Sunday Commentary II: What is the End Game for Water in Davis?

Proponents of the Water Initiative turned in signatures in January
Proponents of the Water Initiative turned in signatures in January

If you listened very carefully to the words of the City’s General Manager for Utilities, Herb Niederberger, at the URAC meeting on Thursday, he presented, if there were no pending lawsuits, a way forward for the city on roads. The problem, of course, is the no lawsuit portion of that way forward.

Michael Harrington has not overtly tipped his hand on this, but most people expect a lawsuit. The biggest danger, however, is that he has another, potentially much stronger, card to play than a lawsuit.

A lawsuit here is not unproblematic, however. One source told the Vanguard that Mr. Harrington’s lawsuit cannot halt the water project at this point. However, it could derail the possibility of getting the financing that would save the ratepayers at least $50 million on their base rates.

The city will be able to get financing regardless, but at a much higher cost. Mr. Harrington has taken pride in the fact that his petition for referendum resulted in a better project at a much lower cost, however, that starts to reverse itself if he continues to attempt to block the project from going into effect.

The city has laid out their scenario – the council figures out new rates by July 1, and puts it forward to a Prop 218 process implemented by October 1 and they can go forward largely unscathed.

However, the city is not taking into account the interaction between council action and the community. Already Mr. Harrington is signaling that there needs to be a new rate study and that the rates need to be on the November ballot for voter review.  The presentation materials from Bartle Wells at Thursday’s URAC meeting clearly signaled that the rate study portion of Mr. Harrington’s requirements is well under way.

While it seems unlikely that the city would agree to put the rates on the November ballot, Mr. Harrington at this point has the momentum and incentive to attempt to force the city’s hand.

And, while it is clear the city views Mr. Harrington as an annoying gadfly at this point, they have not exactly helped their situation.

First, from the start, back in late 2012, the Vanguard, Matt Williams, Michael Harrington and others all suggested that the city needed to have the rates completed before and/or tied to the ballot measure. Instead, the city insisted it was sufficient to pass a free-standing Measure I and have a separate process following Measure I for the Prop 218 hearing.

The Vanguard warned the city at the time that this was a bad idea, however, Harriet Steiner insisted. The result is that, after that process wrapped up, the opposition simply took their time and got the signatures needed to put the rates on the ballot.

Second, the city did not take the threat of the Measure P initiative seriously. Much as it had a huge amount of time to discuss the city’s fiscal position with the voters, the city had a huge amount of time to educate the voters about CBFR, the advantages, why it was better to go to this model rather than a traditional model with meters representing a huge percentage of the fixed cost, and thus forcing a much higher per gallon rate on low-end users.

The opponents of Measure P were outworked and outspent on the campaign and paid dearly.

Third, there was already a substantial level of distrust by the voters on the water rates and the overall management of the city, and that was amplified by revelations late in the process that the city had switched the rates without notifying council, and other factors.

People want to blame Michael Harrington for all of this, but the city bears huge responsibility for creating a climate where the actions of Michael Harrington and other activists were able to succeed.

The URAC wants to study the rates, but this is all a lesson in futility unless the city can set forth a process that all agree to.

While the city sees a lawsuit as a potential threat to the rates, a bigger threat is another ballot initiative that would push the question well past the October 1 timetable laid out by Mr. Niederberger.

Is the city council going to finally agree to put the rates on the ballot as Matt Williams and others suggested back in 2012, or will they allow the process to be subjected to chance? Will they risk that Mr. Harrington will not follow through and force the issue onto the ballot again or that the voters will be more understanding of their position this time around?

These are huge stakes and already the process seems to be moving in the wrong direction.

—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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  1. Ryan Kelly

    The rate structure has never been Mike Harrington’s true concern. Stopping the water project is his goal. He has been fairly up front about this. People who sign on with him and participate with his schemes need to question themselves as to whether they agree with this goal before following his lead. I can’t help but wonder about Mike’s motives. Does he harbor anger toward certain people in town and this is payback? Or is his determination to stop any potential for new development make him deaf and blind to the problem the project will solve. Regardless, it looks like any action by Mike will cost the ratepayers more money, even if succeeds in the collapse of Davis’ participation in the water project. People need to make the decision on whether to participate.

  2. Michael Harrington

    The voters demanded repeal of unfair rates. The City needs to follow a careful transparent and public process to adopt new rates. The repealed rates were partially the product of back room deals between certain business interests and members of the CC. That’s why homeowners got stuck with paying 40% more per gallon. I saw it happen.

    The new rates have to be fair where people are charged equally and the new rate structure has to be on the ballot for a citywide vote. Measure P explicitly calls for that. My friends and I will require the CC to honor that mandate from the voters.

    Interesting that the day before the election out City Council and City Utilities Manager were screaming that if P passed we were all doomed and the project was dead. Now last week the same staff member said that’s actually not true. He should be fired for his misinformation dispensed to
    the public .

    And now this same staff member wants the voters to entrust him with a parcel tax to pay for his other programs?? Want the parcel tax? Fire the staffer who gave us these horrible rates and attempted to mislead the public.

    1. Don Shor

      Mike, here is an excerpt from the ‘impartial analysis’ of Measure P.

      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.
      Harriet A. Steiner
      Davis City Attorney

      So as to your comment

      the new rate structure has to be on the ballot for a citywide vote. Measure P explicitly calls for that.

      … it seems Harriet disagrees. But I couldn’t find the text of Measure P to see for myself.

      1. David Greenwald

        “it seems Harriet disagrees.”

        I’m not sure that’s a good thing. She was able to win the court battle, but on the political front some of her recommendations have harmed the project.

          1. Mark West

            I don’t see anything in the text of Measure P discussing a new vote, let alone requiring one.

    2. Matt Williams

      Measure P language = “Shall an initiative ordinance repealing Ordinance No. 2405, which adopted increased water rates, and putting water rates in effect prior to May 1, 2013 back into effect, be adopted?”

      Council Resolution establishing Measure P language = “Resolution Ordering an Initiative Entitled ‘An Initiative Petition to Repeal Water Rates Applicable to the City of Davis Water System’ to the Ballot for the Previously Called June 3, 2014 Municipal and Special Election, Directing the City Attorney to Prepare an Impartial Analysis, and Providing for the Submittal of Primary and Rebuttal Arguments.”

      Initiative language =
      Final Slides
      The legal question is whether the language of the Initiative is incorporated into Measure P. If it is, then section G of the Initiative becomes very interesting to ponder.

      Section G language = “Voters have not been given the opportunity at a regular, direct election to approve recent water rates increases, despite the voters’ clear statement in the successful Fall 2011 water rates referendum that the voters desired to repeal or vote upon such large increases.”

        1. Matt Williams

          That is their point. The referendum was successful in meeting the signature threshold, but it never was voted on. The December 2011 rescinding of the rates by Council was done with the commitment by Council that the referendum vote would take place once new rates were established by the proposed WAC process. It is their contention, memorialized in the Initiative wording, incorporated by reference in Measure P that to date no such vote has taken place.

          I’m not a lawyer, so I can’t give an informed opinion on their logic; however, there is a clear chain of public events that confirms the events they describe … which in my lay opinion, leaves open the legal merit of the position for which they advocate.

          Groundhog Day

          1. Mark West

            When the rates were rescinded, the referendum against those rates no longer had any validity. There is no basis for applying that referendum to some future set of new rates. It does not matter how many times they refer back to it, the referendum is no longer valid.

          2. Matt Williams

            When Dan and Rochelle orchestrated the rescinding of the rates in December 2011, the Council made very clear commitments that the spirit of the referendum would be honored, which meant the citizens would get to vote. One of the main dialogue themes during the referendum signature gathering process was the “disenfranchisement” of all the people who both rent and pay for water. As I remember it, the Council was clear that they both heard and understood that issue, and that the people who pay for water but don’t own would get to vote. That vote brought on by the referendum was on a trajectory to happen in the spring of 2013, but because of self-imposed deadlines the Council presented to the people a very different vote in the form of Measure I. The argument we are now hearing is a continuation of the argument that many in the community made at the time … that Measure I sidestepped the spirit and intent of both the 2011 referendum and the December 2011 commitment by Council.

          3. David Greenwald

            Mark: I think Matt’s point is slightly different from the one you are raising which is that the council upon rescinding the rates made a commitment, not that the referendum was legally binding.

            Council I think has politically erred by trying to sidestep the referendum and the concerns of the people. The public appears to support the surface water project in concept, the trickier aspect is the rates.

            I’m still very concerned that the impact on low income people has not been adequately addressed.

          4. Mark West

            Matt: There is no evidence that appeasement will be a successful strategy when dealing with folks who are committed to a win at any cost approach. The City should ignore the blather and stick to the legally mandated process for setting new rates.

          5. Matt Williams

            Mark, I’m not advocating one way or another in what I am posting … simply reciting the facts as I know them.

            With that said, there more than likely is an endgame somewhere in this mess, and it would be wise for us to find it.

  3. Dave Hart

    I’m sure Mr. Harrington is feeling very powerful at this point in time. I agree with Ryan Kelly that all he cares about is killing the water project. I take as evidence his assertion that the new rates are “unfair”. What the Measure P election was about was not the “fairness” of the rates but the age-old issue of asking people to voluntarily accept higher prices for something. That is an easy campaign to wage. The city was always in the position of having to wage a much more difficult campaign that required a much broader and deeper discussion of the need for the project and how it should be paid for. I’m still not convinced most people even recognize the need for the project and Mr. Harrington will continue to be successful in undermining it in the absence of broad and deep public support.

    Whatever new rates the URAC comes up with will be seen as fair when a broader and deeper understanding for the project itself is in place. So, I think it is time to slow down and find a way to engage more people, more deeply on the project itself as well as how much it will cost and how it will be paid for. Maybe the city needs to think about putting some opinion survey and public contact outreach expenses on the mortgage. It would be money well spent.

    1. David Greenwald

      The problem now is that (A) the rates were shown to be unfair and (B) the city was shown to be less than honest on a number of fronts and that will further undermine potential voter trust.

  4. Michael Harrington

    Hart: actually, not. I’m a volunteer for much of this city-induced debacle. Blame me and the Yes on Measure P Committee and you are just blaming the victims. Oh, and you would be blaming the voters too. Let’s just wait for the final count, please?

  5. David Greenwald

    “Interesting that the day before the election out City Council and City Utilities Manager were screaming that if P passed we were all doomed and the project was dead. Now last week the same staff member said that’s actually not true.”

    Michael Harrington has a point here. The city did present the worst case scenario as though it were for certain going to happen. There gets to be a bit of wolf-crying here that is likely to undermine future claims, including legitimate ones on the consequence of failing to pass Measure O.

  6. Michael Harrington

    The public demands to vote on the rate packages that are needed to pay the huge cost of the water project. Two sets of rates have gone down. The public will have its chance to vote on the third proposal.

    Also, according to Measure I’s clear language and intent the city had a moral ethical contractual and legal duty to get the rates right before committing contracts to spend our money on the surface plant. This is coming up soon.

  7. Ryan Kelly

    I’m glad that our City Staff have found ways around Mike’s legal maneuvering to derail a project that the community voted to approve. I’m impressed that they are doing such a good job under the circumstances. Unlike some, I do not think that they are involved in some conspiracy to ruin Davis.

    I wish Mike Harrington would leave Davis. He is clearly full of anger and hate and is poisoning the civic life of Davis for many.

  8. Tia Will

    ” The repealed rates were partially the product of back room deals between certain business interests and members of the CC. That’s why homeowners got stuck with paying 40% more per gallon. I saw it happen.

    If you actually saw this happen as you said Michael, I would be very interested to know what specific members of the business community and which specific members of the City Council were making these clandestine deals you claim to have been a witness to.”

    This sounds like it might be illegal. Or perhaps what you really mean is that you would like to think, or more importantly cause others to think that you were a witness to such activity to sew more doubt. That would certainly make more sense in the absence of a willingness to name names.

    1. Don Shor

      back room deals between certain business interests and members of the CC

      Yes, I’d be very interested to know which business interests and which CC members.

      1. Matt Williams

        Tempest in a Teapot

        Here are the facts, which I only know second/third hand. After Council approved the rate structure on December 18, 2012, key members of the Davis business community looked at the $29 million annual Revenue Requirement for the years 2018 through 2025 presented in the Bartle Wells materials from that night’s presentation, and then compared it to the most recent $10 million annual Revenue Requirement for the 2010-2011 period. Simple subtraction showed that $29 minus $10 meant that $19 million per year of disposable income was going to be extracted from the Davis economy in 2018. Doby Fleeman had been beating that drum in public comment from the lectern in Council Chambers well before December 18, 2012, noting in his comments that the City needed to have a plan for replacing that $19 million of economic activity.

        When it became apparent that no such disposable income replacement plan was forthcoming, those same members of the business community proposed that the $29 million Revenue Requirement be reduced to $25 million by borrowing the money needed to pay for $44 million of pay-as-you-go capital maintenance expenses for the current water system rather than paying cash from revenues for those $44 million of expenses. Their argument for that change was that the resultant $4 million increase in disposable income in Davis would produce more economic benefit to the whole Davis economy than the borrowing costs would be. Council directed staff and Bartle Wells to analyze that alternative, and the resultant analysis was presented to the public and Council on January 15, 2013.

        After deliberation, Council directed Bartle Wells to adjust all the rates for all the user classes downward by a uniform percentage equal to the difference in the overall Revenue Requirement (from the old $29 million to the new $25 million). All classes of water customers benefited equally from the reduction. Everyone received the same differential percentage decrease in the final approved rates.

        Those are the facts. Now we get to the mythology. Michael and many others in what would become the Yes On Measure P core group looked at the people who were part of the key business leadership team and jumped to an erroneous conclusion. Doby Fleeman and Jennifer Anderson own Davis Ace. Reed and Jhn Yeomans own Hallmark Inn and Seasons Restaurant. heir interest, and the interest of the other business leaders who joined them was for the thousands of businesses like theirs that rely on the purchasing power of the disposable income of their customers. Where the mythology overwhelmed fact was that some of the business leaders also are the owners of apartment complexes in Davis. It took very little time for an erroneous conclusion to gain traction that the December – January disposable income discussion was really a nefarious “back room” scheme to give a special price break in the water rates to apartment owners, and only to apartment owners. The story had such delicious political overtones that it was quickly adopted as gospel. No effort was made to point out that the January rates decrease was equal across the board for all classes of customers and/or that all Davis businesses benefitted from the additional $4 million of annual business that the additional $4 million of disposable income produced.

        What is ironic is that the Yes On Measure P supporters actively advocated for lower rates during their campaign, and the reduction of the Revenue Requirement for $29 million a year to $25 million a year accomplished that very thing that they were arguing for … an across the board rate reduction. However, the people who brought about that across the board rate decrease are excoriated … such is the nature of politics. Don’t let facts get in the way of a good political argument.

    2. Matt Williams

      Nothing illegal about it Tia. It was done openly, and in the interests of all consumers and businesses in Davis … with the benefit being shared proportionally by all ratepayers.

      1. SODA

        Matt, I am still confused about the role of city staff (apparently Herb since Dianna has left?) in ‘changing’ the CBFR formula or calculation without CC (at least ?Brett) and your knowledge. Is that a myth or a fact and how important is it? At face value it is disturbing to me and adds to the mistrust (and true confusion about rates) David has been writing about. And did the URAC know this?
        Can you clarify: myth or fact?

        1. Matt Williams


          The change that Brett is referring to happened prior to the WAC adopting CBFR. It was a change that was a result of concerns raised by Kelly Salt, the City’s Prop 218 expert lawyer and Doug Dove, the City’s rate consultant. Those concerns had to do with how the per ccf Supply Charge was to be calculated in Frank Loge’s and my original proposal. They felt that the annual dynamic nature of that calculation would not meet Prop 218’s noticing provisions. As a result, we converted that dynamic calculation into a pre-calculated $ per ccf Supply Charge, which in Kelly’s and Doug’s opinion would comply with Prop 218’s provisions. Kelly provided Dianna with a written legal opinion giving the pre-calculated CBFR her blessing, and that opinion document was forwarded to the WAC members prior to the November 15, 2012 WAC meeting.

          Staff and I were involved in those discussions. The e-mail communications that were a part of those discussions were part of the Administrative Record provided by the city to the Yolo Superior Court as part of the YRAPUS case. The city has acted in a wholly above board manner in this. The community dialogue that has surrounded water since the events of November 2012 has morphed factual information into subjective opinion, and occasionally that subjective opinion has been spun into political messages as part of the political process.

          With all the above said, as I heard Brett’s comments about the morphing of his understanding of the Supply Charge calculation methodology, he at no time indicated that staff had changed anything without either the Council’s or my knowledge. The CBFR calculations didn’t even make it to Council until December 11, 2012, and the “change” happened almost a full month earlier prior to the the November 15, 2012 WAC meeting. Brett did, very wisely, observe that the calculation change does allow us (the ratepayers and staff and the council) to jettison the “look-back” feature of the rate structure … as Donna Lemongello and Bob Dunning have argued for for a long time. That change is important, and it fully merited Brett’s motion on May 27th and the council’s 5-0 vote passing that motion.

          Regarding “importance,” at the time the calculation change was extremely important. If the change had not happened, then Kelly Salt’s legal opinion and Doug Dove’s rate consultant opinion would have been very different, and I do not believe the WAC would have been willing to take on the Prop 218 noticing compliance risk. In terms of how important that change is now, it is important if the factual dialogue about the events can continue to be morphed into political spin.

  9. Ryan Kelly

    So once again Mike Harrington’s accusations are false. He spends so much time criticizing staff and others. He should look at the outright lies and misconceptions he spreads. He either can’t or won’t understand the City’s efforts to respond to the concerns of the public. I think he hates the “moving target” and maybe that’s why he repeatedly calls for the City to slow down or stop. People need to ask themselves if this is the person best equipped to lead them and if this is the direction that they want to go.

    1. Davis Progressive

      some of harrington’s accusations were proven accurate. some of the city’s claims were proven false. it seems that neither side has the absolute monopoly on the truth.

  10. Ryan Kelly

    You are right, but Mike seems to linger on the past and repeats accusations over and over in an effort to make them true. He never edits his material over time. Some of his accusations involve the distant past which is difficult to respond with an explanation. Some of the accusations are from his imagination, which are exceedingly difficult to respond to. This is a strategy designed to diminish the character of his opposition and create uncertainty and distrust.

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