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| Water rate high rollers |
But the theme of the evening was City Council unity. It was deemed important by no less a personage than Josh Moran that a united City Council must go forth into the community and explain to the unhappy residents that they must not oppose this water rate hike lest everything we hold sacred be lost. Which is a wordy way of saying that they're going to hold the Water Enterprise hostage. Just like they're going to hold the Police Department hostage when they ask (again) for a UUT increase.
Everything is just so draconian. It is always 24/7 do what we say or we'll kill the puppy time with these guys.
In order to achieve this unanimity on the City Council compromise had to be achieved. It all broke down this way. The two Councilmembers who wanted the highest possible rate as laid out by the consultant were Mayor Walsh and Mayor Pro Tem* Harabedian. The MPT* believing $5 million in reserves was the most important thing, while Nancy apparently is still emotionally scarred by her experiences during the last water rate increase "process" in 2010. She doesn't want it to happen that way again.
On the other side of the divide were Councilmembers Capoccia and Koerber. They favored an approval of the lower rate as laid out by the consultant. While this would not result in reserves quite as large as those hoped for by the previous two, it would still get the job done. As explained by Councilmember Capoccia, the big concern is getting this rate increase past the residents. In his opinion there is a very good possibility that voting ratepayers will mail in the 1,800 or so Prop 218 ballots protesting the water rate hike, and send this effort down in flames. Something that could drive our at risk water company to the brink of some kind of a financial denouement.
Capoccia and Koerber were of the opinion that we don't need that big of a build up in reserves because the needed debt coverage would have been achieved, and the major projects already accounted for. One way or the other. The unspoken message here being let's not make reserves so large that some future council won't decide to do something financially ruinous, like float another bond.
It was then that Josh Moran gave his speech on the need for compromise. It wasn't that he didn't want to side with the Mayor and MPT,* it was just that he recognized an inherent danger in the message that would be sent by a 3 to 2 split City Council vote. And that unless the City Council showed a united front on the water rate hike, the chances for its defeat by the residents would improve markedly.
Here is the scorecard. The Mayor and MPT* wanted 19-18-18-4-4 for water. They got 19-18-16-4-4. The UUT3 wanted sewer rate increases to be 4-4-4-4-4%. Capoccia and Koerber allowed them 4-4-4-3-3%. The first increase is 2/1/14, the second 7/1/14. The rest comes yearly on July 1st of each year following. That is, if all this manages to survive Prop 218.
As shown by the April 2012 defeat of the UUT extension, residents are not in the mood to listen to City Hall calls for more money any more. No matter which department's bacon is to be fried. A lot of perspectives at City Hall were changed by that shocking experience, and the results were clearly on display last night.
The other elephant in the room was this City's massive water bond debt. Chris Koerber laid that all out this way. Debt servicing is a $1 million dollar cash flow problem. Currently the water system is budgeted (2013 - 2014) to have $3.637 million in revenues and $3,428 million in maintenance and operations expenses. Which leaves only $209,000 to service $995,000 in just the current bond debt obligations.
Here is the good part:
What was the thinking on the 2003 $6,750,000 bond issue? One that is interest only with 5,5% interest until the year 2020? Not $1 has been paid on the principal has been paid on the 2003 $6.75 million dollar bond issue. Yet we have already paid $3,270,909 in interest! Prior Councils did not raise rates adequately to deal with this. It is time for the City Council to fix this without incurring more debt. It pains me to support such a large increase, but it needs to be done.
A little object lesson on how a $6.75 million bond issue was turned into nearly $15 million in debt. A sorry legacy that has put this City into the financially disastrous mess it is today.
As we should all be able to recall, it was during the 2010 water rate increase "process" that the City Council blinked. A massive home grown Prop 218 revolt (there is no other word for it) had resulted in an uprising that produced nearly 2,000 signatures. The spectacle of City Staff members throwing out ballots in order to get the number below the 1,800 or so threshold was not a pretty one. A lot of the deep mistrust many residents in this town feel towards City Hall has its roots in that experience. With many to this day believing the whole thing was stolen.
It was during that period in time when Mayor Joe Mosca (along with his devoted allies John Buchanan, Nancy Walsh and Josh "Mr. Compromise" Moran) caved. Rather than raise water rates adequately, which they could have easily done with the Prop 218 effort having been defeated, they instead opted for what they'd hoped would make them liked. They raised rates far less than what was adequate to deal with the financial pressures the Water Company was under.
This resulted in a two-fold failure. First it didn't make any of them more likable, plus it also kicked the obvious problems down the road. Last evening's events being the culmination of that sorry process, and the end of that road.
What we saw last night could have been done three years ago. It wasn't, and now the City is about to face the prospect of its second Proposition 218 struggle in a short period of time.
Which raises one more question before I stop typing. Why is it the City declined to support the Prop 218"process" in 2010 by sending out protest ballots, yet is falling all over itself to do it this time? I find this to be rather mysterious. It is a radical behavioral change on the part of our city government, and one I did not anticipate. I had assumed that residents opposed to the water rate increase would be on their own once again. Yet here the City is showing quite a lot of enthusiasm for doing it themselves.
The only thing that I can figure is City Hall has figured the odds and has decided their chances of winning are greater if they control the Prop 218 deal rather than the residents.
And that smells like fear to me.
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