actually refund the difference to the tenant.
Donna and highbeam, one of the considerable strengths of the CBFR rate structure is its built-in, self-funding affordability program. A substantial portion of the people who would qualify for rate relief have already worked hard within the current rate structure to reduce their bills by reducing their water consumption. As a result, their water usage is below the median usage for the city as a whole. Those low volume users (below the median) will see substantially lower percentage increases in their bills under CBFR than high volume users (above the median).
A 5 ccf per month SFR customer will see a 2018 bill that increases by an amount equal to 109% of their current bill, while a 15 ccf SFR customer will see a 2018 bill that increases by an amount equal to 150% of their current bill. That 41% difference is a built-in affordability program.
Under the current rate structure most (but not all) of the customers who need rate relief are paying a disproportionately high share of the system capital construction costs. CBFR fixes that, and in the process of having the highest volume water users shoulder their fair share of the system construction costs, CBFR provides the self-funding for that de-facto affordability program.
As the Nattering Nabob of Negativity has pointed out, there are also large families that need rate relief as well. To their credit, the Council stepped up in several ways last night to address the needs of that portion of the Davis citizenry. Lucas Frerichs motioned, and the Council passed the addition of a voluntary contribution feature on water bills to help those who want to make voluntary contributions to an affordability program. With CBFR’s built-in affordability program in place, those voluntary contributions can go even further in helping those who need help.
[quote]Nattering Nabob of Negativity[/quote]Wow! Blast from the past! I thought Spiro had passed…
Donna and highbeam, one additional built-in, self-funding affordability feature of CBFR affects apartment dwellers. Since apartments contribute proportionally less peak system load in the summer because they have less irrigation per person, renters will also see an end to the disproportionately high share of the system capital construction costs that Multi-Family Residences have historically paid. Beginning January 1, 2015 renters will shoulder their fair share of the system construction costs, and as a result have more affordable water bills passed on to them by the apartment owners.
williams tricky-dribbles left
Very punny, DP.
[quote] the Council passed the addition of a voluntary contribution feature on water bills to help those who want to make voluntary contributions to an affordability program.[/quote]
In my skeptical opinion, this action isn’t worth the cost of the ink it’ll takes to print on the bills. I estimate the monthly total of voluntary contributions to be approximately zero.
I’m reminded of the folks who say “If you think taxes should be raised, why don’t you just write an extra check to the government?,” or those who say “I don’t have kids in school, why should I pay school taxes?”. If subsidies are in order — and I think they are — they should be fully funded by all of us, not just some of us.
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STEAC provides grants for families in crisis who are at risk of having utilities cut off. I think water would fall into this. We should support STEAC’s efforts in doing this.
A family using 4-5 ccf will see their water bill rise from somewhere around $21 per month to $32 per month in the 5th year. Since the summer water use in single family homes is largely irrigation and the benefit for watering is in maintaining the landscaping around a home, renters might look into having the irrigation negotiated as the responsibility of the landlord and not the renter (This could be determined by the difference in usage when the irrigation is turned on). Or the landlord pays it and raises the rent, but then would be limited by the rental market rates. I think that both would benefit from an open discussion about the water bill and both work together to manage it.
Matt, yes I am aware that keeping ones water bill as low as possible starts with conservation. So I do hope that part of the responsibility is taken seriously before people complain about the cost and look for help. In fact I am so nasty that I would hesitate to give help to someone who is not doing their part. I doubt that will be considered however, we just have to hope for the best. You heard the electricity example Lucas gave last night about a case up in Arcata, which I won’t repeat here.
[quote]STEAC provides grants for families in crisis who are at risk of having utilities cut off. I think water would fall into this. We should support STEAC’s efforts in doing this. [/quote]
As a long-time donor to STEAC, I object to the idea that we should effectively shift the organization’s resources to the subsidization of municipal water bills. The water bill equity issue needs to be addressed at the source, not dumped onto the perennially-strapped nonprofits.
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Ryan and Jim – I understand both of your points on this. One of the things I am concerned about with a City program is actually identifying those most in need of support–especially if they are renters (the challenges of doing this have already been noted). In many programs designed to provide support to poorer members of communities (including things like foodstamps and WIC), enrolling those who are eligible is a challenge. We assume that people will get the information but many do not and therefore do not benefit from programs designed to assist them.
I say all this (and am sure you know it) to suggest there may be a role for STEAC (or an organization like STEAC) in this issue. If funding a scheme to help out people with water bills would divert limited resources away from important programs–and I agree with Jim that it would, why not have STEAC play a role in helping identify those most in need and assure that they get help as needed. This could include renters. Starting with STEAC’s local clients would seem possible in this regard. Details would need to be worked out but perhaps this would be a useful public/non-profit collaboration.
Jim Frame
[quote]In my skeptical opinion, this action isn’t worth the cost of the ink it’ll takes to print on the bills. I estimate the monthly total of voluntary contributions to be approximately zero.
I’m reminded of the folks who say “If you think taxes should be raised, why don’t you just write an extra check to the government?,” or those who say “I don’t have kids in school, why should I pay school taxes?”. If subsidies are in order — and I think they are — they should be fully funded by all of us, not just some of us.
[/quote]
I find your lack of faith disturbing.
While I would favor some mechanism by which subsidies were “fully funded by all of us”, I do not see that as a political reality at this point in time. And along with Rob, I find the idea of a public/ non profit collaboration very attractive for this problem. Having said that, I also like the convenience of having a designated donation spot on my water bill allowing me to make regular contributions and see this as a small step in the right direction.
[quote]I find your lack of faith disturbing. [/quote]
Perhaps I didn’t make my intent clear enough. First, when I said “approximately zero,” I was exaggerating. Of course some people will contribute, but I do believe the total amount of donations will be very small. Second — and more importantly — adding a donation box is a way of transferring a public responsibility to private sources. It smacks of the Bush-era “compassionate conservative” concept, dressing up the notion of making government smaller and devil take the hindmost. It also lets the CC claim that they’ve done something substantive to address the burden on low-income households, when in fact it’s a pitifully inadequate approach (pardon my lack of faith).
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[b]On Affordability[/b]
In the Tuesday night meeting I handed a short memo to the clerk regarding the unresolved issues with CBFR, which outlined four groups of ratepayers that will be overcharged under the proposed implementation of CBFR:
1. Steady users: non-irrigation users that use about the same amount every month
2. Early users: all of the existing ratepayers
3. Early conservers: those who took initiative to conserve from the beginning
4. Typical users: all users who have a “normal” use pattern
Without the actual usage patterns of the accounts, I could not give an accurate estimate of the overcharge. But for Steady users, the estimate is that they will be over charged by $300 each year.
As I tried to mention in the meeting (with my bad accent), that if the council simple fix the issues with CBFR, the low income ratepayers (who typically are steady users), would get a relief more substantial than the CARE program being proposed (valued at $120 per year).
That conclusion was based on the Yolo Ranch usage pattern with 57 Ccf Winter usage and 82 Ccf Summer usage. If I swap the numbers with 5 Ccf year-round. the resulting overcharge is $120 per year. (It just happens to be the same amount as the proposed assistance.) In this case, no one is “being assisted,” they are just paying what they should be paying if the error of CBFR is fixed.
Before we talk about charity and donations, we should have a firm understanding on whether those who can afford to donate aren’t already underpaying. If the system undercharges them, and they “donate”, their donation isn’t a real donation. They are just paying what they should have been paying.
[b]On Donation[/b]
For the sake of donation (with the intention to help those who cannot afford their fair share of the payment), there is a convenient concept based on ownership (of the debt) that makes the situation accountable.
In a billing method based on ownership, any ratepayer may voluntarily pay more and buy more shares. Then, when a new ratepayer joins the system and pays his bills, every shareholder is reimbursed according to their contribution. The meaning of this accounting mechanism is that the person who “donates” may relieve the burden to low-income ratepayers without losing any money (other than to inflation or the opportunity cost of investing that money elsewhere).
CBFR is not an accounting mechanism based on ownership. Because of that we don’t get to use these more organic ways to relieve our neighbors.
An analogy to illustrate the difference between donation and ownership:
You and your roommate both need a computer each. You can afford two computers, but your roommate can’t.
In a donation model, you buy two computers and donate one to your roommate. Your roommate is free to do whatever he wants with it, such as sell your donation to someone else.
In an ownership model, you buy two computers and allow your roommate to use one of them. Your roommate does not own the computer he uses, and may not sell it to make a zero-capital profit.
In either cases, from the database of the water agency, it would be easy to run a query and acknowledge the biggest sponsors of the water system, such as:
XYZ Corp:
Fair share of the capital: 1%
Actual ownership: 2%
XYZ Corp is a sponsoring the water system for 1%.
I think the concept of voluntary “donation” is inline with mutual good, because it is not forcing everyone to help, but allows those who would like to help to help. I do not know a mechanism that is more directly democratic than that.
All donation mechanism are vulnerable to the risk of abuse and mismanagement.
An accounting method based on ownership (which, strictly speaking, is not a donation mechanism, but provides the same relief) resolves those issues by keeping track of the surplus payment from the rich, and the deficit from the poor. In the database, the system knows which ratepayers did not pay enough. The system simply does not ask them to pay because their shares are being covered by a “sponsor”.
Depending on how you look at it, a ratepayer who has been subsidized might have a goal to pay back their own debts when they become affordable to do so. Since the accounting mechanism didn’t simply erase their responsibility, the system allows the ratepayers to clear their own debts, effectively letting the poor ratepayers borrow their own money in an ethically binding way instead of a legally binding way.
“adding a donation box is a way of transferring a public responsibility to private sources. It smacks of the Bush-era “compassionate conservative” concept, dressing up the notion of making government smaller and devil take the hindmost.”
Agreed.
Edgar, I have tried really hard to follow your posts but I am just not able. I will make 2 comments that arise from above.
1) When you combine all 4 groups you list as overpaying under currently structured CBFR, that ends up being pretty much everyone
If a person buys 2 computers and lets another person use one, there are still 2 computers, it does not really get used up. Water does not work that way, the water is gone once used, it is consumed, whereas the 2nd computer is not.
Re: dlemongello
[quote]1) When you combine all 4 groups you list as overpaying under currently structured CBFR, that ends up being pretty much everyone [/quote]
The word “pretty much” is difficult to justify without the actual usage pattern. The groups that underpay are:
1. Irrigation/Seasonal users: Those who do not use the same amount throughout the year
2. New users: those who join the water system later
3. Late conservers: those who do not take the initiative to conserve from the beginning
4. Atypical users: Users who are going through renovation, users who use a lot of water, then leave the system, users that use more water in the winter.
[quote]If a person buys 2 computers and lets another person use one, there are still 2 computers, it does not really get used up. Water does not work that way, the water is gone once used, it is consumed, whereas the 2nd computer is not. [/quote]
The context of the post was the Supply Charge, which corresponds to the capital cost, not the operation cost.
Computer is a capital, so is the water plant.
The electricity that the computer uses is operational, so is the water consumed in a water system.
The Supply Charge is about paying the capital.