CCWD setting ceiling for rate hikes

Written by Sean Janssen, The Union Democrat  May 06, 2013 12:30 pm http://www.uniondemocrat.com/News/Local-News/CCWD-setting-ceiling-for-rate-hikes

Calaveras County Water District directors set the ceiling  last week for impending rate hikes on water and sewer bills.

The board Thursday approved a notice to be mailed out to  customers in about two weeks laying out a proposal to increase monthly water  bills up to 25 percent in the coming year and a cumulative 71 percent by  mid-2017. Sewer bills are slated to rise as much as 15 percent the first year  and 62 percent by mid-2017.

The maximum limits of the proposal boost sewer rates Aug.  1 from $67.50 to $77.63, up to $86.16 in August 2014, $95.64 in 2015, $104.25 in  2016 and finally $109.46 from 2017 through 2018. The water rate could go from  $39.50 to $49.38 on Sept. 1 or Oct. 1, up to $56.78 in 2014, $61.89 in 2015,  $66.84 in 2016 and $66.84 in the final 2017-2018 year.

Directors and staff said the substantial increases are  needed to launch a large-scale effort to upgrade crumbling infrastructure and  have already been put off for too long.

CCWD Finance Director Jeffrey Meyer said about $100  million in improvements were identified in a 2008 master plan document and the  proposed hikes are the district’s first-ever attempt to develop a long-term  funding program for such needs.

“We don’t have a dedicated capital improvement reserve,”  Meyer said.

Past boards have been reluctant to create one through  rate hikes for fear of public backlash from the sticker shock, Director Bob Dean  said.

“The bottom line is it’s time to pay the piper. We’ve  passed on (completing projects) for several years now … and it’s time if we  don’t do it, systems fail,” Dean said. “This board is finally showing the  courage and putting their necks on the line. We have learned from this last  economic downturn that you can’t bet on the come. What hasn’t been done in the  past has to be done now, as painful as it is.”

The last five-year increase program wrapped up last year,  gradually bumping rates up 50 percent during its course. If the latest proposal  is adopted, rates will have more than doubled in 11 years.

Meyer said the last set of increases, though significant,  were tempered by projections of 400 new connections per year throughout its  term. Just 200 materialized in the five-year period, he said.

Director Jeff Davidson said the district’s finances took  another unexpected hit when foreclosure rates spiked as the economy soured,  resulting in the loss of hundreds of thousands of dollars in anticipated  property tax revenue.

Audience member Joe Kelly said steep rate hikes could  exacerbate that problem.

“People in this county are still in danger of losing  their homes and this rate increase may be the cause … if they’re already  underwater,” Kelly said.

Former CCWD  Director Bertha  Underhill said lower-income residents  will be hit too hard by the proposal.

“Now we’re going to have an issue of what do I do? Pay my  water bill or eat and take my medicine,” Underhill said.

The board reminded that public state law prevents the  district from offering low-income assistance programs like electricity and  telephone companies give.

“Nobody’s going to be satisfied with this rate increase,”  said Director Dennis Dooley, later adding, “it’s frustrating to me that boards  don’t do what they need to do but when they do step up, they get criticized for  it.”

The district has identified replacements of sewer lift  stations near Tulloch Reservoir, water line replacements in upcountry towns, and  water tank replacements throughout the county among the first projects to be  completed with the additional revenues.

“If you do a sewer spill into the lake, you’re looking at  hundreds of thousands of dollars in potential fines … then you still have to  fix it,” Davidson said. “You can then end up with four or five additional  lawsuits (from private groups) that you will have to deal with and settle.” 

The board voted 3-1, with directors Davidson, Dooley and  Scott Ratterman in favor, to set the limits. Dean dissented and Director Don  Stump was absent.

Dean voiced support for slightly higher rate hike caps  that relied on funding the improvements without any borrowing.

Davidson said some limited borrowing on a seven-year  payback schedule is prudent to launch some of the largest projects immediately  and while conditions are favorable.

“Debt service is cheaper than it has been in a long time  … and probably will (rise) in the not-too-distant future” as will construction  costs, he said.

Dooley and Dean each acknowledged the inherent political  danger in approving a rate spike as evidenced by the turnover in four seats on  the Tuolumne Utilities District board after an unpopular rate proposal last  year. Four CCWD seats, all except for Davidson’s, will be on the November 2014  ballot.

After notices are mailed to the public, the board must  wait 45 days to hold a public hearing on the proposed increase. If a majority of  the district’s estimated 13,000 water customers or 4,800 sewer users protest,  they cannot take effect. CCWD General Manager Mitch Dion said a sample protest  letter that meets Proposition 218 guidelines will be provided at www.ccwd.org