Editor’s note: This is the second segment of a recent lengthy discussion with Crescent City Mayor Blake Inscore by the Triplicate Editorial Board, Publisher Kimberly Fowler and Editor Robin Fornoff. More segments will be published in coming days.

Let’s talk a little bit about the water rates. What’s the bill hanging out there on the wastewater treatment plant that needs to be paid off?

$37 million.

What’s the city doing about that?

We have continued to evaluate what’s going to be the best way to go back to our ratepayers and explain where we are and what needs to be done.

We can look at the numbers and we can project out based on the capital improvement things that will have to be done via the system over the years and show that by about 2223, our revenues will not will not meet the needs for operational costs.

That includes the $37 million?

Yeah, that includes a debt service. The debt service will cap out at $1.7 million annually… I think it’s three, $1.3 (million) now.

We’re very fortunate. The State Water Resource Control Board of back in 2014, renegotiated… took the loan to zero percent interest, which over the life of the loan ends up saving us about $15 million, which is huge. But we set that aside in the sense that, number one, we were going through organizational turnover from the period of time.

When we really started looking at how do we approach this fiscal challenge that the wastewater treatment plant gives us, city manager Gene Palazzo was still here. And so we started approaching a strategy of how do we get there. When he left we had an interim, which is hard to really make big decisions on how you’re going to approach something during an interim leadership.

We hired another city manager that didn’t end up being the right fit for the city. We addressed some of those things during that period of time.

And that’s part of where we weren’t as successful maybe of really communicating the whole process. Then we went back to an intern with Mike Young and then Eric Wier was interim for a period of time. And now we’re back with stability of leadership addressing this and saying, OK, 2023 is going to get here and we can set aside certain things that are capital improvement projects and say,

OK, well this is a big ticket item. Let’s not approach that this year and make sure that we have a sufficient fund balance to continue doing things.

But it’s going to be an issue eventually. We’re going to have to come back to the ratepayers and we’re going to have to say, this is the long-term plan that provides us with the financial resources necessary to continue operating.

One of the things that we’ve done, and the reason that we haven’t gone back to the ratepayers, yet, is that we put out this RFP for contract operations. if you can find somebody that will take on all the responsibility of payroll and benefits and all those things that are associated with that, that potentially could be a significant cost savings to the operation of the plant that changes then what I come back to you as a ratepayer to do.

If I come to us, or a ratepayer now and say, Well, here, let me show you this doom and gloom and 2023 and that’s why I’ve got to raise your rates. Then you find out six months later that I contracted out operations and I’m saving a million dollars a year, you’re going to cry foul. You’re going to say, wait a minute. You told me it was this and now you’ve been working on this and it’s it’s really that?

And so this is a piece that I really think we need to fully explore before we go back to the public and say this is what the rate structure needs to be.

The reason that we have I think we have to look at this contract management is that we become a training ground for Pelican Bay State Prison. People come here they get a job as an operator or an operator and training. We pay for all their training. They’re here three or five years. They get all the way up to grade three and then a position opens up out of the prison and they’re gone.

We’ve got all this money invested and we then, we have to start completely over. Because the state’s always going to be able to pay more than we can.

We need to find a way to close that exit. I think that contract operations may be the way to do that. There’s no guarantee.

What’s the timeline on that?

I’m not sure when they come back… I we put them out. I think we’re going to have an idea on how many people respond to it in the next month so at least we know. I mean, we may have nobody respond, go yeah, well within the framework of what you’re looking at we can’t do that. Or they’re going to respond, go yeah, we’ll do that for $4 million a year. It’s like, OK, well we do it for a lot less than that now.

So, I think that by summer we’re going to know is this going to be a real possibility to go to contract operations.

Isn’t Brookings doing that?

Yeah, Brookings just did. This is one of the reasons why we went ahead and and really pushed to see where we fall. Because they’re saving, I don’t remember what the numbers were. I think somebody said that they’re saving almost a million dollars a year by going to contract operations. It may not be that much. That’s the number that stuck in my head.

But they obviously believe that they could save a significant amount of money by doing it that way. So that’s the reason we haven’t gone back to the ratepayers. Because I really think that we need to have that piece fully vetted out. I don’t want to come back and have somebody say you’re saving $50,000 but you but you raised my rates. Well, give me my portion of the 50 grand back.

We’re going to have to ask for a rate increase eventually.

What what was the percentage of increase you asked for that failed a year ago?

What it was, was a complete restructure of how we did it. We were going to a consumption-based, which I think is absolutely hilarious title to use for waste management. Consumption-based is based on the amount of water that you use. And so the reality is that there was, I think, a 5 percent increase that was built into the system.

The idea that when you looked at the totality of all the numbers come in, we need 5 percent more per year. That’s what they said. What you’re asking for, you’re going to raise our rates 20 percent (overall). Well, in that sense, yes, that was true. The difference was under consumption-based for low volume users, maybe those people, maybe half of those people, their bill was actually going to go down. For the high volume users it was going to go up and it was going to go up quite a bit. But that’s something that a ratepayer has control over. But they don’t now because it’s a flat rate (for everyone) and some will say, well, that’s that’s just unfair. if I’m a single person living in a little house on a street and I’m all by myself, why should I pay the same amount as somebody over on Pebble Beach and, you know, has a five bedroom, two story house with a whole family living in it.

But that’s something we will rethink and go back to once we figure out whether or not we’re going to do the contract operations.

Long answer. Sorry. Nothing we do is… easy. There’s all these different nuances to everything we’re trying to balance. Sometimes it’s hard to explain.

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