Oxnard utility rates to go sky-high?

Major capital projects needed - $800+ MILLION?

By George Miller

For years, the Oxnard utilities staff has been warning us about shrinking water supplies, higher costs, extensive deferred maintenance, obsolescence and expanding demand for water, wastewater and stormwater services. These services are probably as important to the health and safety of residents as are the police and fire departments.

Oxnard Wastewater Treatment Plant

Existing Oxnard Wastewater Treatment Plant

After one year of City Manager Greg Nyhoff”s tenure and several previous reviews of the situation, we saw a major presentation on the situation at this week’s city council meeting, which included multiple solution options, schedules and estimated costs.  the rate impacts are not yet calculated. In fact, a Utility Rate Advisory Panel, consisting of stakeholders representing single family and multi-family dwelling residents, industrial and commercial customers, will be appointed to discuss/advise on this.


Stated purpose:

Purpose of Public Works Integrated Master Plan (PWIMP) • Develop a vision for the future: • Develop 20+ year Capital Improvement Plan (CIP) and implementation plan: • Develop the financial analysis and rate structure to support the PWIMP • Additional task: Conduct rate study


July 28 council session contents

STUDY SESSION   (click to watch City Council sesion on this)
SUBJECT: Verbal Presentation of Utilities Rate Options.
RECOMMENDATION: Receive the Report and provide staff with direction on the rate setting process.
Legislative Body: CC Contact: Daniel Rydberg Phone: 385-8055

Document: Q-1 Utility Rates Study Session (pdf 3,763KB)  (Download and read staff presentation)


The bill would be staggering- up to $661 million for wastewater projects and $200+ million for water (substantially higher with “escalation”).  Other major public work projects  beyond this scope would be streets- $100 million++; flood control- $35 million; trash and recycling- $ TBD.

Interim Utilities Director Daniel Rydberg and staff presented two alternatives each for wastewater and water- major renovations vs complete rebuilds. It was labeled the Integtated Water Resources Master Plan, developed mostly by a team of three city employees and three outside contractors.  It was obvious that they heavily favored the complete rebuild options, citing, reliability, replacing obsolete hardware, improving construction/servicing access, elevating structures to avoid sea surge, storms and alleged sea rise risk.

The conservation measures imposed as a result of the severe drought of the last few years has reduced demand temporarily, taking some of the pressure off, but the long term cost of developing alternative supplies and the spiraling costs of outside purchased water will create long-term upward price pressure.

Wastewater facilties were described as being in poor condtiuon, while water systems were rated fair to good.


Estimated wastewater expenditures. Source: 7-28-15 staff presentation.

We were told that the main thing driving water rates was the higher cost of purchased water (Oxnard purchases about 40% of water). The city is trying to manage that via recycling and well management, but groundwater levels have dropped alarmingly, even before the drought. There has been talk about ocean water desalination in the past, but not at this session.


Oxnard water projects. Source: 7-28-15 staff presentation.

There was very little opposition to what was discussed. It was evident that long term neglect, deferred maintenance and expanding demand all mean that something will have to be done. This was an information meeting only, so no approvals or appropriations were sought (yet). However, council and staff now better know what to expect, plan and budget for. These costs will impact enterprise funds and be financed by ratepayers and bonds. Utility rates will necessary rise dramatically over time (see chart below).




Source: staff report 7-28-15.



Bottom Line: Rate increase impact on an average Oxnard residential bill. Source: staff report 7-28-15.

Past resident questions about why money wasn’t set aside for this have never been satisfactorily explained. But, one way or another, residents will pay. But it might have been nice to spread it over time, starting earlier and avoiding some interest charges. The city owes over $400,000,000 now on various bonds and loans. Shrinking interest rates and strategic refinancings have reduced finance costs over recent years, but huge new capital expenses and likely interest rate increases from historical lows wil likely change that, putting more and more pressure on city finances and ratepayers, who will have to make up the difference.

Councilman Bert Perello noted that there had been a past City Council recall over major utility rate increases. Resident Larry Stern again complained about inconsistent rates, benefitting certain industrial customers (and the golf course) at the expense of residential ratepayers.


George Miller is Publisher of Citizensjournal.us and a “retired” operations management consultant, active in civic affairs, living in Oxnard.
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