Council will hold hearing before increases go into effect

With a wastewater fund that is currently running at a deficit and a list of capital improvement projects planned, the Crescent City Council on Monday unanimously approved a sewer and water rate increase.

The Council also unanimously approved a $29,715 contract with Temecula-based Willdan Financial to conduct an updated sewer and water rate analysis.

Under the proposed sewer rate increase, which must be approved a second time before it goes into effect, monthly rates for residents living in the city and county will increase by $5.38. Water rates for multi-family residential properties in the city and county will increase by 62 cents.

Light commercial water rates in the city and county will increase by 46 cents per 100 cubic feet. Heavy commercial water rates in the city and county will increase by $1.12.

The proposed rates are scheduled to take effect May 1 following a second reading of the ordinance and a public hearing.

The Council's decision came after Public Works Director Eric Wier presented a five-year capital improvement plan that consists of roughly $6.4 million in water and sewer projects. These projects are necessary to ensure a reliable water and sewer system, but the city's sewer fund is currently running at a deficit, Wier said.

"We currently cannot meet our operations and maintenance needs for our year-in year-out budget much less complete these projects we've identified tonight," he said.

Currently operational and maintenance expenses in the city's sewer enterprise fund exceed revenues by more than $650,000 per year, according to a city staff report.

The proposed rate increase is the last installment of a $30 increase that was approved by the Council in 2007 following a failed protest effort, according to City Attorney Bob Black. The latest increase should have taken effect in June 2010, but was deferred after the city was able extend a 20-year loan for the wastewater treatment plant to a 30-year loan, Black said.

Under California's Proposition 218 law, property owners and bill-payers can prevent a sewer rate increase if a protest letter was received by the city from over 50 percent of the affected parcels. According to Black, the number of protest letters the city received did not reach the 50 percent mark.

"There (was) approval for the capacity of a rate increase, but the rate increase itself has to be implemented by adopting an ordinance," he said. "There'll be a second reading and a public hearing that goes with that and then the Council will decide."

Willdan Financial completed a sewer rate study in 2009, said City Manager Eugene Palazzo. Water rates were also analyzed in the 2008-2009 fiscal year, he said, but rates haven't been changed in 12 years. Willdan's previous rate analysis validated the rate structure the Council approved in 2007, Palazzo said.

According to Mayor Rich Enea, if the city had implemented the final tier of the 2007 rate increase, it could have resulted in revenues of $300,000 a year. He pointed out that Fort Bragg charges its residents $157 a month for wastewater service.

Councilwoman Kathryn Murray added that the only nearby communities with sewer rates lower than Crescent City are McKinleyville, which charges its residents $47.64 for water and sewer, and Gold Beach, Ore., which charges its residents $74.45 for water and sewer.

Councilwoman Kelly Schellong added that the city isn't raising rates higher than what was previously approved in 2007.

"We are reaching the top of the rate structure after a delay that our previous Council implemented to try to save the ratepayers money," she said.

During the public comment period, former City Councilwoman Donna Westfall said a recent repair to the wastewater treatment plant's membrane biological reactor filter system and the replacement of a generator were expansions, not maintenance repairs.

"To refresh your memories expansion ... is supposed to be paid for by developers," she said. "Operation and maintenance is paid for by ratepayers. I think ratepayers are paying for expansion."

The city's five-year capital improvement plan includes a $460,000 seismic retrofit of the city's elevated water tank on Wonder Stump Road. Sewer capital improvement projects include a $250,000 to install two 10,000-gallon chemical tanks, as well as replace 300 feet of sewer line.

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