Both city and county users would see 3.6 percent increase
Less than three months after residents saw an increase in their water bills, the Crescent City Council may raise sewer rates.
By a 4-0-1 vote, the Council on Monday scheduled a public hearing for May 19. Councilwoman Kelly Schellong was absent.
If approved, sewer rates would increase by 3.6 percent for all users both in the city and the county, according to Public Works Director Eric Wier. The proposed rate increase reflects the increased costs of goods and materials as well as operational costs, Wier said.
“It’s just keeping up with inflation that has happened over the last couple of years,” he said. “The cost of living increase would be based on the consumer price index, which is based on the urban index, which is what we’ve used in the past for sewer rate increases.”
If approved, monthly sewer rates for single-family homes in the city would increase by $2.51, according to the city’s staff report. Monthly rates for single-family homes in the county would increase by $2.19.
Sewer rates for multi-family homes within city limits would increase by 29 cents per 100 cubic feet of water, according to the staff report. Rates for multi-family homes in the county would increase by 26 cents per 100 cubic feet of water.
For business owners, sewer rates for light commercial buildings in the city would increase by 31 cents per 100 cubic feet of water, according to the staff report. Light commercial buildings in the county would see a sewer rate increase of 28 cents per 100 cubic feet of water.
Heavy commercial buildings in the city would see a sewer rate increase of 49 cents per 100 cubic feet of water. Sewer rates for heavy commercial buildings in the county would see a rate increase of 45 cents per 100 cubic feet of water.
Residents will have the opportunity to protest the rate increases through the Proposition 218 process. The most recent Proposition 218 protest attempt regarding sewer rate increases came in 2007 when the Council approved a $30 increase. The last installment of that increase took effect in May 2013.
Under Proposition 218, only one protest letter per parcel can be accepted. For a protest to successfully halt the rate increase, the city needs to receive letters from more than half of the 3,800 residential and commercial customers the sewer system serves.
Protest letters must state that the person signing opposes the proposed sewer rate increases, according to the staff report. The assessor’s parcel number, street address or customer’s sewer account number must be included. A printed name and signature must also be included.
Even if the proposed rate increases are approved, the city’s sewer fund will continue to experience a structural deficit, Wier said. The current deficit is expected to be at $388,349 for the 2013–14 fiscal year, according to the city’s staff report.
“The structural deficit has basically depleted our reserves over the last couple of years,” Wier said. “It’s forced us to delay capital projects that we’ve wanted to do as well as a lot of the preventative maintenance that we should be doing.”
Despite the sewer fund’s deficit, the city was able to make some capital improvements and do routine maintenance projects using Community Development Block Grant and Proposition 50 grant funding, Wier said. But the deficit puts an annual debt service payment due in August 2015 at risk of default, he said.
To help alleviate the deficit and reduce the need for further rate increases, the Council in December authorized staff to renegotiate the terms of the $44 million state loan that paid for upgrades to the wastewater treatment plant. Staff’s goal is to get the state to reduce the city’s interest rate.
The city also hired Willdan Financial, a Temecula-based firm, to develop a 30-year sewer rate model that city staff could use in its renegotiation efforts. Former interim finance director Susan Mayer served as a financial consultant.
Kennedy/Jencks Consultant was hired to complete a 30-year capital improvement plan for the sewer system, according to Wier.
Even though they said they were reluctant to raise rates, Council members acknowledged that an increase was needed.
“We have to be fiscally responsible,” Councilwoman Kathryn Murray said. “This is something we must do in order to balance the budget and keep us fiscally sound.”
Councilman Rich Enea pointed out that by doing projects like the Second Street sewer replacement project with CDBG grant money, the city is trying to alleviate as much cost as it can. He also addressed potential questions as to why a cost of living increase is so much at one time.
“It’s because we never did a cost of living (increase),” Enea said. “We’re starting now to make it as painless as we can.”
Following an unsuccessful Proposition 218 protest effort last fall, the city began a series of water rate increases, starting with a $6.16 increase in January. Water rates will increase by $3.79 in July, by $3.44 in 2015, by 72 cents in 2016 and 74 cents in 2017.
Those rate increases were necessary to offset a $649,000 budget gap in the city’s water fund and to enable the city to obtain loan financing for a $4.5 million five-year capital improvement plan.
Written protests may be submitted to the city at the public hearing or mailed to City Hall at 377 J Street, Crescent City, CA 95531.
The public hearing will take place at 6:30 p.m. May 19 at the Flynn Center at 981 H Street in Crescent City.