Sunday Commentary: Predictable Ending for URAC Process, Council Has to Decide

Elaine Roberts Musser and Herb Niederberger figure out how to proceed
Elaine Roberts Musser and Herb Niederberger figure out how to proceed

The result was almost inevitable as the council asked the URAC (Utility Rate Advisory Committee) to do something that they were not created to do, were not equipped to do, and should not have been asked to do – decide which rate options were the best.

The URAC was formed as the successor to WAC, but really with the idea of providing advice and oversight to make sure that the water rates were producing the revenue needed to fund the water project. They were not formed to do policy analysis or rate analysis.

It was a long and painful process watching a group of people first have to familiarize themselves with all of the issues that the WAC members learned over a year’s time, try to digest the information, and then attempt to get seven people with at least three and perhaps more ways of thinking to come up with a consensus rate recommendation.

That proved too much.

From the start, this just did not seem like a good idea. And to be fair, the URAC members made a go of it – they put forth an honest effort – and ultimately the downfall was not lack of knowledge, but lack of consensus.

But still, why put them in that position to begin with?

Part of the problem is that the councilmembers themselves are not necessarily up to speed on the water rate issues. Brett Lee has made the comment that he really does not need this kind of advice and he is correct. Brett Lee went to just about all (if not all) of the WAC meetings, and, while he had work obligations on Thursday, he has been to the URAC meetings as well.

So, naturally, he not only feels up to speed, but probably more qualified to weigh in on the water rates than others. Lucas Frerichs also attended a number of the WAC meetings.  But what of the other councilmembers?  The WAC was at least televised and videoed, so councilmembers with busy lives could return to those videos, but not so with the URAC.

Everyone has busy lives, so I understand not being able to make all of the meetings, but punting the decision to a volunteer citizen body seems like looking for political cover rather than making smart policy decisions. And, yes, there are members who have experience and expertise, but this body, again, was not formed for these purposes.

That leads me to a critical point – do we really need to rush this process through? The council was prepared to look at the rates regardless of Measure P’s outcome, but, by the passage of Measure P, the city’s water rates will revert to the 2010 water rates which do not provide the revenue needed to move forward with the process.

Michael Harrington can be bombastic, he can be inflammatory, he rubs people the wrong way, and he is certainly obstructing and may probably still be attempting to kill the water project. However, he is not necessarily wrong when he accuses the city of crying wolf at predictions of the sky falling.

Go back to the Fall 2011 referendum drive and Stephen Souza was launching a counter-signature gathering process where the flier stated, “Think before you sign!  Forcing a vote on the clean water project is a delay which will cost rate payers more money.”

At the bottom it read: “Failing to act now could result in a loss of our water rights.” It continued: “The state water right is conditioned on the active use of the water. Delaying could jeopardize that state right.”

But, as we know, the referendum qualified, the council pulled back, implemented WAC, and the city put a better conceived project on the ballot that the voters supported.

However, Mr. Harrington was not satisfied with the fact that the water rates themselves were not on the ballot, so we got Measure P. The city warned of dire consequences and liability if Measure P passed. Those claims ended the day after the election.

Herb Niederberger told the URAC two days after the election that, as long as the rates are in place by October 1, the city can still get low interest rates.

Mr. Harrington would respond, “From my experiences with other public works programs I refuse to automatically accept the sky is falling.”

And Mr. Harrington has a point – each step along the way we have been warned that the train is leaving the station, there will be dire consequences, and the sky will fall on the project if we do not proceed and there will be dire consequences if the sky does fall on the project.

Now here’s the problem – I don’t know what to believe anymore coming out of the lips of the city and, in particular, Herb Niederberger. The claims that the sky is falling are starting to sound like the little boy that cried wolf.

The problem with the wolf crying analogy is that the lesson is so often misconstrued as an anti-lying lesson – do not lie (or in this case embellish) or you will no longer be believed. That analogy certainly should serve as an object lesson for the city staffers not to make fantastical proclamations, because when the real crisis hits, the citizenry will no longer be responding.

However, there is a secondary lesson that citizens like Michael Harrington ought to adhere to and that is that, while it is true that the city embellished, that does not mean the next time they won’t be right. After all, what killed the sheep was not merely the lie but complacence on the part of the villagers. And if the citizens of Davis become complacent, they may find themselves paying much higher rates.

It is essentially a game of Russian Roulette – just because you avoid the catastrophic end result your first three rounds does not guarantee safety the fourth round.

Just because Mr. Harrington’s game initially resulted in lower water rates does not mean that subsequent rounds will do the same.

At this point the council has to proceed even in the face of another potential lawsuit and threats to put the rates on the ballot.

We have an unfortunate situation where Herb Niederberger seems to have disobeyed council direction that he find a way to create an adequate record, and has gone against Johannes Troost’s wishes that the meetings be officially recorded.

Mr. Niederberger’s explanation on Thursday was that he spoke to the city attorney and she said that he was not legally bound to do so. However, legally bound is not the issue – the council last week told him to do that and he has failed to respect their wishes.

That is unfortunate in the wake of a non-decision. Fortunately, so far two members have published their accounts of their rationale.

We have Greg Clumpner who supported various forms of the 60-40 conventional rate structure and Richard McCann who supported a Summer Tiered rate. We also have various communications from Donna Lemongello and Matt Williams.

That is not the ideal situation, but we will have to make do.

The critical issue that divides the URAC is, frankly, the critical issue that will divide the council and possibly the community – the seeming tradeoff between social equity versus the need for revenue certainty and drought resilience. If this meeting was any reflection, these issues will not easily be resolved.

In the end, the URAC was unable to bridge this gap, despite efforts by Frank Loge to craft a motion that would have the council attempt to implement a rate that has an 87 variable charge and a 13 percent fixed charge, finding a way to create the cash reserve that Mark Northcross stated on Tuesday that council would need in order to get approval from bonding agencies.

However, Mr. Loge attempted to hedge the bets by having bonding agencies evaluate the plan in advance. Rate consultant Doug Dove echoed much of what Mr. Northcross stated on Tuesday – that the rates could work, but they would require a cash reserve and may result in higher interest rate charges.

Sandwiched around Frank Loge’s motion were two motions that were similar to one another, one from Elaine Roberts Musser and one from Greg Clumpner.   Both Ms. Musser and Mr. Clumpner were of similar minds for the need of a conventional 40% Fixed and 60% Variable rate structure, believing that the difference between 60-40 and 87-13 was not sufficient money to make a huge difference, but the need for revenue certainty was critical.

Ms. Musser pushed Option 3, a conventional with uniform tiers, and Option 1, a conventional with tiers, in her case breaking at 18 (rather than 10) ccf. Mr. Clumpner pushed 3, 1, 2 in that order. All of these were conventional, and the only difference was tiering at 10, 18, or uniform tiers.

This is the issue that the council seems divided on and the fate of 87-13 probably rests with the ability to create enough of a cash reserve so as to satisfy the bond experts that the rates are drought-proof.

The council will now have to weigh these issues without additional guidance from the URAC, but, in a way, that is how it should be – relying on the elected officials who are accountable to the public rather than the appointed URAC which is not.

—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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30 Comments

  1. dlemongello

    ” Mr. Loge attempted to hedge the bets by having bonding agencies evaluate the plan in advance. Rate consultant Doug Dove echoed much of what Mr. Northcross stated on Tuesday – that the rates could work, but they would require a cash reserve and may result in higher interest rate charges.”

    For me, the crux of the matter lies right here. I believe the 87% Variable/13% fixed rate structure is most fair. Coupled with it’s built-in feature to automatically correct for revenue loss due to less consumption, I also think it is revenue resilient. And I think it will generate the necessary 25% cash reserve. If with all these features in place we can get the same or better financing (as stated in Dr. Loge’s motion) as the 60% Variable/40% fixed structures, then this is the way to go in my opinion. But if with all these features in place we still would have to pay higher interest rates, then I am responsible enough to know that would not be worth it. They MAY result in higher interest rates, or they MAY NOT. Let’s find out.

  2. Ryan Kelly

    I don’t believe that the City is crying wolf. If this goes on we will be paying higher rates. Mike Harrington is playing a game of delay, delay, delay in an effort to kill the project. There is just so much wrong with the threats that he spews, information that he implies he has but never states clearly, the false accusations and conspiracy theories he repeatedly expounds, the manner of his delivery – viciously attacking one minute and then a slimy over-friendliness, declarations of him being a victim, a hero and a reluctant participant, a leader of legions, a follower, an advocate of the poor and middle class while advocating for relief for the upper middle class homeowners.

    Just because he manages to get something right for a moment in time, does not wipe out all of the damage he causes and the money we have spent in staff time and legal fees and lost opportunities. People are tired of this . I wonder about the long-term effects on the community – the reluctance to participate in local governance. Mike has become one of the “personalities” (his own term) who tarnish life in Davis.

    1. Barack Palin

      “I don’t believe that the City is crying wolf.”

      How many times has the city and some of the rate makers cried doom that has yet to materialize? Yes, I believe the City is crying wolf.

  3. Ryan Kelly

    My god, do you listen to what you are saying? A warning is given for potential effects of an action, a work around is found to avoid the unwanted effect, and the warning is then criticized.

    A person is warned that he might go to prison, but his hard-working attorney secures a sentence of probation and community service. Does this mean the attorney was crying wolf?

    A student is warned that he is at risk of failing a class, but by studying hard to do better on the final, doing some offered extra-credit, and a wobbling of grading by the instructor, he squeezes out a passing grade. Is the teacher crying wolf?

    This is just another false allegation that has been repeated enough times by Mike Harrington that people have started to believe to be true and has absolutely no value in helping the process. It is a false reasoning to take no action, to delay action, to not move forward.

    1. David Greenwald

      Ryan: While I think you make a decent point about the warning regarding impacts of an action, from my perspective the warnings are always based on worst-case circumstances that we pretty much can reasonably guess will not come to fruition. I think Donna’s point above is accurate – ” it does not leave one much to go on and really erodes at that ever so important issue of TRUST.”

    2. DavisBurns

      Ryan, Tia. I agree with you. If the city council proposed rates originally that might hopefully cover all the expenses with maybe a 1% margin of error we would criticize them for being fiscally reckless. And if it failed to cover expenses we could bitch endlessly. Seems to me they should be cautious about exposing the city to rates that will fail to generate adequate income. I can agree they could have done more community outreach the same as with the new street lights.

      1. dlemongello

        There were problems with the rates that were just rescinded, but generating enough income was NOT one of them. They would have kicked in Jan 2015 and if consumption in 2015 is anything like 2013 or even 2012, we’d be riding a surplus to the tune of ~$5 million, not a deficit.

        1. dlemongello

          And the same holds for the rates Matt and I are proposing now, a $5 million surplus in one year if consumption is same as 2012 and $5.4 million if same as 2013. And that surplus, if generated, becomes a cushion against any future fall of consumption and revenue.

          1. Matt Williams

            Once the Revenue Stabilization Reserve Fund reaches the appropriate level to ensure the lowest possible interest rates, then any annual surplus thereafter can be used to pay for capital infrastructure maintenance projects on a pay-as-you-go basis and avoid any interest and borrowing costs, thereby pushing the overall Revenue Requirement lower. It can also be returned to the ratepayers in the form of lower rates in the next 12-month period. The annual water rates review that Council member Swanson called for is an ideal vehicle for considering the best way to deal with any surplus.

  4. Ryan Kelly

    So what is the solution? Would we rather the City staff be mute?

    There is only a growing mis-trust because Mike promotes it. Taken in context – Mike’s allegations that the water project is an elaborate scheme for explosive residential growth by developers and the politicians they have in pocket, etc. – this is just one of many rumors and false allegations that he spreads around. It has no purpose other than erode public trust. It doesn’t help the process and creates a hostile working environment for staff, elected representative, and volunteers.

    I urge you not to be a vehicle for a carefully crafted campaign of obstruction.

        1. David Greenwald

          I didn’t use the word. I don’t think the city was dishonest, rather they embellished an unlikely outcome and downplayed the more likely one – which is what actually happened.

    1. Barack Palin

      “Mike’s allegations that the water project is an elaborate scheme for explosive residential growth by developers and the politicians they have in pocket, etc. – this is just one of many rumors and false allegations that he spreads around. It has no purpose other than erode public trust. It doesn’t help the process and creates a hostile working environment for staff, elected representative, and volunteers.”

      So you accuse Harrington of rumors and false allegations but in turn want to give the City a pass for what many believe are doing the same thing.

  5. David Greenwald

    “I urge you not to be a vehicle for a carefully crafted campaign of obstruction.”

    First, I think it’s more opportunistic than carefully crafted.

    Second, if you read what I said in the article above, I said that while Michael Harrington has a point, he also risks future costs by assuming that he can delay indefinitely as at some point the worst case scenario will come true.

    I think each side here is guilty of minimizing the other side’s points and that disconnect leads to suboptimal community outcomes.

  6. Tia Will

    “It is a false reasoning to take no action, to delay action, to not move forward.”

    I am in complete agreement with Ryan on this. I have never yet heard “the city say that any dire consequences were going to happen, only that there were potential adverse consequences. If people choose to take any statement of possibility as a statement of inevitability as is being portrayed by Mr. Harrington, they are doing so willfully and at their own peril. I would hope that enough people are willing to consider each possibility on its own merits and not get drawn into the game which Mr. Harrington is advocating of “guess which consequence “the city” is lying about.

    1. Matt Williams

      the game which Mr. Harrington is advocating of “guess which consequence “the city” is lying about.

      Maybe we need to call on John Charles Daly, Dorothy Kilgallen, Arlene Francis, and Bennett Cerf to arbitrate this dispute.

  7. Michael Harrington

    I won’t make any bones about it: it’s tough to reverse two CC 5-0 votes on a quarter billion dollar controversy. Of course the project apologists are going to be hostile.

    Everyone knows, right, that the sudden well shut down in west Davis just before Measure I vote was actually either intentionally manufactured high manganese content or grossly negligent well management? Comes from our friendly water utilities staff who are still telling us CC needs to vote NOW on rates or the world collapses?

    1. Don Shor

      “Everybody” except people who operate wells, people who study ground water, and people who regulate water systems. You’ve just specifically accused city staff of malfeasance or negligence. You’re a lawyer. You should know better than to make false accusations in public.

    1. David Greenwald

      That’s the beauty of the parcel tax. They won’t be able to do that.

      Maybe I should write the “which is it” for you, yesterday day you were dancing to “Renew Davis” and today you are going after the parcel tax, so which is it?

  8. Michael Harrington

    I want language that our fiscal conservatives approve. The mayor mentioned last week using the new parcel tax to backfill the general fund about a million dollars. Do that and those dollars go to fat packages for senior employees.

    Not going to happen

    Let’s renew Davis —- together.

  9. tj

    Climate change — what impact will this have on the project?

    It’s reported that each degree of warming adds 7% more moisture to the atmosphere, in which case storms will carry much more water. And drastically higher sea levels might have an impact on the project too.

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