Measure P would, if the voters approve it, repeal the current water rates in their entirety. Some believe that this would not be a huge deal, in that the city could quickly and easily approve new water rates.
The impartial analysis prepared by the city attorney states, “If passed, Measure P would not be retroactive and passage would not provide a basis for refund of 2405 rates already paid. Prior to the Measure P vote, the City may consider modifications in water rates, subject to compliance with requirements of the California Constitution (‘Proposition 218′) and without voter approval.”
Harriet Steiner continues, “If Measure P passes, the City Council, after complying with Proposition 218 could propose and, absent a majority protest from ratepayers, could modify and/or increase its water rates in the future without voter approval.”
On Sunday, Sue Greenwald and Mark Siegler arguing for the Yes on P side, made the central case, “Homeowners and tenants of single-family homes soon will be paying 40 percent more for each gallon of water than other residential users under the new water rates adopted by the City Council. Not only is this unfair, it ultimately will result in higher costs for most ratepayers and lead to adverse unintended consequences.”
They argue, “Voting yes on Measure P will repeal this rate structure and send a strong message to the council to implement a rate structure that is fair to all.”
They continue, “Residents of single-family homes will pay 40 percent more per gallon than other residential users, and far more than commercial users, for two reasons: 1) reliance on summer-month peak use to determine two-thirds of the bill year-round and 2) using meter size to determine a portion of the bill.”
“The new rate structure is untested. While there is nothing intrinsically wrong with an experimental rate system, it is incumbent upon first adopters to assess the distributional implications to assure it is both fair to individual users and fair across user classes,” they add. “Fair rates become increasingly important as our water costs escalate astronomically. The costs of new surface water and wastewater treatment plants will result in our municipal utility bills being among the highest statewide.”
On the other side of the coin, Matt Williams, Bob Schneider, Jerry Adler, and Stephen McCord argue that “Measure P is the latest chapter in an open and exhaustive process about the way we deliver and pay for water to Davis ratepayers. The bottom line of that process is that Measure P doesn’t make sense for Davis. Please vote ‘no’ on Measure P.”
Their argument focuses largely on the process and they take the voters through the process from the December 2011 decision to “pause” the water project through the WAC studying process, to the rate setting process and ultimately to the passage of Measure I in March 2013 and the final decision by Judge Dan Maguire in March of 2014.
They argue, “Even after all of those open, transparent and exhaustive steps, opponents of the approved rates are challenging them yet again with Measure P. All those open, transparent and exhaustive steps are why we urge you to vote ‘no’ on Measure P.”
In their opposition, Ms. Greenwald and Mr. Siegler put forward the idea of “false peak-use analysis,” noting that the council argues that the rate-setting was fair “because they say the cost of the surface water project is dictated by ‘peak’ summer use. Similarly, they argue that it is fair to charge one household less per gallon than its neighbor year-round if that household can afford an extended summer vacation.”
They argue, “This ‘peak use’ argument is based on false assumptions.”
They shift the argument away from the necessity for structuring the rates for peak use, arguing “the city claimed that we needed the surface water project for reasons that have nothing to do with peak use, such as ‘securing river water rights,’ ‘improving water quality’ and ‘complying with new salinity and selenium standards. In fact, city consultants proved that we could have achieved all necessary current goals — including meeting peak capacity — without the project. And the council acknowledged that further downsizing of the treatment plant would not significantly decrease total project costs.”
They add, “The City Council has made the incorrect claim that two-thirds of people will be paying less under this new system (when compared to the equally unfair Bartle-Wells rates). This false claim relies on the assumption that big summer irrigators like the city, school district and some large-lot neighborhoods will pay massively more.”
However, they argue, “these users are planning to opt out of irrigation by digging their own wells, further shifting the costs back to remaining ratepayers. Thus, most people actually will be paying far more since this opting out has not been adequately calculated into the current rate estimates.”
The No on Measure P side argues, “The new rates are based on a simple and just idea: Everyone pays their fair share, both for the water they use, and for the system that brings them their water. The new system promotes fairness for those who don’t use much water — often seniors, low-income residents and those in apartments or with small lots. Traditional water rates severely penalize all those groups. Two-thirds of the residential ratepayers will pay less under the new rate structure than they would have under a rate structure like the one that has existed in Davis for more than 10 years.”
They add, “The approved rates promote fiscal stability for the water utility, and in the process create a strong incentive for conservation without penalizing customers with rate hikes when they conserve.”
What neither side brings up is the impact of Measure P. The proponents of Measure P believe that a better rate system could somehow be adopted, as Measure P would not, at least on paper, stop the water project that the voters approved in March 2013.
On the other hand, while the proponents of the current system do not state it, many in the city believe that Measure P’s passage would be a small, temporary blip on the radar.
Staff analysis from last week’s council meeting suggests something else.
City staff notes, “On February 26, 2013, the City Council approved the Amended and Restated Woodland-Davis Clean Water Agency Joint Powers Agreement (JPA). The Agreement contains sections regarding Termination (Section 10) that carry significant cost concerns in light of Measure ‘P’.”
The agreement may be terminated, but only by mutual approval of the parties and it cannot be dissolved “until all debts and liabilities of the Agency have been discharged or assumed in accordance with this Agreement and the dissolution agreement. This would include direct, actual and reasonable costs to redesign the Project Facilities to accommodate Woodland, amounts due to the WDCWA [Woodland-Davis Clean Water Agency] and construction costs to date. Also, the city has an outstanding obligation to purchase its share of the 10,000 AFA [acre-feet per annum] water right from the Conaway Preservation Group (CPG). Davis’ share of this purchase is $36.5 million.”
Staff notes, “Passage of Measure ‘P’ would limit the ability of the City to meet deadlines stipulated in the agreement and affect the City’s ability to pay its obligations. In effect, passage of Measure ‘P’ can trigger the Termination Sections of the JPA.”
Staff continues, “City staff has reviewed the fiscal and legal impacts if Measure P were to pass and has determined that the passage of Measure ‘P’ could have several adverse cost impacts. These impacts assume that the City will not be able to timely adopt new water rates that fully cover the upcoming costs of the DWWSP [Davis-Woodland Water Supply Project] and provide this funding within the timelines necessary to avoid a default on the City’s obligations for this project.”
Staff estimates that it would take 75 to 90 days (two and a half to three months) to adopt new water rates.
The city highlights several key impacts. First, “Davis will not be able to proceed with financing of the DWWSP and will not have funds to proceed with the remainder of the Davis Water improvement projects.”
There are huge financial impacts of up to $25 million for the city of Davis, but the bigger problem is that damages to Woodland would be around $50 million.
City staff estimates, “Davis would likely miss the opportunity to finance the DWWSP and other Water improvements at the lowest interest rates. This has the potential to cost Davis residents over $100 million in long term project costs.”
Third, “If the City cannot perform its obligations to fund construction of the DWWSP and foregoes its chances to conjunctively use surface water to meet the demands of its residents, then the City will be mandated to retrofit at least 12 groundwater wells to treat for hexavalent chromium. The construction costs for wellhead treatment are estimated at $1 million per site or a $12 million immediate impact. The City does not have reliable estimated costs for the annual O&M costs for this treatment and removal but it could easily exceed $1 million annually.”
Finally, “If the City cannot perform its obligations to fund construction of the DWWSP and foregoes its chances to conjunctively use surface water to meet the demands of its residents, this will adversely impact the design and operation of the wastewater treatment plant improvement project. The City’s Wastewater NPDES [National Pollutant Discharge Elimination System] Permit adopted in October 2013 contains water quality standards for Selenium and Electrical Conductivity that can only effectively be met with the City migrating to surface water or conjunctive use (combining surface water and deep wells). There are no viable solutions to meet these water quality standards through improvements at the wastewater treatment plant.”
Staff argues that the water system is an enterprise fund, funded through water rates, and city staff “cannot determine with any certainty the impact on the City’s water rates if Measure P is adopted and the aforementioned default and penalty payments are incurred and Davis no longer participates in the DWWSP.”
In their conclusion, staff writes that they believe, “City must do whatever it takes to avoid the possibility of defaults on the DWWSP and the consequence of penalty payments to either Woodland or the WDCWA. This includes investigating the cost and availability of interim financing to cover the costs that would need to be expended to preserve the City’s participation in the WDCWA and reduce or eliminate the risk of default costs.”
Based on this analysis, Measure P’s passage has huge ramifications.
Sue Greenwald and Mark Siegler downplay this possibility, arguing without explanation, “Finally, no dire consequences will result from the passage of Measure P, as claimed by the council and staff. These are the usual scare tactics. The only thing that will result from a very short delay is a fairer rate structure.”
—David M. Greenwald reporting