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HomeMy WebLinkAbout17 - Adoption of Sewer Rate Adjustment - Written CommentsMarch 22, 2016, Council Agenda Comments The following comments on items on the Newport Beach City Council agenda are submitted by: Jim Mosher ( jimmosher@yahoo.com ), 2210 Private Road, Newport Beach 92660 (949-548-6229) Item 17. Adoption of Sewer Rate Adjustment I have previously commented on this item when it was before the Council on October 13, 2015 (Item 15), and January 26 (Item 19) and February 9, 2016 (Item 3), including a request for reconsideration at the latter meeting. 1. I continue to feel the sewer rate structure should be left in the Municipal Code, as it is for water rates, rather than moved to a resolution. Placing the rates in a resolution not only makes them less visible, but it will subject future voters to a less formal process of rate increases by first and second readings of a proposed ordinance, and may deprive them of a right, in addition to their Proposition 218 protections, to object by referendum after the final Council action. 2. If setting rates by resolution is desired, I continue to be mystified by why staff is urging Council to adopt the resolution before the Council has adopted the ordinance allowing the resolution. Why wouldn’t staff ask that the resolution be adopted after it is certain the ordinance has been approved at the next meeting? If the ordinance isn’t adopted, do we really want yet another contingent resolution cluttering the City’s records? In this connection, it might be noted that the expectation of the City Charter and California general law requirement for noticing proposed ordinances when introduced is that the most serious public debate will occur on the night the ordinance is considered for adoption, not on the night it is introduced. The introduction is just supposed to set the wheels in motion for a robust airing of differing viewpoints, typically two weeks later. 3. As to the substance of the rate structure proposed in the resolution, I am not sure this is the rate structure a majority of the Council would or should want to impose: a. Please review my written comments about Item 3 on February 9th agenda. b. While the City certainly needs to do some catch-up to correct for its failure to enact the need for a rate increase identified in the 2010 Sewer Master Plan, it is not clear why the proposed rates would need, in perpetuity, to be so much higher than the rates thought necessary in 2010. c. In addition, while it is recognized that water consumption is a very imperfect proxy for the intensity of a customer’s sewer use, the proposed abandonment of the system of supplemental charges for various classes of users that exists in the current Municipal Code Section 14.24.065 seems unfair to the single family residential ratepayers in many parts of the city. In normal years their water usage largely goes to landscaping and since that water does not go into the sewer, they should not be paying a sewer service fee for it. The existing surcharges seem to me to have been a system intended (however imperfectly) to correct for this by recognizing that a larger proportion of the metered water use goes into the sewer in certain classes of structure (hotels, multifamily buildings, etc.). Received After Agenda Printed March 22, 2016 Item No. 17 March 22, 2016, Council Agenda Item 17 Comments - Jim Mosher Page 2 of 2 d. There is also an equity problem between City water users and those who obtain the water they flush into the sewer from other sources. i. As an example, Page 5.15-4 of the 2012 Draft EIR for the Uptown Newport project indicates the TowerJazz semiconductor facility on that site (and not slated for redevelopment for a number of years) purchases 43 million gallons per month of water from the Irvine Ranch Water District, most, if not all, of which I assume is flushed into the Newport Beach City sewer system. If my math is correct that’s 57,487 HCF per month, and if they were a City water customer TowerJazz would be paying a $22,420 sewer use fee (going up to $33,917 in 2020). As non-City water customers their use charge will be a fixed $10.51 (going up to $15.95) even though there is no difference in the wear and tear on the system caused by City versus non-City water customers. ii. Likewise it appears that the Uptown Newport residential project on the portion of the property currently being redeveloped, and the possible addition of a180 room hotel to it, will pay only nominal amounts towards the upkeep of the City-owned sewer system even though they will be heavy users of it. e. Short of metering sewer use (as opposed to water use), it’s not clear the equity problems can ever be entirely satisfactorily solved. But surely some adjustment to the previously proposed rate structure is needed to correct for the fact that HF&H did not know the City has not been paying for its own use of the sewer system. i. The “public use” logic that has been advanced to rationalize the City’s exemption of itself is clearly erroneous. If school and County buildings pay for their use, why would the City not? Likewise, if the logic is sound, why would the City not exempt itself from paying for the water it uses, and place that on the backs of the City’s private water customers? ii. Assuming the City is responsible for, say, 3% of the sewer use, and agrees to pay for that out of the General Fund (as it seems obvious that it should), then surely the burden that needs to be paid by the other ratepayers should be 3% less than HF&H estimated. iii. In addition, the General Fund may have a considerable one-time obligation to pay for the City’s past use of the system, which should not have been the responsibility of the private sewer ratepayers. The correction of that error could drastically reduce the assumed shortfall in the Sewer Enterprise Fund and the need for private ratepayers to provide additional funding. 4. As to the proposed ordinance, it contains at least one typo: the second line of the first “Whereas” includes the phrase “as wells as” (emphasis added). I assume the author meant “as well as” [with no “s”].