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Water rate hike draws ire at board meeting

Posted: October 23rd, 2015 | Features, News, Top Stories | No Comments

By Jeff Clemetson | Editor

For drought-stricken Californians, there are no issues of greater concern than issues surrounding water. The cost of our water, the source of our water and the conservation of our water are issues that people are becoming more aware of and more passionate about the longer the drought goes on.

That passion was evident at the Oct. 7 board meeting of the Helix Water District. The board met to discuss future rate hikes that will go into effect at the beginning of next year, drawing an uncharacteristically large crowd that overflowed from the meeting chamber into the lobby of the district’s office building at 7811 University Ave. in La Mesa.

During the board’s presentation of the rate increase, public attendees grew impatient, worried that a long presentation period would discourage people from staying and voicing their complaints and suggestions to the board. One man shouted, “We’re not here for pie charts and graphs, we want to be heard,” to instant applause from the packed chamber.

Among the many complaints about the rate increase raised by people at the meeting were the rising administration costs for the district, exuberant salaries of district administrators, an unclear and confusing public notice system and the five-year plan model for determining rates. The complaint that seemed to have incensed most everyone at the meeting was the fact that even though Helix Water customers had more than exceeded their duty to conserve water during the drought, they will now be paying more for their water.

Residents pack the Oct. Helix Water District board meeting. The district voted to increase water rates, drawing loud complaints from customers. (Photo by Jeff Clemetson)

Residents pack the Oct. Helix Water District board meeting. The district voted to increase water rates, drawing loud complaints from customers. (Photo by Jeff Clemetson)

“We were told that if we don’t conserve, we will get a punitive price. Now we are told that if we conserve we still get a punitive price,” said La Mesa resident Ron Trooper.

“Paying more for less” was a common refrain throughout the public comments at the meeting.

After public comments, there was a motion for the board to adopt a two-year rate plan but it failed to pass. The board then passed the proposed five-year plan by a 3 to 2 vote with Joel Scalzitti and Kathleen Coates Hedberg opposing.

That five-year plan will include a capped rate increase of 9 percent, starting with the water used this November and December, that will show up on bills customers receive in January. Nine percent is the maximum increase recommended by the cost of service study conducted by Raflelis Financial Consultants. The study also forecasted increases for the following four years, however those increases will not necessarily be implemented because each year the district updates its five-year plan with new projections. The projections are based on prior year financial results, the upcoming fiscal year budget, drought conditions, capital reserve requirements, changes in regulations (such as new mandates from the state), cost of water from the San Diego County Water Authority (SDCWA) and capital expenditure projects.

There are also conditions that would allow the district to establish a rate that is lower than the maximum addressed in the notice and passed by the board at the Oct. 7 meeting, said Helix Water District General Manager Carlos Lugo. A lower rate was adopted last year, which was the second year of a two-year rate schedule passed by the board.

“When the budget for the year was formed, district expenses, including our price to purchase water, were lower than we had expected,” he said. “That permitted us to use an actual rate that was lower than the proposed and accepted maximum allowed.”

The same could happen during the last four years of the five-year schedule, Lugo added. Each year the district will put together a budget based on known and anticipated expenses, infrastructure requirements, and the status of the drought and weather conditions, and then determine the lowest rate possible to recover the district’s costs.

According to the district, the rate increase was a result of two factors: increased cost of water from SDCWA and the drought mandate. Increased cost to buy water, causing rates to rise is self-explanatory, but water conservation efforts making the cost go up defies what one would assume is practical sense.

The district explains it this way: Because Helix Water customers reduced consumption by 28 percent, there was an equal reduction in revenue to the district. In order to recover the portion of lost revenue that is needed to cover operating and administrative costs, the district needs to increase rates.

“Unfortunately, the governor made a 20 percent mandate conservation reduction and that impacts revenue for all 24 local water agencies,” Lugo said. “So either they have drought rates implemented or they raise their rates or somehow account for that.

“They have to because they can’t sustain that loss of revenue for years to come. Some can dip into their reserves but that is only going to be sustainable for a short period of time.”

Lugo added that water districts in Southern California are much better off than those in other parts of the state because districts here have invested in water storage and have more experience dealing with water shortages.

“As a region, we have 99 percent of the water we need because of the investments we make,” Lugo said, adding that the conservation efforts are a bonus, which is why he believes the mandate was too much of a “broad-brushed” approach to dealing with the drought.

“Don’t get me wrong, we feel that conservation is needed but I think you have to look at the regions and what they’ve done in terms of preparing for something like this,” he said. “So a 20 percent cutback doesn’t make sense to us when we’ve invested in the system.”

Investment in new water sources, like the billion-dollar water desalination plant in Carlsbad and the San Vincente Dam expansion project, is one of the reasons operating costs for water districts in San Diego County are very high. However, at the Oct. 7 meeting, it was the administrative costs –– specifically the cost of Helix Water District administrator salaries –– that drew the ire of customers.

According to Helix Water District records, department directors make an annual salary of up to $180,000. As general manager, Lugo makes $209,000-plus a year. Also, benefit packages for district employees, especially management, are generous, reaching as high as $60,000 annually for Lugo and averaging around $40,000 annually for other people with management positions at the district.

Chuck Miller said the district needs to tighten costs of wages and retirement packages, just as customers like himself have tightened water use during the drought. “The district owes us a fiduciary responsibility to keep costs down,” he said.

Lugo defended the district’s salary and benefit policies, pointing to cuts to retirement packages and other measures the board has taken to curb salary costs.

“The board is constantly looking at salaries and benefits, trying to find the right balance between remaining competitive to retain and recruit quality employees and continuing to control costs,” he said, adding that in recent years, district policy has changed to require employees to pay a larger and larger portion of their retirement contribution through payroll deductions, maxing out at 8 percent. In total, employees pay 32 percent of their retirement costs.

“District employees have been very cooperative in the process that began years ago and have voluntarily accepted these changes,” he said. “The board continues to look for ways to lower these expenses and operate the district as efficiently as possible.”

Those concessions in benefits were not enough for customer Bob Cedardahl, who had these words for the district board regarding his rate hike and their wage increases: “I’ve lost respect for you.”

––Write to Jeff Clemetson at jeff@sdcnn.com

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