Utilities Rate Advisory Commission Meeting - February 2, 2012
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Utilities Rate Advisory Commission Meeting - February 2, 2012
The Utilities Rate Advisory Commission (URAC) met on February 2, 2012, from 5:38 p.m. to 8:17 p.m. at New City Hall, 915 I Street, 1st Floor – Council Chambers. The primary agenda item was further discussion of proposed water and wastewater rate increases and approval of recommendations to the City Council. After extensive public comment and deliberation, the commission passed a motion recommending the department's proposed three-year rate increases with specific conditions.
Consent Calendar
- Approval of Minutes for January 25, 2012: Motion by Douglas Brown, second by Scott Brown. All present in favor, none opposed. Minutes approved.
Public Comments & Testimony
- Joshua Foster: Questioned the 11% utility tax going to the general fund (estimated $3.6 million additional over three years) and suggested that fluoride costs (about $1–1.5 million per year) could be redirected. Inquired whether the department would ever operate within its means without perpetual debt.
- Eric Smitt (engineer, ION Sacramento): Argued that the 100-year pipe replacement cycle is a marketing approach, not engineering. Claimed operating costs have tripled since 2001 while capital investment declined. Estimated each homeowner's share of the $2.4 billion program at $35,500 over 30 years.
- Julie Berry (wastewater professional): Supported the rate increases, citing risks of untreated sewage spills, potential fines of $2–$10 per gallon, and the need for proactive infrastructure improvements.
- Gerald Lumley: Disputed that flooding was due to infrastructure failure, attributing it to management. Questioned the use of previous rate increases for payroll rather than infrastructure. Expressed concern about the burden on a depressed real estate market.
- Bill Grant: Criticized lack of accountability and urged the commission to listen to public concerns.
- Mac Worthy: Supported rate increases, noting that only 1% of household income goes to utilities while many spend on cable and cell phones. Emphasized that the program would create jobs and urged the commission to educate the community.
- Craig Powell (ION Sacramento): Presented a report showing cumulative utility costs (water, sewer, storm drainage, solid waste, regional sewer) could rise from about $120/month to over $350/month over 15 years. Recommended a modest one-year placeholder increase, outside expertise, and experienced management before a full program.
Discussion Items
- Proposed Water and Wastewater Rates: The department's proposal (10% water increases for three years; wastewater 16%, 15%, 14%) was presented along with staff's draft accountability plan (eight steps, including online posting of project sheets, semi-annual reports, annual state of utilities). Alternate scenarios were presented: a 9-9-9 water / 14-13-12 wastewater scenario would push fourth-year needs to 7% for water and 7% for wastewater; a pay-go only (no debt) scenario for wastewater would require a 58% first-year increase.
- Commission Deliberation: Three motions were considered:
- Original motion (Carolyn Veal-Hunter): Recommend the department's proposed rates with conditions: accountability plan, bi-annual updates, revenue used for intended purposes, and additional utility tax revenue earmarked for a low-income assistance program. Seconded by Scott Brown.
- Substitute motion (Jeff Donlevy): One-year increase of 8% water and 7% wastewater, plus support for a low-income program. Seconded by Kevin Schubert. Failed 6–1 (only Donlevy in favor).
- Substitute motion (Kevin Schubert): Modify original motion to instead filter additional utility tax revenue back into the department for infrastructure/pay-go, rather than a low-income program. Seconded by Jeff Donlevy. Failed 2–5 (Donlevy, Schubert in favor).
- After the substitute motions failed, the original motion was restated and voted on.
Key Outcomes
- Motion passed (5–2): Recommending the rates as proposed by staff (water 10% per year for three years; wastewater 16%, 15%, 14%) with the following conditions:
- Create an accountability plan including bi-annual updates to the commission.
- Utilize revenue generated by the increase for the intended purposes.
- Additional taxes generated by the increase (from the 11% utility tax) be earmarked for developing and operating a low-income rate assistance program.
- Next steps: Staff scheduled a pass for publication on February 21, 2012, and a City Council hearing on February 28, 2012, to adopt the rates by ordinance, effective July 1, 2012.
- Commission announcements: Members requested that the council be informed of the recommendation and that the commission be kept updated on any changes.
Meeting Transcript
Good evening, ladies and gentlemen. The hour of 538 having arrived. We will determine if indeed a quorum is present. Secretary, please call the roll. Jeff Dunlavey. Kevin Schubert? Here. Douglas Brown. Stephen Archibald? Here. Karen McBride? Here. Scott Brown. Carolyn Villhunter. The Commission has a quorum. A couple of quick meeting announcements. This meeting is being viewed, video streamed and can be viewed on the city's website or viewed later from the archived files. Please silence all cell phones and mobile devices. If you wish to speak tonight, please complete a speaker slip, which are located in the back of the room. If you wish to speak tonight, please complete a speaker slip, which is located in the back of the room and return to me at any time. Should you need assisted listening devices, they are also available from me upon request. Okay. Thank you. One moment, please. Okay, thank you. The first item of business is the consent calendar, and the only item on the consent calendar are the minutes of our last meeting on January 25th. Having read them thoroughly. Does anyone have a motion to adopt item number one, the minutes from the prior meeting? Ms. Doug Brown moves. Is there a second? Second. Ms. Mr. Brown moves. Scott Brown moves. All those all those in favor say aye. Aye. All opposed? That motion carries. We will now move into item number two, which is a discussion of and uh hearing oral presentations, other reports, other information, public comments, discussion amongst the commissioners of uh the Commission's responsibility to adopt uh a recommendation to the City Council on uh rate changes for water and sewer rates. So uh I think first we will start with Mr. Brent. Brent, interim director with utilities and we thought tonight um what we would do is report back to you before you continued your discussions on a few of the items that were brought up at the last last hearing. And those would be specifically uh Jessica Hess will present our draft accountability plan that was a discussion at your last hearing. And then secondly and lastly, Jamil Moon's our business services manager will run through a few of the scenarios that were mentioned specifically at the last meeting. Uh uh member Brown on the reduced three-year rates, and also I think uh uh Commissioner Dunlevy on the uh on the other scenario that you had mentioned about you know some blend of of uh pay-go and and um debt service. So with that, unless uh the commission would like other than that, I mean we're that was our intent, and then we're here obviously to answer questions or out the evening. Okay, thank you, Mr. Matthew.
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