There’s a very real possibility that Measure P, which asks the city to toss out its current water rates, will pass. Voters are worried about the rising cost of water, and they’re confused about the consumption-based fixed rate that will take effect in January.
WE DO NOT SUPPORT Measure P. And we absolutely do not support scuttling the water project, as many of the initiative’s supporters fervently hope. We, and all informed residents of Davis, recognize the water rates must generate enough revenue to finance, build and operate this project. Rates must go up.
However, we are worried about the political ramifications of pressing on with a confusing rate structure that continues to generate complaints of unfairness.
Here is our solution:
1. Vote no on Measure P.
Passing this initiative will guarantee new rates, sure, but every other consequence is a negative one. Davis could default on its obligations to the surface water project. The city also could miss out on opportunities for extremely low-interest loans that could cost the ratepayers more than $100 million in long-term project costs.
Do you want to see your water bills truly skyrocket in the coming decade? If so, vote yes on P.
2. Move forward with a plan floated by city staff last month, and supported by the council, to ask the newly constituted Utility Rate Advisory Committee to review a new series of rate changes based on revised revenue requirements for the project.
In the year since the council approved the current rates, Davis’ share of the water project has dropped from $114 million to $107 million and interest rates are lower than projected. One more bright spot: Davis still may qualify for 2-percent long-term financing from the state if all threats to the project (lawsuits, initiative challenges) are removed.
If work begins now — a month before the election — on a new rate structure, then a new ordinance could be ready for council action in June, a Proposition 218 hearing could be held in late July and rates could take effect in August. That timeline would mean no threat of default because the city would be collecting enough money to meet its responsibilities to the water project.
SHOULD THOSE RATES continue to be based on the controversial CBFR model? We say no.
Experts say CBFR guarantees the fairest rates for the greatest number of utility customers. While that may be true, the community doesn’t trust them. And sometimes, the most politically expedient path is the right one to take.
We remain uncomfortable with basing part of a future year’s rates entirely on summer usage. And, figures show there wouldn’t be a huge difference if rates were calculated on a traditional 12-month base instead. We encourage the new advisory committee to look seriously at this option.
The bottom line: We know how much money we have to raise to cover all of the water project costs. Ratepayers will be shelling out substantially more in the coming years no matter what structure we agree on.
MEASURE P does not deliver salvation from higher rates. Instead, it could result in costly bridge financing to avoid default penalties and increased interest rates long-term. It’s not the way to go, Davis.
Vote no on Measure P.