There were a couple of interesting letters to the editor on Measure P this morning. Sue Greenwald, the former Mayor and three-term city councilmember writing that Measure P is nearly cost-free, while Ed Schroeder, the UC Davis Professor writes in to defend CBFR, an irony given that it was Sue Greenwald who once brought Professor Schroeder to the table.
Sue Greenwald writes, “I am grateful that The Davis Enterprise editorial board took the time to talk with both sides of the Measure P issue, and that they agree that we should either dispense with the new water rate structure (the consumption-based fixed rates), or at a minimum switch from a summer month to a 12-month basis.”
She adds, “However, I don’t understand why The Enterprise has repeated the city’s over-the-top scare tactics as fact. None of them has validity.”
“I can say categorically: The water project will not fall through simply because we roll back the rates to last year’s levels for a few months, and that is all that would happen if Measure P passes. It would take only a few months to complete a new Proposition 218 process,” she writes.
It is an interesting tactic going on by the pro-side of the Measure P debate. It follows the comment by John Munn in the last debate, “Measure P is not about stopping the water project. We voted on that in Measure I.”
There has been an evolution in the thinking on Measure P. Originally, the opposition discounted Measure P, arguing we would simply pass new rates. That calculus changed drastically when a city-analysis forecasted more dire consequences if Measure P passed. That forced the opposition to take the threat of Measure P more seriously and has now put the pro-side on the defense.
Sue Greenwald now is taken to the position that if Measure P passes, it only changes the rate structure. The problem that the pro-side now has, is that any new rate structure would still have to produce the same revenue.
Ms. Greenwald argues, “The City Council could promptly give firm instructions to a professional rate consultant (not yet another citizens’ advisory committee) to come up with a new rate structure that approximates an equal cost per gallon both between individuals and across classes of users.”
She continues, “Any small resulting shortfall in revenue that might result from reverting to 2013 rates for a few months would be easily covered by our large water fund reserve. In the unlikely scenario that a bridge loan were necessary, the costs wouldn’t even show up as noise given the magnitude of the expenses of this project. Hence, the project wouldn’t fall through and there would be no associated costs or penalties.”
The city estimates that it would take 75 to 90 days to adopt new water rates. They argue, “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.” The city would then “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.”
“The statement that Measure P could cause us to lose low-interest state loan opportunities is also false,” Sue Greenwald writes. “The city likely has lost its low-interest state loan possibility because the City Council made a poor choice by opting for a no-bid contract with a multinational company and the associated privatization of the operations. State law prohibits giving low-interest state loans to projects with privatized operations.”
However, here as well, her argument gets caught up with some problems. First, the city did not opt for a no-bid contract, though the process did end with a single bidder. Second, the operations are not being privatized so much as outsourced as the city still owns the surface water plant jointly, it has simply contracted to a private party to run it.
She concludes, “So yes, we have probably lost our low-interest state loans, and yes, that could cost the city more than $100 million if The Enterprise’s cost information is correct. Does it have any bearing whatsoever on Measure P? Absolutely not. The council and staff have known about this loan problem for some time. Not to have shared this knowledge with the public is bad, but it is unconscionable for City Hall to have used this problem of its own making as a campaign weapon against Measure P.”
If we take these arguments at face value, that the supporters of Measure P really do not believe its passage will kill the project, then the alternative is that they oppose CBFR. That puts them in an interesting place because the alternative to CBFR is a Bartle Wells fashioned rate structure which puts heavy emphasis on meter size which means that low end water users pay a disproportionate share of the new costs.
Given the water project, there is no avoidance of higher rates. The only question is who that burden should fall on. If you follow through the yes on Measure P arguments, it becomes clear that burden in their view should fall on low end users. In a companion article to this one entitled Who bears the burden of a Yes vote on Measure P? the Vanguard compares the relative burden on different groups of ratepayers under Bartle Wells and under CBFR.
In his letter to the editor in the Enterprise, retired UC Davis professor and consultant to the City of Davis on the wastewater treatment plant upgrade, Ed Shroeder lays out arguments that he believes refute some of the Yes On Measure P argument by defending the CBFR structure.
He writes, “Proponents of Measure P have raised four objections consistently to the consumption-based fixed rate water rate structure: 1) increased cost, 2) fairness to homeowners, 3) conservation will not lower cost and 4) the CBFR is too complicated. Consideration of each of these objections should be made in deciding whether to vote yes or no on P.”
“Since 1990, there have been several studies of our water supply, including one by the National Water Research Institute. The uniform recommendation has been that Davis needed to invest in a surface water source,” he writes and identifies, “Our individual bills will increase in coming years regardless of the rate structure used. The surface water project is a significant capital investment, wells need to be replaced and the overall system requires maintenance.”
“Fairness is always a matter of viewpoint,” he continues. “If the cost per gallon was constant, people living in condominiums might feel that subsidizing homeowners with lawns was unfair. The size of our water supply system is based on summer demand. A reasonable approach is to ask those most responsible for the size required to pay more for water.”
Professor Schroeder writes, “The tier system used by most communities addresses that issue by increasing the unit cost of water as use increases. Some communities, such as Santa Cruz, add a surcharge for out-of-city users as well. The Water Advisory Committee, after a long study ,determined that the CBFR structure was a more equitable approach to making the water rates fair.”
“Conservation will not significantly lower our bill under any rate structure. If we buy a car and leave it in the garage, our gas bill will be zero but we still must make the monthly payments. The same is true for our water system,” he continues.
Finally he adds, “The objection that the CBFR is too complicated is surprising. The calculations are quite simple; there is an example in our most recent utility bill and on the city’s website and there are only three numbers involved. For a community with the education level of Davis, this should not be an issue.”
—David M. Greenwald reporting