Sunday Commentary: Seemingly No Way to Avoid the Water Rate Train Wreck

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

Tuesday’s meeting may have been one of the most contentious we have had since Mayor Joe Krovoza took over as mayor of Davis in early 2011. Certainly since Brett Lee and Lucas Frerichs joined the council two years ago.

The truth is that the stakes here appear to be very high but the path to avoid those stakes is very unclear. The reality is that Tuesday’s meeting represented two separate train wrecks coming to a head – but both are related and tied into the Measure P vote.

Many have pinned the blame on the rejection of the water rates through the passage of Measure P on CBFR. I have a somewhat different take on the results, which I believe are more complicated than simply a rejection of CBFR, which was an issue in play in 2013 when the voters approved Measure I.

If you look at the results in March 2013 and compare them to the results in June 2014, you realize something very interesting. In March 2013, No on Measure I received 6802 votes. In June of 2014, Yes on Measure P received 7058. In other words, nearly the same number of people voted for Measure P as voted against Measure I.

What changed drastically is the side supporting the water project fell from 8000 votes in March 2013 to just under 6800 in June 2014. Fewer people voted in the June primary as voted in a March 2013 special election.

Just as earlier we laid blame for the parcel tax polling numbers on the lack of campaigning by the Measure O campaign, we lay the same blame here. In March 2013, they hired a political consultant, hired Will Arnold as campaign manager, identified their likely voters and mounted a robust campaign. The result was that 1000 more people voted in the special election than voted in the primary election.

That is a point that just about everyone should keep in mind for a number of things, but for our purposes here, it illustrates the point that the reason the water rates went down is not necessarily CBFR – which Bob Dunning campaigned against for sixty days leading up to the Measure I election, but rather complacency on the part of the water supporters.

As the story continues, the blame of CBFR underlies two other factors that emerged on Tuesday. Matt Williams was walking precincts in the spring and recognized that Measure P was going to pass and identified the look-back as a critical factor. In addition, while CBFR created a much more equitable rate, he and Donna Lemongello found a way to make it even more equitable.

Staff Drags Their Feet, Intentionally Sabotaging Williams-Lemongello

They came forth with their modifications right before the election. At that point, the council was concerned about the rates and willing to look in alternate directions. However, city staff, in particular Herb Niederberger, deliberately disobeyed council direction and he dragged his feet on properly evaluating what has become known as Williams-Lemongello water rates.

As Donna Lemongello writes in today’s paper, “It is really unfortunate that what I essentially begged, on June 17 (or was it the 10th?), for the Council to have done, an analysis for the comparison of all the water rate structures side by side, will most likely never happen.”

She continues, “As I said that night, if we had that, and if the URAC had had that, the decision would have been made much easier. The decision could have then simply moved to differences of opinion on policy and how these structures fit into policy.”

“We were never allowed to combine all the information into a comparable, accurate and consistent format to simply make these numerical graphic comparisons. Instead what we got was a presentation by the consultant to council and to us citizens, of inconsistent, incorrect, misleading and therefore meaningless graphs, that cost money for the consultant to make,” she writes. “Anyone who thinks for just a moment realizes how senseless and frustrating that scenario really is.”

This led outgoing Mayor Joe Krovoza to unload on Herb Niederberger on Tuesday.

He said, “I would like to ask if staff has worked with Williams and Lemongello to understand the rate resiliency of their proposal.”

Herb Niederberger answered in the affirmative, “One of the reasons that it generates such a surplus is they have a different starting point.”

Mayor Krovoza responded, “That’s not my question.”

Mr. Niederberger stated, “Yes we understand the rate resiliency of the Williams-Lemongello.”

Mayor Krovoza stated again, “That wasn’t my question. My question was has staff worked with Williams and Lemongello to understand the rate resiliency and worked with them on the question?”

He questioned him harder, “You’ve worked with them?”

Mr. Niederberger answered that Matt Williams furnished them with the rate resiliency and presented it to the URAC.

“And you consider it not rate resilient,” the mayor continued?

“Again they have a different starting point,” Mr. Niederberger responded. “They put a conservation number in year one, whereas all the other conservation numbers were based over time.”

But Mayor Krovoza disagreed. “Everything I have heard, you have not worked with them to try to make it rate resilient. Everything I have heard is they have an idea, an idea I believe that matches our community’s values so much better and for weeks and weeks they’ve been stonewalled in being able to work with quality staff to figure out if they can make it workable.”

He argued that at this meeting they once again received the staff’s 60-40 presentation and were “in my mind not getting a good faith effort to see if this rate structure could work for us.”

“I am terribly disappointed, I think that this is decision making at almost its very very worst at this point in time,” he said. “I am not going to support this. We are moving forward toward a rate structure that is less conservation oriented than we have at this point in time.”

He would add that we are only at this point because staff has stonewalled for months and “it is absolutely equitably unfair and even unconscionable.” He added, “This a huge step backwards for this city.”

Brett Lee Pushes for 60-40

On Tuesday, Brett Lee seemingly reversed course and decided we needed to implement as vanilla a rate structure as possible.

“At this point, I would like to have a very super vanilla rate,” he said. The advantage, he said, is that Bartle Wells has been legally vetted. In the long view, he said, we can always do a new Prop. 218, “we can do something that is the vanilla rate and we can give the URAC the time and the resources.”

He said that Matt Williams and Donna Lemongello have been working on the rate structure, but he said he cannot in good conscience support it when he doesn’t believe it has been fully vetted.

He said, “We got it wrong last time.” He then added, “I believe we got it wrong but we were set up to get it wrong because we were making the decision with a deadline. It wasn’t really clear how this cute, elegant solution was going to be deliberated.”

Brett Lee’s view goes as follows.

First, he thinks that a 60-40 rate structure is tried and true, and would avoid not only a legal challenge but is less likely to be challenged by another initiative.

Second, he believes that if we have our rate structure in place, we will be eligible in the fall for state revolving loans.

Finally, he believes that while Williams-Lemongello might be a good rate structure – if it is vetted – it would be challenged legally, challenged with an initiative, and he believes it is inferior to the ultimate aim – a water budget.

Cost-per-ccf-across-conventional-rate-systems

From our perspective however, it seems that the conventional 60-40 rate structure is the worst of all world. When we look at cost per ccf, we most clearly see the problem with these rates.

The lowest user spends TWICE per CCF what the middle tier users at 11 CCF spend. And they spend THREE TIMES the amount that the highest end users use. They are effectively subsidizing the water usage of the top end users. As Matt Williams would state a few meetings ago, “That is not fair.”

The critical issue facing the council is the seeming tradeoff between social equity versus the need for revenue certainty and drought resilience.

Had Herb Niederberger allowed Matt Williams and Donna Lemongello to have access to Doug Dove of Bartle Wells and Financial Advisor Mark Northcross, we might have at least been able to see if there was a way forward.

Despite Councilmember Lee’s thinking here, it is not clear that a risk averse approach – going even temporarily in the direction of tried and true but inferior rates – ends this game any quicker. I continue to hear skepticism that the city will qualify for the state revolving fund, given that we have a private operator and our water is too good to qualify under the clean water act.

We do agree that the city needs to move forward, but it should move forward with the best possible rate. Assuming we will get a second bite at the apple is a recipe for more legal challenges and potential derailment.

—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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32 Comments

  1. Mr. Toad

    The reality is those who vote in proportionally higher numbers in Davis; the old, non-student, home owners, pensioners, landlords and nimby’s and sore losers of the past trying to generally screw things up are protecting their own interests. Brett is simply trying to come up with something to move us forward, something vetted by the courts and acceptable to the masters of the universe that buy our bonds. The good news is that low end users while paying more in the end per unit volume are using less water so they still have lower bills overall and that pleasing the bond raters saves us all a lot of money.

    1. Davis Progressive

      “are protecting their own interests”

      passing a 60-40 would protect their self-interest.

      “Brett is simply trying to come up with something to move us forward, something vetted by the courts and acceptable to the masters of the universe that buy our bonds. ”

      and wholly unfair to those who use little and pay three times more per gallon than those with huge water use.

      ” The good news is that low end users while paying more in the end per unit volume are using less water so they still have lower bills overall and that pleasing the bond raters saves us all a lot of money.”

      so you’re arguing for what is essentially a regressive tax because it’s convenient to you. how are you any different than the people you accuse of protecting their own interests?

      1. Mr. Toad

        Actually I’ll pay my water bill without complaint no matter what they pass and don’t see the amounts between the different rate models as big enough to worry about. I, like Brett, just want to pass something to stop the bleeding from the $200,000/month revenue loss to the city from measure P that threatens our ability to keep the city solvent and complete the water project. I simply want to get this done and move on to other issues.

          1. Don Shor

            So start at 60/40, build up a planned reserve, direct staff to actually work with the 87/13 rate proposal for future consideration, and ratchet down the fixed rate portion over a couple of years as the reserve is established. Something. Just do it.

          2. Davis Progressive

            if we do that, we might as well go to water budgets. however, my guess is that won’t happen.

          3. dlemongello

            We will not need the bond financing for a few years or not at all if somehow we get the SRF loan, so we could start with 87/13, have plenty of time to actually get a bond rating on it and if it did not hold up, get a bond rating on another structure that supposedly is A+, and adopt it later.
            I do agree we should adopt a rate now and not get too far behind in collecting the revenue we need to move forward and pay the bills.
            I hope you realize the 60/40 does not necessarily generate a reserve any faster and could do so slower, it’s all subject to what happens with consumption.

          4. Don Shor

            My assumption, based on studies I’ve read, the behavior of my customers, and simple logic, is: as rainfall returns and low-water landscaping continues to take hold, consumption will go down. So it is better to bank money from the fixed rate first, IMO, if that would have an impact on the bond costs. It’s the more reliable revenue stream.
            My point is: I understand your frustration, but the staff has seemingly sabotaged adoption of 87/13 at this time. I understand Brett’s analysis, and consider it practical and realistic. I suggest the council go ahead with whatever they can muster, and then take time to really review your proposal with consideration for adoption in a year or two.

          5. dlemongello

            Don, I accept your reasoning about consumption going down, in fact I agree. Of course the 87/13 rates can be set to generate more revenue at lower consumption, in fact right now they already are. That is the main discrepancy in the graphs that were shown. To be compared equally they need to be set to generate the same revenue at the same volumes of consumption.
            The overall effect is the 60/40 is 27% less dependent on consumption for revenue and charges 27% more independent from of how much water anyone uses and vise versa with 87/13.
            It is rather unfair to be sabotaged and as I said in my letter, I saw only advantages in simply doing the analysis.

        1. Davis Progressive

          that’s not the question. the question is not whether you’ll pay more, but rather how much more and who will be subsidizing your water use. again, you seem to support a regressive tax and i wonder why.

          1. Don Shor

            Set the rates to satisfy the bond sellers and pass legal muster and just friggin’ get it done. That’s why.

          2. Mr. Toad

            Because we need to pay for the water system. If you can get the votes for some other system you think is better that won’t result in more craziness I’m for that too but the council gave Matt Williams a bite at that apple and the voters rejected it, Now you want to waste a bunch of time over marginal cost differences. I’m not for regressive or progressive rates. I’m for any rates that work and will end the debate. You might say I’m for cloture rates.

          3. dlemongello

            Matt bit and got the worm, that does not mean the whole rest of the apple was bad. When I started working with him it had nothing to do with my own bill, it had to do mainly with the issues of changing tenants and the lookback, the lookbsck was the worm. The more one learns however the more one sees. So my bill finally became part of all that I newly saw so clearly. 87/13 $18.60 (a high month of 3 ccf) 60/40 $27.96, almost $10 a month. Need I say more? Oh, and that’s before the raise 60/40 to actually be comparable in generating revenue.

          4. Mr. Toad

            No you needn’t say more. I’m just wondering though how many people are there in this town are going to struggle with paying an additional $10 dollars a month?

          5. dlemongello

            But every $ can be spent any number of ways. I would not struggle (and I hope I never get to that point where $10 makes a difference), but I’d rather give it to the SPCA or STEAC or… Why should I spend it so someone who uses a ton of water pays less per unit volume AFTER fixed costs are covered and taken out of the equation. And I can only speak for myself, $10 might be food for someone.

          6. Mr. Toad

            You make my point clear. 60% more sounds like a lot until you realize we are talking about only $10/month more. In my mind its just not worth fighting over $10 bucks/month. In your mind perhaps 60% is a great injustice in the struggle between the rich and poor, the wasteful and the conservative. In the jargon of local taxes the difference is less than a Mischka’s latte a week. Oh and what do you get? You get water.Try living without it.

          7. dlemongello

            Mr.Toad, it really is not for you to say whether I should care about $10/month making a difference in my life. I had thought of saying please don’t come back with the latte thing, Oh well. I don’t drink coffee and would not waste money on such things, I have been frugal as hell my whole life and that is the reason I could afford the $10 , or that I can afford to live here, or any number of other things I worked and saved for. So why should I subsidize someone else, especially when that someone else probably can afford to p;ay for all of their own water.

  2. Tia Will

    “Despite Councilmember Lee’s thinking here, it is not clear that a risk averse approach – going even temporarily in the direction of tried and true but inferior rates – ends this game any quicker. I continue to hear skepticism that the city will qualify for the state revolving fund, given that we have a private operator and our water is too good to qualify under the clean water act.”

    I think that this is a clear illustration of how “tried and true” does not equal best. This is very similar to how
    “common sense” is frequently simply incorrect. I strongly agree that there is a need to move forward. I do not see how “plain vanilla” just because it has been in existence longer, is superior to a plan that emphasizes conservation and causes individuals who choose to use less water to effectively subsidize those who choose to use more for whatever reason. An analogy that comes to mind for me. The gas burning automobile would be the “tried and true ” default. The electric or hybrid is demonstrably a better product in terms of our overall health and that of the environment. Should we stay with “tried and true” because that is what we are most familiar with, or should we not move forward towards a better solution ?

    1. DavisBurns

      Exactly my argument for re-visiting the lighting at night issue. The trend across the world, and in Davis (because we aren’t as special as we want to believe) is for ever increasing lighting at night with illumination increasing between 5 and 20% per year. Follow that trend and by 2025 we will have changed the cycle of day and night that has existed during all evolution on earth. Darkness at night is tried and true. Illuminating the night at current levels comes with consequences we are just starting to understand. Right now, it is ‘common sense’ that more illumination is better, that the dark is dangerous. Just as we need to encourage conservation of water, we need to have an awareness that indiscriminate use of night lighting has health and environmental consequences.

  3. Robert Canning

    There were two photo’s for the above post but they did not translate. Let’s try again.

    Which of these two groups of people do we prefer to lead our city?

    This one:

    or this group:

    Personally I prefer the first group.

  4. Robert Canning

    Fair enough. First group was a photo of our current city council the other was the group pictured in the opening of this article. The contrast just struck me.

    1. Dave Hart

      One problem with your “choice” is that none of the people in the second imaginary photo are elected. That is why I wouldn’t want Measure P crew “leading” the city. They are not accountable to anyone. They used a fear campaign to convince us the CBFR was “unfair”, but they have no idea or ability to provide any leadership as to what is “fair” aside from throwing rocks. While the CBFR might not have been perfect, it was better than the 60/40 deal. So, no, I do not trust or want them to lead me anywhere. That said, I agree with the idea to just implement something that is not going to antagonize thelowestcommondenominator party led by Bob Dunning and get it over with. There needs to be a longer term plan and campaign to really involve the voting public on why a more sophisticated and nuanced rate plan is both more “fair” and more transparent. It might take awhile and would be worth the time and expense but it won’t be done before November.

      I want both Donna Lemongello and Matt Williams to know how appreciative I am at the work and creativity they summoned to devise something really good for the community and how saddened I am that their efforts were dismissed in such a disrespectful manner by the city staff and the Measure P crowd.

      1. Robert Canning

        Just to make sure I understand you Dave, I agree completely and my failed attempt at irony was exactly as your post states. I have no trust in the eight people pictured above to speak for me or what I believe is the best interest of Davis in the long run. They are a bunch of people who, based on a lousy 7,000+ votes (less than 20% of registered voters) seem to think they know best what is for the City and have declared victory. I believe David is correct that if a decent anti-P campaign had been waged they would have lost. But that opportunity is now past us. Shame on “us.” I am sorry Bob Dunning was not in the picture because he belongs there too with his holier-than-thou attitude. Every time he says “trust me” I cringe.

        And I totally agree with you about the work that Donna and Matt have done, and was so pleased when the Mayor rightfully dressed down City staff last week. Every time Mike Harrington gets up to speak at City Council and says “Here is what you need to do…” I shudder. Such arrogance.

      2. dlemongello

        It’s not over yet and Matt and I are working cooperatively with the consultant to do the very best job of presenting a comparable analysis so the Council and the people can clearly see what is on the table. May the best rate rise to the top. And thank you for your kind words.

      3. Mr. Toad

        I agree too and even though I think we need to get it done as quickly as possible and don’t see the rate differentials as a big deal I do appreciate Matt and Lemongello’s efforts.

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