Council Set To Approve Mailing of Notice of Water Rate Increases

watersupplyThe eventual more than doubling of Davis residents water and sewer rates will begin with a rather modest 5% increase in the water rate and 6% increase in the sewer rate.  For the average ratepayer, the city staff argues this will be tantamount to a little over four dollars a month or less than fifty dollars per year in a rate increase.

The actual rate approval will not occur until May 4.  However, this is just the first step among many that will see most people’s water and sewer rates at least double in order to pay for what might be a half billion dollars combined in a water supply project and a wastewater treatment project.  The city has already taken the step of forming a joint powers authority with Woodland, making the water supply project a done deal without ever having final approval.

According to the staff report, the water rates will generate $10.9 million in revenue.  Staff had originally considered an 19% rate increase, however, they have reduced that acknowledging that there are ongoing discussions regarding the status of the Surface Water Project.  Thus, the 5% is sufficient to cover the expenditures in 2010-11.  They then note: “the trade off will mean more significant rate increases in the coming years.”

Meanwhile the sewer rate will generate $12.8 million in revenue and assume a $145 million project with construction completed by 2017 (despite the fact council has never approved this project.)

Here is a key piece of information to those who oppose these projects and cannot afford the rate hike.

“Proposition 218 (Prop 218) was voter approved in 1996 and requires that the City give notification to all property owners of rate increases on most utilities. This notification takes the form of a mailing that includes the proposed rate, reasons for the rate increase, information on the public hearing and instructions for those who wish to protest the rate increase. If the majority of property owners protest the rate increase, then the rate increase could not be implemented.

The public hearing is scheduled for May 4, 2010. At that time, Council would be considering actual adoption of the rates.”

While that is a very high bar to establish, it does include a provision to oppose the rate increase now and also in the future.  This first rate hike is likely not to incur significant protest, however, each succeeding rate hike makes that possibility more likely.

The 5% rate increase according to staff estimates equates to an increase from $34.52 to $36.25 per month or $1.73 per month.

The following are funded by the rate hike:

  • Operations and Maintenance 9/10 base expenditures with and added $350,000 for UCD water purchase and $110,000 in increased well maintenance;
  • $600,000 for various replacement and repair projects;
  • Surface Water Project – $3,000,000 which is the total estimated expenditures for FY10/11.

However, there is also a Municipal Water Use rate and a second tier on the water rates to help minimize peak water demand.

water_rate_hikes_2010-11

New Proposals For Wastewater Treatment

In the meantime, the Council will also be hearing from Dr. Ed Schroeder and Dr. George Tchobanoglous who worked with the city to develop a planning Charrette process looking at wastewater treatment plant upgrade alternatives.  There is no fiscal impact yet on the Charrette Panel’s recommendations as it is being prepared. The estimate will be used as a baseline to compare alterative options against and will be brought back to the Council later this year.

According to their report, the purpose of the Charrette was twofold.  First, to development a treatment process flow diagram that will allow the city to continue to discharge to the Willow Slough Bypass as it has.  Currently the Water Quality Control Board has issued a new discharge permit to the city requiring significant upgrades to the quality of the discharge.

The secondary purpose is to insure that the selected system will minimize ratepayer fee increases.

It contains what it refers to as six innovative features.  First, the redundancy required under California Water Code will be provided without the need for multiple treatment units.  Second, there will be portions of the current facility that will be rehabilitated and retained as components of the new treatment plant, resulting in significant cost savings.  Third, the recommended treatment plant will be adaptable to future needs such as a need to incorporate removal of nitrogen or the use of a disinfected other than chlorination.  Fourth, design of the oxidation ponds could result in lower oxygen requirement and thus decrease energy consumption.  Fifth, city decisions about future growth will not be constrained by treatment capacity.  And sixth, decisions about treated wastewater dispersal options will also not be constrained.

Commentary

The Vanguard has been covering the water issue now since our inception, the city council has never voted to authorize the entire project.  Instead it has taken piecemail steps, all the while arguing that the particular step was necessary to advance the project, without ever having an up or down vote on the project itself.

Councilmembers Sue Greenwald and Lamar Heystek has consistently attempted to either stop or slow the progression.  One thing their drumbeating probably accomplished is at least forcing the council majority to seek most cost-effective means to achieve the inevitable.  Still costs will be prohibitive and as I would expect, far higher than estimated.

This is the proverbial frog in the boiling water scenario.  The council are going to cook ratepayers first with a slow heat up in the form of a 5% water rate increase and a 6% sewer rate increase.  That seems like a small amount.  For the average rate payer it is a modest $51 per year.  But understand this is just the first step and it only produces about $22 million, less than a tenth of the current estimated cost of the project. 

In fact, it is probably less than one-twentieth of that cost.  Multiply that most $51 dollars by 20 and suddenly you are over $1000 per year, which means about $85 per month, and frankly that seems on the low end of the costs.  However, that conservative estimate jacks the average rate from $109.66 (which seems low from what I’ve heard) to nearly $200 per month for the average user.

Let us put this in comparison to tax increases that are proposed.  The half-cent sales tax is expected to continue to generate around $3 million per year.  On just the water end, this is expected to generate around $3.7 million next year. 

The school parcel tax right now stands at $320 per parcel.  An increase to $600 would be a $280 per year increase or roughly $25 per month.  That’s larger than the current water rate hike increase but smaller than what the final water rate hikes will look like.

These services and the fees associated with them go into the city’s Enterprise fund.  We have spend an inordinate amount of time discussing the city’s general fund, but have rarely had the discussion of the Enterprise fund.  THere is a budget session coming in March, perhaps that fund should be scrutinized a bit more closely given the magnitude of the rate hikes.

Per Proposition 218, rate payers can protest it, but the threshold for a city of Davis’ size is too high for that to be an impact yet.  It would require more than half the households to protest.  That could happen in a small neighborhood like El Macero, it is unlikely to happen in Davis – at least not yet.

The Growth Factor

While, the Tchobanoglous and Schroeder Alternative is welcomed from a fiscal standpoint, there is a huge red flag that should be noticed by all slow growth advocates.  At least one reason why we need these projects is to being to provide enough water and wastewater capacity to service future potential growth.

We know that currently the city is just about out of water capacity to sustain additional growth.  A large development the size of a Covell Village would be a tremendous strain on growth.

However with the new surface water project, water supply will no longer be a constraining factor on growth.

Read the fifth innovative feature of the wastewater treatment system, and you see them note “city decisions about future growth will not be constrained by treatment capacity.”  On the surface that would appear to be a neutral statement, in other words, it would appear to take water considerations off the table.

But it becomes clear that growth is in fact a consideration in the construction of these new projects.  To put it simply, the city could not have grown much without increased water supply and wastewater treatment capacity.  Now we can double our population without water being a problem.

Unless of course climate change alters the precipitation patterns.  I still have an abiding fear that we will construct an elaborate and expensive water supply project that yields no water as Southern California muscles away the Sacramento River water rights from Northern California.

I also have a fear that as Northern California moves more and more to surface water that this will have a huge and detrimental impact on the Delta and the Delta ecosystem.

But for most, this will end up being taxation without a vote under a different name, as the city has the capability to jack up the rates of water without a vote.

—David M. Greenwald reporting

About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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10 Comments

  1. alanpryor

    Staff originally brought this to the NRC last month (January) with a proposed 18% rate hike and indicated this was the first of at least 5 planned annual rate hikes of the same percentage to fund the proposed Sacramento water project. When asked why the rate hikes were being iniitiated before the project was even approved, Stephen Souza indicated the fees were necessary to fund ongoing costs for the project the including Davis’ share of JPA engineering and legal costs and intake structure work. This received a rather cool reception at the NRC and the proposed rate hike was only grudgingly approved.

    It would be interesting to know why the proposed 18% rate hike presented to and approved by the NRC only one month ago is now being whittled down to 5%. Did Staff mess up that much on their calculations presented to the NRC? Or could it possibly be because Council now does not want to announce these huge rate hikes before the upcoming Council elections thus making it a big debatable item in the race. Either way, this is the first of many, many more hikes to come if the water project is approved. Average monthly rates for a single-family home will eventually push $100 with sewage rates not far behind…If you are a senior on a fixed income, you better plan on installing an outhouse and getting buckets to snitch water from your neighbors faucet!

  2. E Roberts Musser

    “Either way, this is the first of many, many more hikes to come if the water project is approved. Average monthly rates for a single-family home will eventually push $100 with sewage rates not far behind…If you are a senior on a fixed income, you better plan on installing an outhouse and getting buckets to snitch water from your neighbors faucet!”

    Well said!!! My concern is there is no thought being given to the unaffordability of these water/sewer projects. City rationale is that we must do it bc new water standards demand it – yet if many citizens cannot afford massive rate hikes, what then? A good portion of the town ends up in foreclosure? If the resultant fewer rate payers are available to pay the increases, the increases must be set even higher for those residents remaining. The JPA must wrestle with this very real possibility, bc the combined water/sewer rate hikes we are talking about could be massive – anywhere from $200 – $400 more per month. How many of you could realistically afford to pay that much more? Many seniors on fixed incomes cannot possibly pay such steep rate increases.

    This problem is going to occur across the country. Frankly, it is the federal gov’t that really needs to address this issue. Complicating the picture are the ongoing “water wars” between Northern and Southern CA. To a certain extent, that has to play out before it is really reasonable to decide if a Sacramento River surface water project would be as beneficial as we have been led to believe. Further gumming up the works is the recent decision to sell Conaway Ranch by its owners, property which was going to be used for wastewater disposal by the city, to try and put off the necessity for a sewer plant upgrade.

    There has been talk of water conservation, as a partial solution to the problem. The more the town can conserve, the more likely it is we will not need a sewer plant upgrade. I see some problems with this mode of thinking: 1) water conservation will not buy us out of the infrastructure costs of at least one of these costly projects (surface water; sewer plant upgrade); 2) only 5% of the water is used by residents, the other 95% is used by farmers, so that a 20% reduction in use would only represent a 1% decrease in total water consumption; 3) residents can only conserve so much – there is still a need to flush toilets, take showers, wash dishes, do laundry; 4) some can afford new water saving devices more than others, yet the ones who need them the most are the least able to afford it; 5) extreme conservation measures will degrade our quality of life significantly, to the point that all landscaping may need to be cacti, dishes will have to be washed in the sink, showers will have to be communal or nothing more than wipe-downs.

    All of these things need to be on the table and open for honest and forthright public review…

  3. Barbara King

    What section of what code makes the water that comes out of Davis taps fit to drink but unfit to discharge as waste water, and how can this expensive bit of law be changed?

  4. davisite2

    I understand that our Senator Feinstein is pushing a bill that would markedly reduce the endangered species provisions and permit much more delta surface water to be diverted to California agribusiness and the Southern California “desert”. The recent CA “water bill” being considered is a complete cave-in to CA agribusiness with no mandatory conservation included and water quality and use monitoring being relegated to the local communities involved(usually under the complete political control of Agribusiness) rather than at the State level.

  5. davisite2

    The argument that communities will be forced to bankrupt themselves to meet water standards that are imposed on them is not necessarily true. There are communities in our Southwest that have Arsenic levels in their water supply that exceeded what the Feds said they would allow but, because there was no fiscal way for these communities to put in place a water treatment operation to reduce these As levels, they have not been forced to comply. Actually, as I remember it, the permissable Arsenic level was officially increased.

  6. Barbara King

    Similar thing happened with allowable amounts of fluoride in water. It went from 2 PPM to 4 PPM in the late 80’s or early 90’s, after hot debate about the health consequences.

  7. Greg Kuperberg

    [i]Similar thing happened with allowable amounts of fluoride in water. It went from 2 PPM to 4 PPM in the late 80’s or early 90’s, after hot debate about the health consequences.[/i]

    Yes, they are corrupting our bodily fluids.

    I am also wondering whether there will be a theory of disloyalty to explain why the city council approves rate hikes.

  8. Barbara King

    Sorry I did not make it clear that the change from allowing 2 PPM to allowing 4 PPM of fluoride in the water was about naturally occurring fluoride, similar to the increase in the allowable amounts of naturally occurring arsenic.

  9. Sue Greenwald

    The problem is not that rates are “going up all over California”. Very few, if any, cities are both building a surface water system from scratch at the same time as an entirely new waste water treatment facility, while also refurbishing a groundwater system (such as new $9 million water tank at Mace).

    According to one group of water engineers who asked to meet with me, our combined water/wastewater rates will be among the highest in the state if all projects go through at once.

    I hope that we can still find a way to phase in the improvements, and to pay off one new system before starting the next. Not only will money seniors have problems, but I also don’t see how business can be competitive.

  10. preston

    The only problem with delaying or “phasing” projects is that this will, in the long run, raise the overall cost of the improvements even higher. Raw materials will cost more, labor will cost more, land will cost more, permits will cost more, multiple environment impact reports will have to be done, laws will change, technology will change, and the litigation will be unending. Instead of complaining of having to pay for progress, let’s find a way to do it. I have said it before, there is no way we can not expect our expenses to increase when the cost of living goes up by 3% and we maintain a growth rate at or below 1%. Not when our city survives on property taxes. We need to increase our growth rate, and bring in some more sales tax generating businesses if we want our taxes to not escalate. We are a city of smart people (author excluded), we can come up a way to progress without going bankrupt in the process.

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