An argument was made on the Vanguard yesterday with regards to CBFR. I do not believe this to be a moot point here. There are still some decisions that will be made about rates and future lawsuits that have a strong bearing on this.
Michael Harrington wrote on Friday, “Bob got it right with the surface water project and rates. From January 2013 on, he hammered the CBFR look back, and the sky high summer rate differential. He also got it right in the fall 2011 water referendum’s demand to vote on the rates.”
There is a view in this that everyone believed that CBFR was good, except for a small group of people led by Michael Harrington and Bob Dunning, and that they ultimately proved to be correct.
But that is a somewhat revisionist view. First of all, while CBFR was by no means perfect, it did represent a dramatic improvement over the 60-40, traditional rate model proposed by Bartle Wells back in December of 2012.
On the issue of equity, at the time we noted that at the 10th percentile, the ratepayer would be paying $5.50 per ccf under the Bartle Wells inclining rate structure compared to $2.01 for the 90th percent user. Under a CBFR model ,that ratio fell to $3.58 per ccf at the bottom to $2.26 at the top.
Note that the change improved the model for the bottom 70% of ratepayers and didn’t exactly kill the top end.
What emerged ironically was an attack on CBFR led by Bob Dunning. People got so irrationally freaked out by the idea of a look-back, which Dunning argued had a huge flaw in it because it distorted the message between the “punishment” (increased summer rates) and the treatment (conservation). However, overall it would have meant huge savings and greater equity to most ratepayers.
Conversely, the Bartle Wells alternative would have greatly harmed most ratepayers, even if it installed assurances of simplicity under the guise of “fairness” that really wasn’t very fair.
This equity chart helps us note what happened. Under a 60-40 rate structure the bottom rate payers paid 2.77 times more per unit than the top rate payers. CBFR did not fix that completely but dropped it to 1.5 times or 50%.
The recently proposed Lemongello-Williams model only marginally improved upon the ratio of low to high users, instead, the greatest equity it instilled was in the ratio of SFR to apartments. CBFR disadvantaged SFR when compared to apartments, increasing the ratio from 1.2 to 1.43, which was due to the fact that apartments have a lower water demand in the summer months because they do not irrigate as much as SFRs do. The Lemongello-Williams proposal reduced the distortion down to 6% and the rate that Council enacted, the Bartle Wells version of 87-13 that was aligned with the Bartle Wells Rate Study Update, reduced it from 42% (under CBFR) down to 17%.
Interestingly enough while the Lemongello-Williams proposal slightly lowered the ratio of large to small users down to 47.6% from 50%, the Bartle Wells model that has been adopted increased that slightly from 50% to 59% because they included the costs of meter replacements into the fixed fee.
Going from CBFR to 87-13 was not about the ratio of small users to large users, but rather about the ratio of single family residents to apartments, which was in large part a response to one of the core arguments of the Yes On Measure P supporters (see http://www.davisenterprise.com/forum/opinion-columns/yes-on-p-davis-water-rates-need-a-do-over/)
These numbers in the OpEd and the chart above demonstrate that the Measure P fight was not about saving low end users either in single family homes or in apartments, but rather about saving high end, summer users.
There is also an interesting addendum to this debate. Mr. Harrington writes, “Bob is usually right on the law, the facts, and the moral side of the railroad tracks that bisect Davis.”
But as Mark West points out, Bob was not correct on his legal advice on CBFR which Judge Maguire declared legal in his decision on the YRAPUS case.
Mr. Harrington writes, “we were going to appeal that water rates decision, but now it’s moot. So we will never know if Bob was legally and conclusively right.”
Mr. West responds, “Sorry Michael, that’s not how our legal system works. If you plead guilty to a lesser charge you didn’t commit in order to avoid defending against a more serious one, you can no longer claim to be innocent as you made the declaration of guilt. Similarly, if you fail to appeal a decision against you in civil court you have chosen to accept the verdict and can no longer claim to be right. You lost, and Bob’s legal opinion was shown to be incorrect. He is still a nice guy, just not a very good lawyer.”
As we go to the history books briefly, Mr. Dunning argued in creating fictitious water users, “The fact their bills vary so wildly for the same amount of water is proof positive Prop. 218’s requirement of ‘proportionality’ is violated by the CBFR rate structure. Dramatically so, in fact.”
He added with a measure of certainty, “If this thing ends up in court, as it no doubt will, the city won’t have enough attorneys to explain how it costs $1,373.64 to deliver 180 ccf to Rochelle but only $596.04 to deliver the exact same amount of water to Joe. But good luck trying.”
The argument that Bob Dunning put forward there was included in the brief put forward by the Yolo Ratepayers in the YRAPUS case. As Michael Harrington and Jon Morse argued on page 9, paragraph 27 of their brief: “The Loge Williams Rates do not comply with Proposition 218 and are unconstitutional and illegal in that, inter alia, they impose a fee or charge incidental to property ownership which exceeds the proportional cost of the services attributable to the parcel.”
Here they actually cited Bob Dunning’s January 27 column: “An example of one of the arguments favoring Plaintiffs was published on January 27, 2013 by local notable columnist Bob Dunning in the Davis Enterprise, a respected regional publication that researches and publishes stories at the forefront of local political and economic developments.”
They added, “Mr. Dunning did what few have done: he pulled out his calculator, created five hypothetical water account users whose first names coincide with five City leaders, and factually demonstrated using grade school arithmetic how annual charges vary wildly for a uniform amount of annual water used. See, Exhibit ’6,’ a true and correct copy of Mr. Dunning’s Sunday column published January 27, 2013.”
They concluded: “This is but one example of the constitutional deficiencies suffered by this rate structure.”
Judge Maguire then proceeded to quite specifically debunk this argument. The only thing he did not do was cite Bob Dunning by name when he wrote, “In particular, the plaintiffs construct a hypothetical situation in which a resident uses one extra ccf in the summer, which then causes the resident’s supply charge to be increased in the next year, thereby increasing the resident’s bill even further.”
Judge Maguire continued: “This hypothetical underscores a distinctive feature of the CBFR, which is that the rate is quite sensitive to changes in summer water use. This sensitivity promotes conservation, as does any system in which the rates increase with the volume.”
The plaintiffs, Judge Maguire noted, “[plaintiffs] argue that the CBFR rates discriminate between users, by penalizing users who use more water in the summer.” He disagreed, however, writing, “there is a good reason, supported by the Administrative Record, to charge more for summer water: the system must be built to handle peak capacity, and that capacity is determined by summer usage.”
So the judge concluded, “So ‘steady’ users, who do not increase their use in the summer, do pay less than typical users, but this variance does not violate proportionality because peak-period demand imposes more costs on the system than off-season demand.”
In so doing, Judge Maguire debunked the central thesis of Bob Dunning’s objection to CBFR, which he framed into the assertion without legal authority that the city violated Prop 218 with these proposed rates.
Mr. Dunning may have won the political argument by scaring citizens into rejecting CBFR, but he did not win the legal argument.
It is interesting to note that in her public comment at the series of Council and URAC meetings on water rates, Sue Greenwald took exception to the whole concept of costs based on peak usage. Although she laid the blame for the peak-period demand argument at the feet of then-Mayor Joe Krovoza, Sue was in effect saying that Judge Maguire’s arguments in his decision on the YRAPUS case are off base as well.
Another interesting sidebar to this story is the commentary about equity by Mayor Pro Tem Robb Davis at both the July 2nd and July 15th Council meetings. Those comments focused on the SFR and apartment residents in Davis who will have a hard time paying their increased water bills, which will be higher regardless of what rate structure is adopted.
—David M. Greenwald reporting