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Committee deadlocks on water rates

By From page A1 | June 20, 2014

The City Council is on its own when it comes to water rates.

The Utility Rate Advisory Committee could not come to agreement on recommending water rates after three meetings and a deadline that struck Thursday night.

A majority of its seven voting members couldn’t agree on a rate recommendation, coming closest with a 3-3 vote and one abstention on a complex motion that city staff said would be impossible for the council to execute.

The motion, presented by Frank Loge, the co-author of the water rates voted down by Measure P supporters in the June 3 election, advised the council to accept a largely gallon-by-gallon water rate with only a 13 percent fixed charge if it could pass muster with the bond rating agencies.

If not, the motion advised the council choose one of three conventional rates with significantly higher fixed rates — 40 percent. Some of those rates had tiers for different levels of water use. Committee member Ben Bourne added a friendly amendment that a drought surcharge be added to the rates.

The higher the fixed rate, the more burden on low-income and fixed-income water customers, but also the better for the water system’s perceived financial performance in the eyes of bond rating agencies, because fixed rates are more certain income.

However, Mark Northcross, the city’s bond financial adviser, said recently the city could create an estimated $4 million rate stabilization fund that should satisfy bond rating agencies in the event that the council chooses a water rate structure with a low fixed base.

The committee’s other vote, to include only the conventional rates as an option, garnered just two votes, four against and one abstention.

Herb Niederberger, the city’s general manager of utilities, said it took months for the voted-down water rates to get a preliminary bond rating estimate, and that came only after the rates had been vetted by legal experts. Committee member Greg Clumpner said Northcross could give the council the bond rating vetting it needed to move forward.

The council is set on approving a water rate by early July so it can meet its October deadline of having rates approved through the Proposition 218 process in place, so it can qualify for low-interest state financing. Measure P supporters dispute that idea, saying the city is making up another fire drill.

“I don’t think the council can act on the recommendation,” Niederberger told Loge.

“That’s a consideration they’ll have to deal with,” Loge said.

Later, committee member Johannes Troost made a motion to fully report the voting of the committee to the council and the names of each committee member attached to each vote.

“I’m worried, Herb, that we’re not giving an honest view about what is occurring,” Troost said. His motion passed, 5-1-1.

Chairwoman Elaine Roberts Musser said the City Council “is completely split” on water rate design.

The council will discuss water rates when it meets at 6:30 p.m. Tuesday in the Community Chambers at City Hall, 23 Russell Blvd.

Some of the most pointed comments Thusday came from the public.

Former Mayor Sue Greenwald, a vocal proponent of Measure P, said high fixed costs would hurt senior citizens.

“The people who are coming up to me hysterical about the (water) rates are all seniors,” she said.

Meanwhile, Michael Harrington, a local attorney who helped sue the city over its old water rates and put together Measure P, told the committee to slow down and wait on recommending a water rate. Otherwise, the citizens committee that defeated the old rates is ready to go again, he said.

“We’re fired up and ready to go if it’s not done right,” he said. “… You have the authority of the committee to push back (on the City Council).”

Harrington said a conventional rate with a 40 percent fixed base was definitely too high, but that he had not looked at the 13 percent fixed-rate version.

— Reach Dave Ryan at [email protected] or 530-747-8057. Follow him on Twitter at @davewritesnews

Dave Ryan

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