Amid a dwindling water utility fund, the Healdsburg City Council is considering the possibility of increasing water rates by roughly the equivalence of two 5.4% rate increases. Rate prices will vary per household and some may see an over $7 increase.
While the city council typically approves a series of rate increases spread out over five years, the rate increases need to be implemented in just one year to match inflationary costs and due to the need for updating aging water utility infrastructure.
Water rate consultants are proposing to increase all potable water use rates by $0.49 and fixed monthly service water charges for single-family homes by about $3 effective July 1, 2022. The proposal for wastewater is to increase the single-family monthly service charge from $37.33 to $43.21, a 16% increase, effective July 1. The overall wastewater usage rate for residential would be a 2% increase from a wastewater rate of $10.41 to $10.62.
The need to consider rate increases is also being driven by another year of severe drought. As residents use less and less water in an effort to conserve, water bills are consequently lower, meaning the city’s water and wastewater funds are receiving significantly less revenue.
Less revenue is an issue because the water utility still has fixed costs such as employment costs, infrastructure maintenance and improvement costs to address old water infrastructure.
If the council were to approve water and wastewater changes, the following water rate schedule would go into effect:
Water usage rates ($/hundred cubic feet – HCF):
— All potable water use: Current: $5.51. Proposed: $6.00
— Riverview Homeowners Association non-potable water: Current: $1.44. Proposed: $1.47
— Hydrant water sales: Current: $11.02. Proposed: $12.00
Fixed monthly service charges:
— Single-family: Current: $23.19. Proposed: $26.21
— Single-family + Accessory dwelling unit (ADU): Current: $23.19. Proposed: $20.02
— Multi-family: Current: $16.13. Proposed: $15.60
Non-residential
— Up to 1” meter: Current: $37.09. Proposed: $41.44
— 11/2” meter: Current: $71.54. Proposed: $79.53
— 2” meter: Current: $113.07. Proposed: $125.23
— 3” meter: Current: $210.02. Proposed: $231.86
— 4” meter: Current: $348.47. Proposed: $384.19
— 10” meter: Current: $1,593.91. Proposed: $1,831.36
Water bill impact analysis
So what would a water bill for a single-family home look like under the new proposed rate changes? Well, it depends on if the household has low, median, average or high water use.
According to the council’s agenda report, a single-family home that has a monthly HCF of 5 would have a bill around $56.21 under the proposed rates, about a five-dollar difference from current rates. A single-family home with a monthly HCF of 6 would have a bill around $62.21, also a five dollar difference from current rated.
A single-family home with a monthly HCF of 9 — the average use for single-family homes — would have a bill of $80.21, a $7 increase from current rates.
A single-family home that has a high monthly HCF of 20 would have a bill around $146.21, a $12 increase from current rates. A single-family home with an ADU that has a monthly HCF of 9 would have a bill of $94.04, a $1 decrease from current rates.
Looking at wastewater
If the council were to approve water and wastewater changes, the following wastewater rate schedule would go into effect:
Monthly service charge:
— Single-family: Current: $37.33. Proposed: $43.21 per dwelling unit.
— Single-family with ADU: Current: $37.33. Proposed: $29.58 per dwelling unit.
— Flat rate: Current: $99.76. Proposed: $96.31 per dwelling unit.
— Multi-family: Current: $35.50. Proposed: $35.00 per dwelling unit.
Non-residential
— 1”meter: Current: $60.67. Proposed: $70.14 per meter.
— 11/2” meter: Current: $118.49. Proposed: $137.49 per meter.
— 2” meter: Current: $188.16. Proposed: $218.31 per meter.
— 3” meter: Current: $350.82. Proposed: $406.89 per meter.
— 4” meter: Current: $583.15. Proposed: $676.29 per meter.
— 10” meter: Current: $2,673.10. Proposed: $3,235.59 per meter.
Wastewater usage rates ($/HCF):
— All residential: Current: $10.41. Proposed: $10.62 per HCF.
Non-residential
— Low strength: Current: $9.37. Proposed: $9.55 per HCF.
— Medium strength: Current: $13.62. Proposed: $13.97 per HCF.
— High strength: Current: $19.85. Proposed: $20.44 per HCF.
Wastewater bill impact analysis
For a single-family home that has a low wastewater use, the bill under the proposed rates would be approximately $75.07, a $6 increase. For a single-family home that has an average wastewater use, the bill would be $96.31, an almost $7 increase. A single-family home with high wastewater use would pay around $149.41, and over $7 increase.
A single-family home with an ADU with average wastewater use would pay less, about $13 less, under the proposed changes.
Why raise rates during drought?
According to consultant Mark Hildebrand, there are several drivers behind the need to increase water rates, including the recent reduction in residential water use, inflation and deferred capital spending.
“There has been a pretty significant reduction in water usage. I understand that it is hard for people to accept that they use less water so they get charged more, but the fact of the matter is that utilities have a very large amount of fixed costs, costs that don’t go away when water usage goes down and you have to continue to pay personnel, you have to continue to maintain your infrastructure,” Hildebrand said during the most recent Healdsburg City Council meeting.
Hildebrand and Healdsburg Utility Director Terry Crowley presented water rate study information and the proposal for water/wastewater rate changes to the council on March 21.
According to Crowley, approximately 20 miles of the city’s water system is over 50 years old and is either at or approaching the end of its life. Because of this aging infrastructure, there have been several recent water main breaks, including one on College Street, one on Terrace Boulevard and one on Brown Street.
When breaks occur they are patched, but this is really only a temporary fix, not a permanent solution. The goal would be to replace the oldest water mains in town, however, the price is steep at an estimated $20 to 30 million.
“It needs to be replaced. Our ability to deliver water were constrained because we have older pipes that are smaller and we need to replace them with newer pipes that are larger,” Crowley said.
Additionally, the water/wastewater increases were proposed for 2020-21, however, the utility department felt that introducing increases during the height of the COVID-19 pandemic and related economic downturn wouldn’t be good for residents.
The reasons behind the need for a wastewater rate increase are similar to that of the water rates, plus, the sewer utility has not raised rates in six years. Inflation is impacting the wastewater fund and there’s a need to support employment and system maintenance costs.
Both the water and wastewater utilities also carry significant debt from 25-year-old regulatory mandates.
The proposed rate structure would recover more costs through the fixed charge and would affect some customers more than others, according to Hildebrand. He said Healdsburg doesn’t have the highest rates in the region, but it is higher than average rates.
“When we have almost 30% of our residents considered seniors, they don’t have the opportunity to try to increase their revenue in order to pay for expenses like this,” resident Don Taylor said during public comment. “It’s a little bit disappointing when we see we’re trying to conserve and rates are going up and while I understand some of that, that is a concern.”
A final recommendation for the rate changes will be made to the city council at their April 18 meeting. If the council approves of the changes, Prop 218 notices would be sent out to ratepayers by April 25, notifying them of a public hearing.
Prop 218 is a part of the California Constitution and stipulates that water/wastewater fund revenues shall not exceed funds required to provide service, nor be used for another purpose. Services must be actually used or immediately available and the rate approval process must include a 45-day notice, a public hearing and written majority protest, if any.
The hearing would take place on June 21 and ratepayers would have the opportunity to mail in or voice rate change protest ballots.
If more than 50% of Healdsburg’s ratepayers protest against the rates, then by law, the city is not allowed to raise the rates.
“Anything less than 50% protest, the council would have the authority to vote on the proposed rates which would be implemented in July,” Hildebrand said.
