Santa Paula Begins Water and Rate Fee Study

By Sheryl Hamlin

At the February 6, 2017 Santa Paula City Council meeting, a Standing Committee on Water and Sewer Rates was established with two council members populating the committee. The members chosen to the new committee were Mayor Crosswhite and Council Member Hernandez. To watch the council meeting where the new committee was established, click here

The new Brown Act Committee has never met since its creation on February 6, 2017. But on April 12, 2017, there was an announcement in the Santa Paula Times about a meeting of the new committee. Note that the Brown Act requires a 72 hour notice of committee meetings, but only a 24 hour notice of Special Meetings per City Attorney Cotti. So for a never convened committee, a Special Meeting was convened for April 13, 2017, thus skirting the 72 hour notice requirement.

There were eight attendees on April 13, 2017: Mayor Crosswhite, Council Member Hernandez, Interim Public Works Director John Ilasin, Peggy Kelly Santa Paula Times, Cindy Madrigal Public Works, Sheryl Hamlin Citizens Journal, Rick Araiza Santa Paula Fire Department Chief, Greg Clumpner NBS Consultants and Sandra Easeley Finance Director. Council Member Gherardi attended in the audience as a private citizen. The format was casual around a table in a Study Session format per the request of Mayor Crosswhite.

History of Santa Paula Water and Sewer Rates

Santa Paula Water and Sewer Rates have been the topic of several meetings in recent history. Read two reports here and here.

Greg Clumpner of NBS was involved in the 2013 study. Sandra Easley stated that the last study was 2008 with subsequent rate increases. The 2013 study recommendations were never implemented.

As preparatory data for the 2017 study, NBS has been given 36 months of water and sewer billing as well as the leak policy. NBS will also receive the potential capital upgrade projects from American Water after the 60 day ramp up period has elapsed during which time American Water will review the water treatment plant for capital equipment deficiencies and prepare a report. American Water starts on April 17, 2017, so presumably this means that PERC will receive the $$829,685 buyout as described here.

2013 Study Versus 2017 Study: What has changed?

In the 2013 study, updated in 2014, NBS recommended a reduced fixed amount of $60.00 per month (now $77 per month) with new rates in tiers for volume usage. Since that time, the State of California has been emphasizing water conservation policies, a landmark suit in San Juan Capistrano changed how cities can create tiered rate plans and the City of Santa Paula bought the wastewater treatment plant.

California has established Urban Water Management Plans which recommend 70% fixed rates with the rest variable in cost recapture. Once NBS has finished the study and the council has approved it, the plan must be sent to the State for approval.

The group discussed benefits of lower fixed costs with higher variable costs. Mayor Crosswhite gave as an example her situation with one person whose bill never exceeds the $77 fixed costs because one person cannot tip the meter to the first level of the variable costs. Is $77 too high for one person? Should the fixed costs be lowered with higher volume costs? These are policy decisions, explained the consultant.

Mayor Crosswhite added to this discussion the fact that the council has not received any information about how much it costs to run the plant, which the city now owns, so there is no sense of where we are with respect to operating costs.

Proposition 218

As noted above, the City of San Juan Capistrano was sued by citizens saying that the tiered rate structure violated Proposition 218 because the city could not justify the operational costs for each tier. They won in court. Now, according to the consultant, the use of tiers is much more difficult to justify.

A group of citizens has sued the City of Oxnard stating that years of transfers between the Enterprise Funds and the City’s General Fund are illegal because the city cannot justify these transfers. Note that the City of Santa Paula has maintained this practice for a decade and is reported here. The Oxnard suit will have far reaching implications once decided.

Rebates?

Ginger Gherardi asked about rebates under the study to which Council Member Hernandez said why would rebates be necessary if we would lower the rates, obviously referring to the unimplemented 2014 study which lowered the fixed costs. The consultant said that they would include the 1.2 bond coverage ratio in the new study.

Subsidies?

Both Mayor Crosswhite and Council Member Hernandez were concerned about low income residents, the mayor was worried about young people buying their first house, while Council Member Hernandez was concerned about low income residents. Different subsidy strategies were discussed. It was also noted that Santa Paula has a disproportionate number of households who have never moved, so their property taxes are very low.

The Elephant in the Room: Granny Flats

It is no secret that California’s housing price increases, both rent and purchase, have increased disproportionately to the growth in wages, thus creating an acute shortage of housing stock at the lower end. To remedy this shortage, Sacramento passed a bill in 2016, signed by Governor Brown, legalizing Accessory Dwelling Units (ADU) or Granny Flats, thus turning single family neighborhoods into multi-family neighborhoods. This article covers the ramifications. Essentially the new law negates a century of zoning ordinances returning the city back to the 19th century days of multi-family dwellings on every block.

The issue for the city now becomes to determine what type and how many meters are installed to bring these units into compliance with respect to water and sewer billing. This is complicated and it was mentioned that the city has commissioned City Attorney Cotti to produce a report on adhering to these new laws. One of the issues is water and sewer consumption.

Outreach

Noting several hostile reactions to rate increases in other cities, notably Vallejo and Oxnard, the city plans many non-traditional methods of outreach to explain the process. The consultant plans several meeting with the community and there will be at least two council level presentations.

Implementation Date

The new rates will likely take effect January 1, 2018.

 

For more information about the author visit Sheryl Hamlin dot com.


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