Local News

Council gets closer to decision on water rate design

By From page A1 | June 25, 2014

A unanimous City Council is taking a look at three water rate options — whittled from seven — in a steady march toward next week’s meeting when a new city council member is sworn in and could change the conversation.

The council seemed poised Tuesday night to eliminate consideration of a low fixed-rate water rate on a 3-2 vote when Councilman Lucas Frerichs made a motion to include a low fixed-rate model in consideration of two higher fixed-rate designs — 30 percent fixed and 40 percent fixed, respectively — with no tiers. He did it specifically so Councilman-elect Robb Davis could have the opportunity to vote on the low fixed-rate option next week.

The low fixed-rate design would have a 13 percent fixed rate and no tiers.

Although the final vote was unanimous, the road leading to it was fraught with debate.

Mayor Pro Tem Dan Wolk wanted a staff analysis of an all-volumetric rate, which the city’s bond financing expert said would still need a $4 million rate stabilization fund. Mayor Joe Krovoza wanted staff to consider the low fixed-rate option.

Councilman Brett Lee seemed adamantly opposed to the low fixed-rate design, which the city bond financing expert said would require a rate stabilization fund of perhaps $4 million to maintain a high bond rating. Generally, the higher the fixed rate, the more comfortable the bond market would be with the water rates, the expert said. City staff recommended a 40-percent fixed rate in the options it presented to the council, options Lee supported.

“Typically you ignore the advice of experts at your own peril,” Lee said, adding Prop. 218 notices could be drawn up for the proposed rates so the council could vote on them next meeting. “We can narrow this down. We can narrow the scope down.”

As Wolk continued to explore the possibility of an all-variable rate — citing the example of Paso Robles — Lee cautioned that going with a “vanilla” rate now would not preclude the council from changing the water rates in the future.

“This is the best way given that our time frame is measured in weeks, not months,” he said.

City staff have repeatedly told the council that an approved Prop. 218 notice must be ratified by Oct. 1 to qualify for low-interest state financing. Supporters of the successful June 3 measure — to throw out what was seen by many as complicated water rates — do not believe the city qualified for low-interest financing because the surface water project will be run privately.

Krovoza lashed out at Herb Niederberger, Davis general manager of utilities, for Krovoza’s perception that city staff have not worked with Matt Williams and Donna Lemongello, architects of the low fixed-rate design.

“For weeks and weeks they’ve been stonewalled from working with staff,” he said. “I am terribly disappointed. I think this is decision-making at its worst. … I think staff is working extremely hard to block consideration of this idea.”

Frerichs agreed, adding that he was annoyed that staff seemed to ignore requests for information and taking of meeting minutes from Utility Rate Advisory Committee members.

As a motion including the low fixed-rate model appeared destined for a vote with the majority, Lee implored his colleagues to change their minds.

“Why are we doing this?” he said. “Why are we prolonging the misery? I’m not willing to vote for an experimental rate.”

Frerichs defended the process he had set in motion, citing Davis needed options to vote on. Lee voted with the majority.

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

Dave Ryan

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