San Jacinto Council delays proposed water and sewer rate increase decision until September

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The San Jacinto City Council continued its discussion on how much city water and sewer rates should be raised to help repair and replace its aged and deteriorating water wells, pumping stations, water and sewer pipelines at its Tuesday, Aug. 18, meeting.

The council received a sobering report by the public works department and city manager Rob Johnson in a work session, May 19. A water and wastewater rate study showed how the city’s water wells, pumping stations, wastewater facilities and associated pipelines were deteriorating due to decades of use and, if they not replaced, could force the city to buy all of its water and pay for treatment facilities from neighboring water districts at much higher prices.

The council learned that some had already been taken off line in earlier work sessions and meetings. The department warned more than $8 million will be needed to keep the system running in the next five years.

The council agreed that the funding had to be found and asked staff and the city’s financial consultants to plan to raise the money with their eye on an increase in the city’s water and sewer customers rates to help finance Capital Improvement Project bonds, which would be used to make the critically needed repairs and replacements.

The financial consultants hired for the study, Raftellis, gave the following report. Three water rate increase scenarios were presented to gain the Community Improvement Project funding needed. The first level of rate increases would bring in all the funds needed or about $13.3 million. The second scenario would bring in 50% of the needed funding or $6.6 million, and the third scenario would bring 30% of the needed funding or $3.9 million.

After hearing the details at the May 19 meeting, the council expressed the most interest in the second scenario but inquired of the staff to look into the possibility of phasing the increase in lower increments. City manager Rob Johnson said that while increasing rates by 50% would take care of the department’s immediate needs, more is needed to assure the customers maintain the same level of service in the very near future.

Staff presented an 18-month report on what repairs had been made to keep the water and sewer system operating and any associated costs. The department has rebuilt the city’s three operating wells, including Lake Park, Artesia and Bath and took the failing Grand Well offline. But, in the next 36 months, the city will need to replace the Bath Well Treatment Well Treatment Facility at an estimated cost of $1.2 million, drill a new well to replace the Grand Well at a cost of $2.6 million and build a new treatment facility at a cost of $1.2 million to handle the water from the Grand Well replacement.

“Just these facilities alone, which are desperately needed to keep the water system operating to provide public health for residents and businesses, are estimated at the low to be a staggering $5 million,” according to the report.

The report also asserted the city is not in a financial position to continue to subsidize the Water and Sewer Enterprise Funds with general fund money needed in many other areas. The city has been subsidizing both the water and sewer system maintenance over the past eight years with no increase in rates to customers.

The council heard from staff that “failure to approve water and sewer rate increases will impair the ability of the divisions to continue to provide necessary and required services in the short and long term.

“The city’s water fixed meter charge and consumption rates were previously developed in 2005, and the last escalation of these rates was implemented in 2009. Since that time, the city increased revenues by charging for the first five units of water consumption (previously provided at no charge) and implementing a Water Adjudication Surcharge in response to new expenses related to the Groundwater Management Plan. There are no further escalation provisions to the rates. The wastewater utility rate was last increased in 2011. Comparatively, per the Bureau of Labor Statistics, water, sewer and trash CPI has risen 47% since 2009 and 33% since 2011,” according to the staff report.

The earlier smaller rate increases were not adequate to cover the rising expenses to maintain the city’s water and sewer costs, staff said.

On June 2, 2020, staff provided an analysis of the timing and implementation of the 50% CIP scenario, in comparison to phasing in increases of 10% each over the next five years. The analysis showed that 10% phasing would not meet the city’s immediate and urgent need for several capital projects, including the replacement of the Grand Well and two treatment facilities, estimated to cost $8 million.

The 50% CIP funding plan provided the council at the Tuesday meeting shows the average single-family home with a 3/4-inch water meter will increase $11.24 per month or up 21.7%. The water bill for a family living in a multifamily residential building with a 3/4-inch meter will increase $32,68 per month up 23.6%. Commercial water rates using the 3/4-inch meter will see an increase of $29,72 per month or up 24.4%. Irrigators with 2-inch water meters will see a $39.05 increase or up $15.4 %.

All average sewer rates will increase $4.92 per month.

The new rates, if the council decides on the second scenario, would begin Tuesday, Sept. 1, and the rates will be reviewed each year. The complete and detailed proposed water and sewer rate increases in all three scenarios are available online at the city website at http://sanjacintoca.iqm2.com.

Although the agenda for the Aug. 18 public hearing showed the council would vote on scenario, they agreed in a 4-0 vote that the decision was too important and should be postponed until all five council members were present. Councilmember Alonso Ledezma was excused that evening to attend a family funeral. The next regular council meeting will be held Sept. 1.

Tony Ault can be reached by email at tault@reedermedia.com.