Council reconsiders water and sewer rate increases
Council reconsiders water and sewer rate increases
Part 1: Recap of the May 21 Sebastopol City Council meeting
This is a two-part article on the May 21 city council meeting. Part 1 deals with the council’s reconsideration of water and sewer rate increases. Part 2 will deal a sales tax measure and the fate of the bunya bunya tree. (Spoiler alert: the tree was spared.)
All members of the city council were present for the May 21 city council meeting, including Mayor Diana Rich, Vice Mayor Stephen Zollman, Councilmember Sandra Maurer, Councilmember Jill McLewis, and Councilmember Neysa Hinton.
In what amounted to a not-so-quiet revolution against the reign of new city manager Don Schwartz, the Sebastopol City Council backed away from water and sewer increases they had approved at their last meeting and seemed divided over putting a half-cent sales tax on the November ballot. Both these efforts—a water and sewer rate increase and a half-percent sales tax—are cornerstones of Schwartz’s plan to save the city from bankruptcy.
Water and sewer rate increases back on the table
At a previous council meeting on April 23, the council voted unanimously to raise water and sewer rates in light of a new rate study by the city’s consultant firm, Raftelis. The rate study offered two options for both water and sewer rate increases:
Option 1 rate increases were steeper and designed to put the system back on a firm financial footing faster;
Option 2 involved smaller rate increases and a slower path to recovery.
Last month, the council decided to split the difference, going with Option 1 for water and Option 2 for sewer. (See our two-part article on the rate study.)
At last night’s meeting, members of the council expressed second thoughts about this decision. Councilmember Jill McLewis led the charge.
“After the last council meeting where we approved this, I lost a lot of sleep,” McLewis said. “I just started questioning many different things: the consequences of it and the unintended consequences of it…I started to have great concern about families what with these tiered rates the way we have them. I started questioning whether or not the average usage was actually accurate.”
McLewis said she contacted Raftelis with questions but was frustrated by their slow response. “Nonetheless, we got some of the information, but it still just helped me with more questions and more angst over perhaps we needed to slow down and actually reassess this and look at it and think about all the different consequences it has.”
She also expressed concern about how the higher commercial rate would affect local businesses, many of which are already struggling.
McLewis wasn’t the only member questioning the council’s original decision. Mayor Diana Rich had developed doubts as well, and McLewis and Rich, who are often at odds, worked together to put the rate study back on the agenda.
“My interest was in making sure that the target dollar amount was well justified,” Rich said. “We’re looking at a proposal of $3 million per year over the course of three years—so $9 million—that we’re being informed needs to be infused into the water and sewer funds. So is that target amount correct? Is the target date to have it all done within three years an accurate target date? …And then finally, are there other options that would be more equitable than the tiered approach that has been presented to us? So that was my interest in bringing this forward to the city council tonight, in order to get the questions answered.”
Other councilmembers had questions as well. In fact, councilmembers had been pelting Raftelis with questions over email for two weeks.
Vice Mayor Zollman chimed in that he was concerned about the effect of the rate increase on the most marginalized. He also wondered whether nonprofits were going to be charged at the commercial rate. Answer: Yes, they were.
Several councilmembers worried whether low-income mobile home parks and apartment complexes, such as Burbank Heights, would be charged higher commercial rates—or in the case of Burbank, which has extensive grounds, much higher irrigation-only rates. They were concerned that those charges would fall most heavily on those that could least afford them. One of the city’s consultants, Toni Bertolero of GHD, said that rates at Fircrest Mobile Home Park were expected to go up 108%.
Raftelis consultant Kevin Kostiuk suggested that one of the ways to deal with this problem would be to categorize mobile home parks and apartments as residences rather than commercial enterprises, so that the lower residential rate would apply.
Councilmember Hinton asked if there could be a special low-income tier, but was informed by City Attorney Larry McLaughlin that this was not allowed because it would basically require other rate payers to subsidize the low-income rate, in effect paying more than their share.
Mayor Rich, responding to concerns about large families and properties with ADUS, asked if the rate could be based on the number of people in the household. Schwartz said that would be too much of a moving target because people move in and move out of households all the time.
Since the city also pays for water and sewer for its properties, McLewis asked what the cost to the city would be for the increased water rates. The answer was that the cost for combined water and sewer services for city properties would rise from $96,000 a year to $214,000 a year.
Rich asked if there was a more equitable solution than the three-tiered approach recommended in the rate study.
By this point, Kostiuk of Raftelis seemed a tad annoyed.
Regarding the three-tier approach, he said, “I’ll start by saying that the recommendation is not ours alone. That was in consultation with city staff. We believe that that approach best fulfills your policy objectives, which include revenue stability, affordability of service, and fairness between user groups. So having rates by customer class [meaning category] is an industry standard. Having class-based—residential, commercial, irrigation—that’s an industry norm. Tiered rates are ubiquitous across California. Well over 70%, maybe 75% of agencies have some form of tiered rates because they help fulfill various policy objectives.”
“Sometimes we think of them as conservation-based rates—they are a conservation tool,” Kostiuk continued, “but they also help us achieve other affordability issues—low income, low water users, fairness both between different user classes and within the class. You use more, you pay more,” he continued, “because you’re utilizing more of the fixed infrastructure built for your system, the storage facilities, the distribution facilities.”
Councilmember Maurer was the first to express her opposition to giving Raftelis an additional $20,000 (requested in part to make up for the extra work the company had to do to answer the council’s email questions). One by one, all the other councilmembers came out against paying Raftelis the additional $20,000.
As the evening wore on, the council grew frustrated that neither city staff or representatives from Raftelis (who had to leave halfway through the meeting) could provide them with concrete answers regarding the rates — in dollars and cents—across various categories, especially for Option 2.
Mayor Rich openly chastised city staff for not providing enough information about different options—in other words, for slanting the staff report in the direction of the staff’s preferred alternative, which was clearly Option 1.
“This is a council that likes to have options,” she said. “I would have wanted to have those options laid out for us. That would be a two tier or three tier, not staff directing to the consultant that this was going to be the three-tier approach. The options would have been very, very helpful. And then I would have felt very comfortable with the outcome.”
Nor were other answers forthcoming. McLewis asked Public Works Director Dante Del Prete for “a very detailed list” of sewer and water infrastructure projects.
“They’re talking about how bad our system is so I think that it would be good for all of us here to have a list to understand—just like we do with roads…I’m assuming we should have some kind of list for that, and if we don’t, then we need to.”
Del Prete said such a list didn’t exist yet—it would be part of the Master Plan his department was putting together—but he said that his crew regularly worked on about 20 hotspots around the city.
The council briefly considered switching to the lower rate (Option 2) for both water and sewer even though no one seemed to have any hard numbers on what that would mean, except that it would be lower. McLewis protested vehemently against doing that without any real numbers to back that choice up.
“I just want to say for me personally, I think it’s unethical for us to vote on something when we actually don’t even know the numbers and what our residents are going to experience,” she said. “I just think it’s ridiculous.”
Ultimately, the council voted to continue this item at the June 4 council meeting; to direct staff to provide numbers for various rates in various categories for Option 2 for water and wastewater; and to not pay Raftelis an additional $20,000.
Summing up the discussion and the inability of staff (and the consultant) to answer basic questions about the rate study, Mayor Rich quoted former Mayor Patrick Slayter: “Not our proudest moment.”
This is Part 1 of a two-part article. Part 2, which will address a sales tax measure and the fate of the bunya bunya tree, will appear tomorrow.
Consent Calendar Items from the May 21 Council Meeting
The consent calendar consists of items that are routine in nature or don’t require additional discussion, often because they’ve been discussed extensively at a previous council meeting.
In addition to the approval of minutes for past meetings, the council unanimously approved the following:
A budget amendment to the 2023-24 Capital Improvement Program budget for Youth Annex ADA upgrades. The council approved an increase to the project budget from $161,000 to $181,000, an increase of $20,000.
The AB 1600 Report, which pertains to how public agencies collect, maintain, and expend impact fees imposed on developers for the purpose of defraying costs of public facilities.
A resolution of intention to levy and collect the annual assessments for the Street Lighting Assessment District, preliminarily approving the annual Engineer’s Report and setting the date of the public hearing.
Two other consent items were removed from the consent calendar. City staff requested the removal of an item about the transfer of more funds to the city’s 115 Trust. Councilmember Hinton asked to remove a review of city council agenda setting policies. This item will be discussed at a future meeting.