Plans to increase the city’s water rate by 18 percent ground to a halt Tuesday evening—at least for this week. The city council decided to offer more time for public input into the issue, which it will take up for discussion once again Monday evening when it meets for a regular session at 6 p.m. in the city council chambers.
The hike in the water portion of the local utility bill is designed to help cover expense of debt repayment on the water treatment plant, constructed in 2008.
City staff lobbied for the rate increase, noting that an emergency exists because a current letter of credit expires in March. That takes on significance, since the city is currently in discussions with lenders regarding repayment of the bonds—and one of the requirements for debt coverage is that the city maintain 120 percent of revenues in its water account to make sure it can handle payments.
Corcoran works with a credit facility that sets up what is known as a “rate swap” which allows a lower percentage of interest on the debt than what is available on the market. In order to earn that variable rate, the city must have the letter of credit—which will not be used—guaranteeing the repayment. Without the letter of credit, the city would need to seek alternate repayment underwriters, most likely requiring a higher, fixed interest rate.
Staff told the council the increase is needed now to offset the decrease in water fund revenues caused by state conservation regulations. Corcoran has been tasked by the state to reduce water consumption by 36 percent, and to the city’s credit local residents and businesses have made every effort to cut back reaching higher savings totals than any other city in the county. In so doing, water rates for consumers on meters have seen a dramatic drop, crippling revenues.
The 18 percent increase in the water rate is expected to raise approximately $372,000 by the end of June. That, along with cuts in expenditures, is hoped to raise the city’s debt coverage of 135 percent, even more than the required debt coverage amount. The city also reserves the right, in its new resolution, to raise the rate by another three percent, or higher—depending on the cost of living index—beginning July 1 of this year and every year after that, as needed.
The council faced a full audience Tuesday, despite the lack of notice for the special meeting. The agenda was not provided to the public until late Monday afternoon, meeting the 24-hour special notice requirement.
None of the people who spoke to the council was happy about the rate increase.
Speaking as a resident on a flat-rate payment structure, Michael Boyett said he had no control over his water costs and has already in essence paid his increase.
“I got no break for saving water,” he said. “Everyone in the city is being punished for doing the right thing and conserving.”
He suggested the city ask the state for a waiver on its conservation goals. He also suggested more time is needed to study the issue.
“If I ran my business like this, I would be out of business,” he said of the notice citizens were being given for the rate hike.
Supervisor Richard Valle offered help from the county in reviewing the debt service with the county’s Public Finance Authority, formed by the board of supervisors. The financing authority offers discounts to programs within the county. He said he could facilitate a conference call between city and county staff to begin a discussion.
Others complained about services for which they are billed, but do not receive. More than one person said they have not seen a city street sweeper, although they pay the monthly utility bill that includes that service. Another mentioned the storm drain charge, while still awaiting storm drains in her neighborhood.
It was pointed out by Carlo Wilcox that more appeared to be going on than just a drop in metered income to the water fund.
“It appears that about 50 percent of the rate-payers are carrying almost all the freight,” he stated. “I previously plotted the rate at which the city was getting into the general fund (reserves) and how the city has been charging more “overhead” costs from the enterprise funds. The money in the enterprise funds needs to remain there. They should not be used to subsidize other spending”
The enterprise funds are those that appear on the monthly utility bill, including sewer, water, refuse and storm drain. They are meant to be self-sustaining and should enable those departments to pay for themselves.
Denise Sifuentes echoed the feelings of many residents who said they just cannot afford the increase. Sifuentes said her family makes every effort to conserve water, including saving shower water to use for outdoor watering, but still falls behind on her monthly utility bill.
“It’s very embarrassing to ask for an extension on my bill. At this point, I will have to decide if I can pay my city utility bill or my electric bill,” she said.
Another resident pointed out how many local residents are on Social Security and other forms of fixed income, including welfare.
“Social Security did not get a raise this year,” said Maribel Alcantar, whose household already helps an elderly relative make ends meet.
More time was requested for public input, and the council agreed to take up the issue once again at Monday’s meeting, However, the delay could mean an even higher rate increase, warned Meik. He said water bills were going out Friday and the rate increase would have been made retro-active to Jan. 1 of this year. Since the rate hike will not go into effect until February, the city could be short of attaining its 135 percent debt service mark.
The city is also expected to cut water fund spending by $120,000 and transfer $150,000 from water fund reserves to meet its required numbers.