With the threat of state sanctions for default, and over the objections of many residents at its Monday, Nov. 4 meeting, the Oakdale City Council voted to raise water and sewer rates to pay for a $13 million loan.
Last year the city could not make its first $840,000 loan payment and revised its debt payment schedule making it subject to certain mandated conditions, including adopting necessary rate fee increases to meet the terms of the financing agreement.
“Without a rate increase, the state will not approve the wastewater repayment plan,” said Oakdale City Manager Bryan Whitemyer. “I wish there was another way, but this is where we’re at.”
During the presentation, Whitemyer also laid out several capital improvement plans that were needed for the city’s infrastructure in upcoming years including water tank and meter replacement and an additional pipeline to the wastewater plant.
The majority of public comment opposed the aimed hikes with some stating those on fixed incomes need to be considered and that a flat rate was discriminatory to smaller households. Others blamed mismanagement of funds and questioned how the city got to the position.
In 2009 the city conducted a rate study and revised its billing structure using a formula that took into account the volume of water used in winter months. What the city officials did not anticipate was conservation efforts made by citizens during those months that resulted in less revenue than expected.
“The (rate) study was a failure,” said Councilman Tom Dunlop. “It didn’t match up with realities in ’10,’11, and ’12.”
“This should have been taken care of years ago,” said resident Alice Garcia, faulting the city’s finance director for not being more informative prior to 2012 when the deficit was discovered.
Other public speakers blamed city leadership for using enterprise funds designated for the water and sewer funds to pay legal fees and settlements from public works lawsuits that totaled over $800,000.
Councilman Mike Brennan told the audience that the “responsible parties” that led the council down the wrong path were no longer present.
“We chose a city manager that couldn’t handle the job,” said Brennan, referring to Steve Hallam, the city manager from 2006 to 2011. “He brought in inadequate personnel. Every one of you are paying for those decisions.”
Prior to the vote, Councilman Farrell Jackson stated the rate increase was not something he wanted to do, but he was going to support the rate hike due to the necessity. He added that prior to 2009; the city used a fixed rate.
“A fixed rate is something we should have done years ago,” said Councilman Don Petersen. “A flat rate on sewer and still using a volume (rate) on water is the way to go.”
The city provides water and sewer service to over 7300 customers. According to City Clerk Kathy Teixeira, only 161 customers provided written protests to the rate hike fee, seven of which were disqualified as duplicate residents of the same service address.
With Mayor Pat Paul again absent, the council voted 4-0 to apply the rate hikes.
Under the proposal, the rate structure will eliminate volume based wastewater charges for the city’s residential customers who in January 2014 will start paying a monthly flat rate charge of $42.02. That fee rises to $48.32 six months later in July 2014, then to $55.67 in July 2015 and $61.27 the following July.
The water rate, which already had a 10 percent increase in July, will increase eight percent in July 2014, and five percent in July 2015. Future increases for 2016 and 2017 will be based on the San Francisco Consumer Price Index.