Local municipal water users have until Tuesday, Sept. 27, to protest proposed modifications in city water rates. Rates are expected to decrease for some users, while dramatically increasing for others.
The new proposed rates are the result of a water rate study conducted this spring by IGServices, under the requirements of Proposition 218. The state regulation requires such a study before rate increases can be charged and the law limits the amount of the rates not to exceed the cost of providing the service.
According to the city public hearing notice, the water rate modification will accomplish two purposes:
–Fixed and usage rates are adjusted such that customer charges are consistent with the cost of services provided; and
–Overall revenue is increased over four years beginning in October of this year. In addition to the initial water rate increase in 2016, users will see a three percent hike in each of the following two years and a two percent increase in year four.
Most residential users will see a drop in their water payment this year. Commercial and industrial users are expected to see huge increases, bringing them into line with the cost of providing water services to the larger customers.
The stated reason for the overall increase is to provide adequate operating cash to cover expenses as a result of lower water sales caused by the four-year drought. The revenue from the modification rates and charges will not be more than the funds required for the city to provide adequate water service to customers, according to the public hearing notice (in order to comply with Prop 218).
There is a procedure for protests. During the hearing, which will be held at 5:30 p.m. in the city council chambers, the city council will consider all objections and protests, if any, to the proposed modifications and other matters described in the report. The council may continue the hearing from time to time. At the close of the hearing, if written protests against the proposal are presented and not withdrawn—and represent the majority of parcel owners—the water rate increase cannot be implemented. (See public hearing notice in this week’s paper).
If, at the close of the protest hearing, there is no majority protest , the council may approve the water rate modifications, as proposed—or as changed—by the council, to become effective Oct. 1.
Any person who wants to preserve the opportunity to file a lawsuit challenging the proposed water rate modifications, if imposed, or other matters described in the water rate study, must file a written protest with the council stating specific grounds of the protest. Any grounds not stated in a written protest filed with the council before the close of the protest hearing will be deemed waived and may not be raised in any subsequent lawsuit.
The water rate study report in its entirety is on file at city hall and available for review. The report can also be accessed on the City of Corcoran website. A portion of that report has been included as “Exhibit A” in the public hearing notice and covers the current and proposed water rates and charges.
The current report shows all water customers paying at the same rate: Residential, commercial, industrial and even both prisons are currently charged a fixed monthly rate of $44.90. That fixed rate is added to a volumetric rate, determined by a charge of $1.20 per hundred cubic feet of water usage. While the rate is the same across the customer base, those who use more water pay more.
According to City Manager Dr. Kindon Meik, the current rates were put in place in 2005 in order to cover debt service for the city’s water treatment plant. The facility was constructed to address arsenic levels in the local water supply after the federal and state governments reduced the acceptable standard. Dr. Meik said the water rates, which initially called for a 24 percent water rate increase each year over four years were implemented following a water rate study and the Proposition 218 process.
The schedule was approved by a resolution dated Oct. 12, 2005; however, in the second two years of the four-year period—2008 and 2009—the city determined it could meet the bond debt service requirements by adjusting the increases down to 16 percent per year.
Failure to meet the debt service covenants earlier this year kicked off the need for additional water rate increases. The city attempted to implement an emergency 18 percent increase in late January, a move that was not approved by the city council, Instead, the council approved an eight percent increase—absent the Prop. 218 process—while transferring $300,000 from the water fund reserve to meet the city’s debt service obligation.
At the same time, the council approved initiating the Prop. 218 process to address further revenue needs in the water department.
Under the proposed rate schedule, there are tiers of rates: the volumetric rates are different between user classes, such as residential and commercial. The monthly fixed rates have also been changed. Single family rates have been reduced for metered customers and apartment dwellers will see a substantial savings. Unmetered residential customers will see only the three percent hike on their fixed rate over three years.
However, those savings are offset by sticker shock for commercial users and the state prisons.
While the fixed monthly rate currently stands at $44.90 for each prison facility, the new monthly rate is proposed to be $17,500 for the substance abuse treatment facility and $25,000 a month for CSP-Corcoran. That’s in addition to the volumetric rate, which is also proposed to be increased.
Large commercial, food processing and hydrants water users will see rates increased on the volumetric scale as well as the fixed rate schedule. The fixed rate will increase from $44.90 to $112 for a two-inch water line to $1,610 a month for a 10-inch line.
Overall, the city said the new rates will add about eight percent additional revenue to the water department.