Council will consider the proposal at Monday meeting
City staff members are expected to present the findings of an analysis on Monday that calls for increasing water rates for the first time in over a decade.
The additional revenue would pay for upgrades to make the system more reliable and earthquake-resistant, as well as to offset current water fund deficits.
The Crescent City Council will be asked to increase monthly water rates by $6.16 — or 60 percent — in December for the average residential water customer. Rates would then increase by $3.79 in 2014, $3.44 in 2015, 72 cents in 2016 and 74 cents in 2017, according to the city’s staff report.
Before the new rates can take effect, the Council will be required to hold a public hearing as well as approve a resolution for receiving and tabulating possible protests against a water rate increase under Proposition 218.
Notices will be mailed to all the ratepayers, and the city staff will ask the Council to schedule the public hearing and second reading of the ordinance that sets the proposed rates for Nov. 4, said City Manager Eugene Palazzo. The review process will take 45 days, he said.
The Council approved a contract with Temecula-based Willdan Financial in March to conduct an updated sewer and water rate analysis.
The city has had the current water rates, which are $10.26 a month for residential users, since 2002, Palazzo said. Crescent City’s water rates are lower than nearby cities, including Brookings, Arcata and Eureka, according to the staff report.
“We’re still looking at being the lowest,” Palazzo said. “All the way down to Fort Bragg, we looked at comparable water rates.”
The city draws its water from an aquifer near the Smith River north of Pelican Bay State Prison, said Public Works Director Eric Wier. From there, the water flows through a chlorination building, under the prison to an elevated tank off of Wonder Stump Road. It is then distributed to customers via more than 60 miles of pipes, Wier said.
The water system has 4,100 individual meters, 490 hydrants and serves a population of about 14,000 — many of them non-city residents, Wier said.
But the elevated tank, which was built in 1958, is in need of a seismic retrofit, which will cost an estimated $530,450, Wier said. The city’s five-year capital improvement plan for the water system also calls for installing a second water line from the prison to the elevated tank, which is expected to cost more than $1 million, according to the staff report.
“I can’t reiterate enough how important it is to have a water system pay its bills,” Wier said, adding that the water rates will be the same for customers living in and outside the city limits. “These proposed rates are not discretionary.”
In the past three years, the city’s water fund has been losing between $300,000 and $500,000 a year, according to Interim Finance Director Susan Mayer. Last year the fund experienced an operating deficit of $334,000, she said.
The city has been dipping into its reserves to pay its bills, Mayer said. This includes repaying a state loan that paid for redundant water lines and for increasing the capacity of a reservoir on Washington Boulevard to 4 million gallons in 2000. The city has paid half that loan off, she said, but reserves have dried up.
“Our rates have not been increased and our reserve has eroded,” Mayer said. “We’re out of cash. Without a rate increase the city will likely not make that next loan payment to the state.”
Wier said the staff hopes that by increasing rates and balancing the water system’s budget this fiscal year, the city will be able to pursue financing next fiscal year to help fund some of the projects on its capital improvement list.
Willdan Financial is also working on a rate analysis for the city’s sewer system, which is also facing a deficit.
“We’re doing the same analysis for the sewer system, but we’re several months out,” Palazzo said.
The Crescent City Council meets at 6 p.m. Monday in the Flynn Administrative Center, 981 H St., Crescent City. Agendas, staff reports and a copy of the water rate study can be found at www.crescentcity.org.