My View: Surface Water Project in Serious Trouble

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My sense is that people in City Hall and some of the posters on this site are underestimating the severity of the threat posed by the litigation, and now the initiative, that Michael Harrington has filed with the help of Ernie Head and Pam Nieberg.

This is going to be the first of a two-part commentary that lays out, in the best way I can, the potential danger here.  For its part, the city seems to believe that the litigation will not stop the water project, and that it will only make it far more expensive.  Unfortunately, we still have not seen the figures but the city’s current estimate of the impact on the bond ratings is about $50 to $60 million.

Under fire from people like Davis Enterprise Bob Dunning, the council made the very political decision to move forward with a Prop 218 that had two separate rate structures on it.  The council felt there was a fairness issue in charging people retroactively for water that they used in the previous summer, so decided to delay the implementation of CBFR until 2015.

In the interim, they chose to use the rate structure that Bartle Wells devised using the traditional fixed-cost rate based on meter size.  This was a result of a sequence of events back in December when the city council overruled city staff’s recommendation to use the CBFR rate structure and sent the matter back to the WAC.

Mayor Pro Tem Dan Wolk pushed through the motion that moved the Consumption Based Fixed Rate (CBFR) structure of Loge-Williams off the table, due to concerns that the new proposal might be confusing to voters.

When Councilmember Brett Lee offered a compromise that would allow the WAC to at least reconsider CBFR, Mayor Pro Tem Wolk was firm and refused.  Two days later, however, the WAC reiterated their support for Loge-Williams on a 6-3 vote.

A compromise put forward by Mayor Pro Tem Wolk and Councilmember Rochelle Swanson allows for “a grace period or phase-in of the CBFR rate structure.”

In a joint statement they wrote, “For the first two years, we will continue with a rate structure very similar to the one we currently use. Starting in year three, after our community has been sufficiently prepared for CBFR, we transition to that structure.”

The problem that we now face is that, while the CBFR was scrutinized in extraordinary measures by legal staff, the Bartle Wells system is vulnerable because as our numeric comparison showed, it is extremely disproportional.  Those who use little water pay more than twice the rate per gallon as those who used a great deal more.

The problem now that the city faces is that if the court rules that Bartle Wells violates the constitution, the entire Prop 218 goes, not just that portion of the Prop 218.

That leads us to the second problem.  The language of Measure I itself.  The language read: “Shall Ordinance … be adopted which grants permission to the City of Davis to proceed with the Davis Woodland Water Supply Project, to provide surface water to Davis water customers subject to the adoption of water rates in accordance with the California Constitution (Prop 218).”

The key language is “subject to…”  The problem, as Matt Williams pointed out earlier this week, is that the city has to complete and adopt the water rates in order for permission to be granted to proceed on the Water Supply Project.

Mr. Williams, who helped design the Loge-Williams rate structure, writes, “I have no trouble arguing that there is a conditional adoption of the water rates, but until the water causes of action of the YRAPUS case are resolved by Judge McGuire, then the legality of both the rates and their adoption is subject to conditions, and those conditions could indeed result in the rates never being fully adopted.”

If that is the case, then Measure I has not been implemented and the city does not have the permission of the voters to go forward.

There are those who believe that the project will continue no matter what and that the city will have to come up with the money, somehow, and that monetary figure will likely increase.

But the case I lay out here suggests it is entirely possible that the rates can be enjoined, because Mr. Harrington will have a very plausible case that Bartle Wells is unconstitutional, and if those rates get enjoined, the city will not be able to meet timelines to purchase the bonds.

Some have argued, as Mark West did, “The City Council never needed the electorate’s approval. They asked for it through Measure I, but there was never any legal reason to do so and in any event, the results were not binding upon the Council. The wording you refer to now is of no legal consequence,” referring to the “subject to” language.

The problem with that argument is that once the council agreed to a binding vote, they are bound by the language they put on the ballot.

The bottom line here is, I think, as a non-lawyer who has talked with a few lawyers off the record, that the city has put itself into a predicament that started when it bowed to pressure from Bob Dunning and compromised on CBFR.

If the Prop 218 process is invalidated either through lawsuit or initiative, Measure I is not in effect based on the “subject to” clause.

The city has some options and one of those is to start a new rate setting process in August or September, where they implement a rate structure that will pass constitutional muster.  The problem there, of course, is it will take time, it will require approval by the voters, and all of a sudden the No on Measure I side is emboldened and no longer demoralized.

Of course, the city cannot perpetually avoid an initiative.  Mr. Harrington, Mr. Head and Ms. Nieberg can re-write the initiative to counter any new rate.

Ultimately, Mr. Harrington wants a Measure J for utility rates that would essentially force a vote on a water rate (or other utility) increase in addition to a Prop 218.

While it is perhaps easy to pin the blame on Mr. Harrington along with Ernie Head and Pam Nieberg, in a way this falls to the city.  The city made the decision to go forward with the rates separated from the ballot.

In our view, that was always problematic and not only because the citizens and critics like Bob Dunning could argue that the rates were not on the ballot, but because it basically invited someone filing an initiative to put the rates on the ballot.

Finally, there is another miscalculation by the city here.  Michael Harrington, whatever you think of him, is a very strong litigator.  Look at his record in the aviation field.  You can argue that he is outside of the bounds of his field, but that is where people like Tim Biddle from the Howard Jarvis Taxpayers Association come into play.

The point is that the issue of proportionality under Prop 218 for the Bartle Wells rate will come down to whose side has the better litigator, and the city will bank on Harriet Steiner’s ability to defend the city’s rates with help from Kelly Salt and others, against Michael Harrington’s ability to litigate with the help of Tim Biddle and others.

People who want to underestimate Mr. Harrington may do so at their own risk.  My assessment is that he has a strong enough case to get an injunction against the rates and potentially prevail in December.  Then what does the city do?

Tomorrow I will make the argument that if the surface water project ends up going up for vote now – in whole or in part – it will, more likely than not, lose.

—David M. Greenwald reporting

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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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63 thoughts on “My View: Surface Water Project in Serious Trouble”

  1. David M. Greenwald

    The Enterprise analysis is incomplete: “We believe the consumption-based fixed rate model — albeit difficult to explain and to understand — fairly apportions the fixed costs of the expensive new water project among all users and fairly bills users for their monthly consumption.”

    They are correct, but failed to assess Bartle Wells.

  2. JustSaying

    “The point is that the issue of proportionality under Prop 218 for the Bartle Wells rate will come down to whose side has the better litigator and the city will bank on Harriet Steiner’s ability to defend the city’s rates with help from Kelly Salt and others against Michael Harrington’s ability to litigate with the help of Tim Biddle and others.”

    I believe it will come down to which side has the law on its side. I suspect each litigator team is adequate to the task, and the judge won’t care who is bigger, faster, stronger.

  3. Michael Harrington

    The City made the facts. We just use them.

    My good friend and co-counsel Jon Morse also practices mostly aviation and maritime litigation.

  4. Frankly

    When social justice impulses dominate a design, they tend to create a mess out a project’s or program’s long-term viability. They also tend to corrupt and confuse the simple economics of the business at hand. At the top of the heap is our so called system of “progressive” taxation.

    In good times the resulting economic confusion is largely ignored by constituents. They pay their so called “fair-share” and eventually forget that any increased incremental effort of earnings results in a larger share being taken from it to be distributed to those exerting less effort.

    The social justice gravy train starts to unravel when:

    – A history of maker constituent complacency combined with a tendency for social justice activists to never be satisfied, causes the share taken from earnings to grow to a point where it is no longer ignored.
    – Bad economic times cause maker constituents to need more of the share taken from their earnings.
    – The maker constituency begins to recognize the lack of sustainability of a process that lacks transparency.

    This last point is key, and it combined with the first two, is the reason I agree with the Vanguard that the surface water project is at significant risk.

    No longer should we support the practice of messing with the simple accounting of a system or program to try and net out social justice. The lack of transparency should no longer be tolerated. The business of social justice needs it own business account.

    For our water works system everyone should pay the same per gallon. The rate system should not be allowed to assign rate awards and punishment based on a classification other than simple per-unit usage augmented by the real variable cost impacts of capacity acquisition. To effectively subsidize other classes of rate-payers to meet social justice goals, there should be a tax. That tax should be clearly identified and disclosed on rate-payer’s bills. So should the discounts/subsidies provided by the taxes be clearly identified and disclosed on the bills of those provided benefits.

    To tax or not to tax to achieve some social justice goal should be a separate discussion. The rate design of our waterworks system should not be hijacked by a minority of activists having this agenda. That case needs to be made transparently. If Davis voters believe it is right and fair to tax themselves to subsidize the rates of lower income people, and/or lower water users, then so be it. But this practice of burying the financial mechanics for funding social justice into what should be simple business accounting has got to stop. City water delivery is a specific policy issue separate from those to help lower income people, and to push an environmental agenda.

    We need a simple per-gallon rate system and a separate but corresponding rate-subsidy tax. The tax should not impact the econometrics of the waterworks system. In other words, every tax dollar derived by taxing certain classes of water users should be used to subsidize the rates of other classes of water users. The funding of the waterworks operation should be immune to and isolated from the impacts of this tax. I believe that type of rate system could be designed, and Davis voters should be given the opportunity to ask themselves if they believe it is right to tax themselves to help lower income rate payers, and to encourage lower water consumption by rewarding those that consume less.

  5. Don Shor

    Actually, Mike, this is the relevant quote from Ernie Head: [quote]“I hope it kills the surface water project,” Head said. “That’s been a mess since Day One. I don’t think we need it and I think it’s too expensive. … (The initiative) takes the money away from (the city), so how are they going to (build the project) if they don’t have the money?”[/quote]
    That is the motive of those pushing the initiative. That is the motive of your lawsuit.

  6. Mr.Toad

    My guess is the city will push forward and adapt as needed to any adverse court decisions. At some point the opponents will run out of roadblocks or money and start to face the liability for the costs of delay. Woodland goes ahead anyway and just bills Davis. The 55-45 vote is more significant than anyone seems to admit. If I was on the council I would see that as a mandate to proceed.

  7. Ryan Kelly

    I want everyone to pay their fair share of property taxes, income taxes and not steal from friends, employees and vendors. Mike might be very convincing but he needs to get his own house in order.

    What I don’t want is to have my rates to be higher because someone across town needs greater capacity. My rates under the new system are completely affordable. Mike’s lawsuit is not about rates. It is about stopping the City from having the capacity for growth. This will be the same reason that Mike will fight against the relocation of the downtown fire station.

  8. David M. Greenwald

    “Do you believe they are?”

    My view is that a judge could overturn the Bartle Wells rates which would nullify the entire Prop 218

  9. David M. Greenwald

    “When social justice impulses dominate a design, they tend to create a mess out a project’s or program’s long-term viability. “

    You have it backwards here. First, I’m not sure that social justice impulses dominate the design. Second, the rate structure set up by Matt Williams and Frank Loge tried to better approximate actual charges – I hardly see how that is an example as you suggest. Third, the portion that might not pass muster is the more traditional rate structure.

  10. Mark West

    We gave the City Council the right to make this decision on our behalf when we elected them. We endorsed that position when we passed Measure I, and we approved the rates by the process spelled out in the State Constitution. The project is moving forward and there is no reason for the City to delay.

    The City has an approved project with approved rates, and now has the legal obligation to continue moving forward. The lawsuit will continue at the same glacial pace that is typical of the process, with plenty of opportunities for the Plaintiffs to add to their record of bluster and prevarication. The judge will hear the arguments and make a decision based on his interpretation of the law, and regardless of the outcome, we should anticipate that the decision will be appealed. The only way that the lawsuit can delay the project is if the Plaintiffs are able to convince the judge to grant an injunction against implementing the new rates. Without an injunction, the lawsuit will not delay the project, though it clearly will make it more expensive for all of us.

    The Initiative will qualify for the ballot and will eventually come up for a vote and there is absolutely nothing that the City can do to change that. Given our past experience, we can anticipate a noisy campaign, and in the end the Citizens of Davis will make their decision. What reason is there to believe that the result will differ significantly from the Measure I vote?

    Water in Davis is cheap. It will still be cheap if the costs increase 10x over what they are today. That is the bottom line that the majority of the voters in town already understand. The No crowd can scream all they want, but that will not change this simple fact. The majority of the voters in Davis want this project and consequently it should continue regardless of how much the vocal minority want to stop it.

  11. David M. Greenwald

    “The 55-45 vote is more significant than anyone seems to admit. If I was on the council I would see that as a mandate to proceed.”

    But will they have the authority to do so

  12. David M. Greenwald

    Mark:

    The city council ceded at least some of that authority when they put Measure I on the ballot. So if the rates turn out to not be constitutional, the courts will step in and invalidate teh rates.

    The city does not have an approved project if the rates are not there.

    There is also the selling bonds issue which will make this matter much more expensive as the result of this lawsuit.

    You continue to downplay the severity of this, but it’s serious and at the very least will cost rate payers much more money in the end.

  13. Don Shor

    Bartle Wells consults to many, many districts ([url]http://www.bartlewells.com/clients.html[/url]). A local judge overturning their advice would have statewide ramifications. So yes: that would be significant, to many districts and ratepayers and not just in Davis. And it all could cost the ratepayers and the taxpayers lots of money. But why would that stop the project? They just issue new rates, do another Prop 218. How many times will Mike and the others sue, and on what grounds?

  14. David M. Greenwald

    Don:

    Agreed on Bartle Wells – but I think this is the direction we’re heading. I don’t think we’re going to see fixed rates done this way within a few years. Now will a local judge overturn them? That we don’t know. But it could happen.

    If it does, then you have to deal with the “subject to” clause. If it doesn’t then you have the initiative and then the “subject to” clause.

  15. Don Shor

    Are you under the impression that the council majority will just fold up and go ‘ok, cancel the water project’ after all of this, due to these issues?

  16. Steve Hayes

    Don’t overlook the result of “gotcha politics” (the Christmas coup of December 2010, the “backing in” of proposed SWP fluoridation after the Measure I vote, etc.) in the downward spiral of poplar support for the Project. The public support of heavy-handed, top-down management of government projects during these tough economic times is at an all time low

  17. cris916

    you are right about that Ryan Kelly, it is purely self interest and what will be beneficial to Mr. Harrington. Of course the lawsuit will be.

  18. Growth Izzue

    [quote]Water in Davis is cheap. It will still be cheap if the costs increase 10x over what they are today. [/quote]

    You might want to rethink that statement. I couldn’t afford $300/month for water that I’m currently paying $30/month for.

  19. Practical

    [quote]Don Shor

    Bartle Wells consults to many, many districts (http://www.bartlewells.com/clients.html). A local judge overturning their advice would have statewide ramifications. So yes: that would be significant, to many districts and ratepayers and not just in Davis. And it all could cost the ratepayers and the taxpayers lots of money. But why would that stop the project? They just issue new rates, do another Prop 218. How many times will Mike and the others sue, and on what grounds?[/quote]

    Don, you are absolutely right. A local judge overturning their advice would have statewide ramifications. However, the ramifications should be inconsequential to the judge as he makes a decision of law. What he will have to weigh is whether the new research that was completed by Frank Loge and Matt Williams actually illuminates a proportionality flaw in the way traditional rate structures handle fixed fees. If I understand the new research correctly, no water providing jurisdiction or rate consultant or rates lawyer has ever looked at the proportionality under Prop 218 for fixed fees. They have only looked at proportionality under Prop 218 for variable fees. If the conclusions of the research are correct and valid then Judge McGuire is in a situation where he will be breaking new ground with his decision. If he finds himself in a position where he has a choice between a decision that is consistent with the law vs. a decision that is driven by ramifications, I can’t imagine that the ramifications will trump the law.

    [quote]Are you under the impression that the council majority will just fold up and go ‘ok, cancel the water project’ after all of this, due to these issues?[/quote]

    No, I am not under that impression. The Measure I vote results say that a majority of the people want the surface water project to succeed. Unfortunately this matter is now being played out on a legal battlefield rather than a political battlefield. What Council has to do is determine what is the best path to a point where both the legal and the political issues are resolved.

  20. Frankly

    [i] First, I’m not sure that social justice impulses dominate the design.[/I]

    Sure it does. It does because the total incremental costs for higher-use water customers is more that the incremental increased cost for the extra capacity to supply that water.

    The rate calculation was jigged with a lower use environmental agenda, and so the higher-use customers (many who are average customers today) will pay much higher than necessary rates to help subsidize lower than adequate rates for lower income and lower-water users who generally rent.

    [I]Second, the rate structure set up by Matt Williams and Frank Loge tried to better approximate actual charges[/I]

    I agree that high-use capacity costs are included, but the rate structure inflates costs for some water users over and above the cost of that capacity, and the excess subsidizes the social justice and environmental agenda.

    [I]the portion that might not pass muster is the more traditional rate structure.[/i]

    Well then, as I pointed out, it is about time.

  21. Mark West

    DG: “[i]The city council ceded at least some of that authority when they put Measure I on the ballot[/i].”

    The CC made a political decision to get the citizens input; there was no legal requirement that forced them to do so. If in some far-fetched way the results of Measure I are invalidated, it will not mean that the Council’s authority was voted down, it will be as if measure I never happened. There will still be no legal requirement for the CC to change their position.

    [i]”So if the rates turn out to not be constitutional, the courts will step in and invalidate the rates.”[/i]

    Yes, that is true. I happen to think that result is extremely unlikely, but in any event as Don rightly points out, there will be nothing preventing the CC from simply proposing new rates. Yawn.

    “[i]There is also the selling bonds issue which will make this matter much more expensive as the result of this lawsuit.[/i]”

    Very true, this project will be significantly more expensive for all of us due to the actions of the Plaintiffs, regardless of how the court rules. You seem to be advocating giving up just because they filed the lawsuit and are threatening an Initiative? Why don’t we just wait for the results, isn’t that the reason (to take a baseball analogy) ‘they still have to play the game?’

    “[i]You continue to downplay the severity of this, but it’s serious and at the very least will cost rate payers much more money in the end.[/i]”

    No, I believe the lawsuit is very serious. It is a serious attack on the Citizens of Davis by a few selfish individuals who are being aided and abetted by a couple of local commentators who make a living ginning up controversy.

    I have already said multiple times that these actions will cost all of us a lot of money.

    Water will still be cheap.

  22. Mark West

    Steve Hayes: “[i]The public support of heavy-handed, top-down management of government projects during these tough economic times is at an all time low[/i]”

    You may be right Steve, but the majority still approved this project. Maybe it is time for all of us to move on and deal with our outstanding issues rather than re-fight ones that have already been decided.

  23. Mr.Toad

    ” You can argue that he is outside of the bounds of his field, but that is where people like Tim Biddle from the Howard Jarvis Taxpayers Association come into play.”

    So the local progressives have teamed up with the reactionary anti-tax Jarvis people who have fought every tax increase in the state since 1978 proving that Davis Progressives are really conservative Republicans.

  24. Practical

    [quote]Frankly

    The rate calculation was jigged with a lower use environmental agenda, and so the higher-use customers (many who are average customers today) will pay much higher than necessary rates to help subsidize lower than adequate rates for lower income and lower-water users who generally rent. [/quote]

    When I went to one of the Prop 218 hearings the impact of lower use was one of the most important concerns I had. Specifically I was very concerned that if the steep rise in the amounts that had to be paid resulted in reduced consumption that all our rates would need to be increased in the coming years. What was very clearly explained to everyone in attendance was that the lower use had nothing to do with an environmental agenda, but rather to do with an overall fiscal stability agenda. That fiscal stability agenda was specifically designed to ensure that there would not be a need for any rate increase throughout the five year life of the rates. After the hearing I overheard tow “environmentalists” bemoaning the fact that by going with a uniform block design for the Variable Use Charge, the January 2015 through December 2018 was weaker than it could be in moving forward an environmental agenda. Their argument was that a tiered design rather than a uniform block design in the Variable Use Charge would have been more “environmentally responsible.” So my question to you is this, “If every ratepayer is paying the exact same uniform block Variable Use rate per ccf, how is it that the higher-use customers are subsidizing the lower-use customers?”

    [quote]I agree that high-use capacity costs are included, but the rate structure inflates costs for some water users over and above the cost of that capacity, and the excess subsidizes the social justice and environmental agenda. [/quote]

    When you say “inflates costs for some water users over and above the cost of that capacity” how are you defining “costs for some users” and how are you defining “cost of that capacity”?

  25. Practical

    [quote]Why isn’t the city just charging more for water used during summer months?[/quote]

    Good question, and if I understand CBFR correctly, that is exactly what the City is doing. Summer month usage has much higher construction costs (almost triple). Those constructions costs mean a higher mortgage to pay for the construction, and those mortgage costs are being charged to customers based on their summer usage.

  26. Frankly

    [i]When you say “inflates costs for some water users over and above the cost of that capacity” how are you defining “costs for some users” and how are you defining “cost of that capacity”?[/i]

    Practical – First you take the total average capacity required today and divide it by the total number of rate payers and get the average capacity per rate payer (ACPRP). Then the base capacity that the system needs to support is the existing capacity plus the ACPRP for the estimated rate payer population growth.

    But of course you would want to design a system with excess capacity. The added fixed cost of the plant design needed to handle that capacity above what we require today, plus the added variable costs to operate the plant above the line of capacity that we require today, should be the excess costs that are born by all rate payers with usage above the ACPRP.

    Where this gets screwed up is by setting an arbitrary lower ACPRP that factors expected conservation. This then gets the nod as the being the size of a system we should require and anything above that gets the evil treatment of the extra costs from water wasters. Basically saying “if everyone killed their grass and took fewer showers they would be at environmentally-correct usage levels; however go above that set level and you will be penalized as a water-waster and you will pay higher rate tiers.”

    Now going back to the way it should be… taking the baseline ACPRP as it is today… but then using the proposed rate system calculating the sum of all monies received from these higher-rate tiers… you have a slick way to reward lower rates to those lower income people and people with smaller yards and less rigorous personal hygiene, and then penalizing the rest of us with higher rates.

    Basically the rate system as designed becomes a class tax.

    If the baseline capacity was set at today’s usage, I would have no problem with tiered rates above that line. However, the baseline was lowered and because of this a lot more people are going to be paying at these inflated rate tiers. This will subsidize a larger percentage of the necessary system and not just excess capacity. It will also subsidize the rates for the “more desirable” conservationist and low income water user.

    Note that I support the surface water project and want it to move forward as long as we don’t dump fluoride toxins/drugs in the water. However, I would prefer that we did not inject a social justice and environmental agenda into our rate system… and instead base-line our current usage and set that as our needed capacity.

  27. David M. Greenwald

    “The CC made a political decision to get the citizens input; there was no legal requirement that forced them to do so.”

    Mark: I agree. Once they did that though, they were bound by the decision and the language of their own statute.

  28. David M. Greenwald

    “Yes, that is true. I happen to think that result is extremely unlikely, but in any event as Don rightly points out, there will be nothing preventing the CC from simply proposing new rates. Yawn.”

    That’s true, but that will take a process and it will take time when the city is supposed to take out bonds this summer to start building the project.

  29. David M. Greenwald

    “Very true, this project will be significantly more expensive for all of us due to the actions of the Plaintiffs, regardless of how the court rules. You seem to be advocating giving up just because they filed the lawsuit and are threatening an Initiative? Why don’t we just wait for the results, isn’t that the reason (to take a baseball analogy) ‘they still have to play the game?'”

    I’m not advocating anything. I’m simply analyzing the situation.

  30. Don Shor

    [quote]Where this gets screwed up is by setting an arbitrary lower ACPRP that factors expected conservation. [/quote]
    I think you may be misconstruing the basis of this. It isn’t that conservation is a goal. It is the expected behavior of people whose water rates increase. I believe it’s based on plenty of observed behavior; somewhere I remember seeing studies of how much people reduce their water consumption based on rate increases of varying levels.
    It is expected that Davis residents will conserve about 20% as they rates go up. There may be a social justice factor (the baseline) but I don’t think there is an environmental agenda.

  31. Practical

    [quote]First you take the total average capacity required today and divide it by the total number of rate payers and get the average capacity per rate payer (ACPRP). Then the base capacity that the system needs to support is the existing capacity plus the ACPRP for the estimated rate payer population growth.[/quote]

    Lets draw a parallel to the real estate business. If we followed your logic then all houses in Davis would be priced at an average value per homeowner level. Why isn’t that the case. Because individual homeowners choose to have different individualized home ownership needs. The market prices homes according to each home’s ability to meet the needs of prospective homeowners. The same is true with water usage. If one ratepayer needs twice as much capacity to meet his/her water needs then he/she should pay a proportional amount equal to that proportional need.

    [quote]But of course you would want to design a system with excess capacity. The added fixed cost of the plant design needed to handle that capacity above what we require today, plus the added variable costs to operate the plant above the line of capacity that we require today, should be the excess costs that are born by all rate payers with usage above the ACPRP.
    [/quote]

    Agreed, and if one allocates those excess capacity costs on an average basis, then the exact same problem exists. Those excess costs should be allocated based on need.

    [quote]Where this gets screwed up is by setting an arbitrary lower ACPRP that factors expected conservation. This then gets the nod as the being the size of a system we should require and anything above that gets the evil treatment of the extra costs from water wasters. Basically saying “if everyone killed their grass and took fewer showers they would be at environmentally-correct usage levels; however go above that set level and you will be penalized as a water-waster and you will pay higher rate tiers.” [/quote]

    What evidence do you have that the City is “setting an arbitrary lower ACPRP”? You have none. In fact, in order to achieve fiscal stability over the life of the rate structure the City is consciously setting a responsibly higher ACPRP, not lower.

    [quote]Now going back to the way it should be… taking the baseline ACPRP as it is today… but then using the proposed rate system calculating the sum of all monies received from these higher-rate tiers… you have a slick way to reward lower rates to those lower income people and people with smaller yards and less rigorous personal hygiene, and then penalizing the rest of us with higher rates. [/quote]

    As I understand it, your proposal would work except for two small problems. 1) the current baseline ACPRP does not comply with the proportionality provisions of Proposition 218, and 2) no one is being penalized by higher rates under the new structure. In 2015 everyone is paying the exact same $0.86 rate per ccf for the Variable Use Charge, and the exact same $0.32 rate per ccf for the Supply Charge. If everyone is paying the exact same unit rate, then how can some people be penalized with higher rates?

  32. Don Shor

    The Bob Dunning Rate Plan seems to be: meter everyone. Charge everyone the exact same rate for each gallon that they use. I sense that is where the plaintiffs and others are going here.

  33. Ryan Kelly

    Mike Harrington: “…
    Pam Nieberg filed the Water Rates Initiative with Ernie Head. Now THATS a message to the voters.”

    How is that a message? What is the message exactly? Ernie is benefiting financially from wells on his property. Pam just appears confused. She is usually advocating for sustainability and ecology, but this is about rates. Now that there is an initiative, we’ll be able to see who is financially driving it. If there is a message that we should interprete from just the people who signed their name to the papers, you will have to be more specific.

  34. Baroe

    How much is Mike earning in this lawsuit? I don’t think Mike Harrington has the financial ability to drive this case, it’s just all about power.

  35. Michael Harrington

    Don: they might agree with you. But maybe not me.

    If we took CBFR back to Version One before it was half spanked to death by water staff and bond brokers, with another hard slap by the CC and Dan Wolk to try to make it sell better with Measure I, I might spend time trying to fix it.

    But the two year BWA and “subject to” gave us an opening, even a barn door. Thank you, Dan Wolk.

  36. B. Nice

    [quote]B Nice pro rating the water bill will be a lot of work for the city[/quote]

    I’m still trying to figure this whole thing out so bear with me, aren’t they already kind of pro-rating by basing some cost on people’s summer water usage?

    Or cant’ they just use a sliding scale, so the more water someone uses the more expensive it gets?

  37. Practical

    [quote]The Bob Dunning Rate Plan seems to be: meter everyone. Charge everyone the exact same rate for each gallon that they use. I sense that is where the plaintiffs and others are going here.[/quote]

    Don, that does meet the proportionality provisions of Proposition 218. It is incredibly fiscally irresponsible though. It also is not compliant with the provisions of the Water Act portions of the California Constitution (Article X) and the enabling legislation that has been passed to support Article X.

    If Davis implemented a 100% Variable Rate, which is what the Bob Dunning Rate Plan is, then environmental lawyers would be filing suit against it faster than you can say William Mullholland.

  38. Don Shor

    Just for the record, so Bob doesn’t get mad at me: I gave it that name based on his logic that we all pay the same for a gallon of milk, we all pay the same for a gallon of gas, therefore we should all pay the same for a gallon of water. I was extrapolating from that. I don’t know if he considers any fixed rate component appropriate. I also don’t know what rate plan Mike Harrington would consider appropriate, nor do I know who he thinks should devise the rate plan for Davis.

  39. Practical

    [quote]I’m still trying to figure this whole thing out so bear with me, aren’t they already kind of pro-rating by basing some cost on people’s summer water usage?

    Or cant’ they just use a sliding scale, so the more water someone uses the more expensive it gets?[/quote]

    B. Nice, as I noted before, CBFR is doing exactly what you are asking for. It isn’t exactly pro-rating, but rather having the mortgage for the capital costs of the system’s water sourcing capacity allocated based on each account’s contribution to those capital costs.

  40. Baroe

    B Nice, not if they have the data from way back then, which I think is lost somewhere or not in existence, so there is no basis for pro rating the water from the average cost.

  41. B. Nice

    [quote]B. Nice, as I noted before, CBFR is doing exactly what you are asking for.[/quote]

    For the record, I’m fine with rate structure the city has set forth. I’m just trying to get a better grasp on the situation, so thanks for humoring me…

    I get that it’s addressing this but it seems to be doing it in a much more complicated way, which the anti-surface water people are using against it. Why can’t it by simplified so that everyone is on the same rate scale, the more you use every month, or what ever the billing period is the more you pay. Would this not address some of the “fairness” concerns like the ones Bob Dunning has expressed?

  42. B. Nice

    [quote]I gave it that name based on his logic that we all pay the same for a gallon of milk, we all pay the same for a gallon of gas, therefore we should all pay the same for a gallon of water.[/quote]

    I’m still trying to figure out why Bob Dunning thinks this is fair, when it doesn’t account for the increase in capital cost due to high volume water user’s.

  43. Mark West

    [i]MW: “The CC made a political decision to get the citizens input; there was no legal requirement that forced them to do so.”

    DG: “Mark: I agree. Once they did that though, they were bound by the decision and the language of their own statute.”[/i]

    Measure I passed and rates have been approved. Those rates have been challenged in Court and may need to be redone. So what? There is no time requirement with regards to Measure I. If needed, new rates will be created that will pass muster and the pending clause of Measure I will be fulfilled. If not, we are back at square one as if Measure I never happened. If that were to occur, there is nothing preventing the CC from simply making the decision themselves as there was no legally binding precedent that requires them to repeat their original mistake.

    [i]MW: “there will be nothing preventing the CC from simply proposing new rates.”
    DG: “That’s true, but that will take a process and it will take time when the city is supposed to take out bonds this summer to start building the project.”[/i]

    The City has an approved project and approved rates. The new rates are being implemented and the bond sale will happen before we have a resolution in the lawsuit, which is why the project will now be more expensive regardless of what the Court decides. Thank you plaintiffs.

    [i]DG: “I’m not advocating anything. I’m simply analyzing the situation.”[/i]

    Your ‘analysis’ has consistently declared the “No” crowd the winner on this issue since before the Referendum. Either your analysis has not been very good, or you are an advocate. I think it is the latter, but I have no issue with you opting for the former explanation.

  44. B. Nice

    [quote]B Nice, not if they have the data from way back then, which I think is lost somewhere or not in existence, so there is no basis for pro rating the water from the average cost.[/quote]

    Got it, I see how this can get complicated….

  45. Practical

    [quote]B. Nice

    For the record, I’m fine with rate structure the city has set forth. I’m just trying to get a better grasp on the situation, so thanks for humoring me…

    I get that it’s addressing this but it seems to be doing it in a much more complicated way, which the anti-surface water people are using against it. Why can’t it by simplified so that everyone is on the same rate scale, the more you use every month, or what ever the billing period is the more you pay. Would this not address some of the “fairness” concerns like the ones Bob Dunning has expressed?[/quote]

    I know how you feel. That was my dilemma going into the Prop 218 meeting I attended. Here’s the understanding that I came out with.

    The City paid Bartle Wells to study its water costs, and what Bartle Wells told them was that in effect 80% of their costs were their mortgage payment and 20% of their costs were for chemicals to treat the water and power to pump the water. No matter how much water is delivered to customers the mortgage payment has to be made, and under the Dunning Water Rate Plan if a customer does not use a “unit” of water the City would lose one full “dollar” of income, but would only save 20 “cents” of cost. The remaining 80 “cents” of cost for the mortgage would still be due and payable. That means that in a time of decreasing consumption, those individual deficit of 80 “cents” add up and up and up until the combined deficit amounts to millions of dollars each year.

    CBFR creates a system where every customer pays the same dollar amount per “unit” of water, and simultaneously puts the City into a situation where if a customer does not use a “unit” of water the City only loses 20 “cents” of income, which exactly matches the 20 “cents” of cost it saves.

    So the Dunning Water Rate Plan produces equal unit costs for customers, but with massive financial instability for the City, while CBR produces equal unit costs for customers with no financial instability for the City. In the end (over time) financial instability for the City ends up being financial instability for the individual rate payers because the City has to raise rates in order to eliminate its deficit.

  46. Practical

    B. Nice, glad to help. it took me a very long time to come to grips with it myself. The Prop 218 hearings were the point where the light went on for me.

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