Approximately 15 residents attended the regular meeting of the Phillipsville Community Services District board of directors last Wednesday, Sept. 4, principally to discuss the proposed rate increase.
The PCSD board has proposed a substantial rate increase with stepped raises each year for five years, as well as initiating a tiered rate structure that will increase the cost of water per unit as customers use more water.
Ronnean Lund, an engineer from the California Department of Public Health (CDPH) - Drinking Water Division, was on hand as well as John Van Den Bergh, a consultant from the California Rural Water Association who has been advising PCSD on how to match their rate structure to their financial needs.
The board will hold a protest hearing at a special meeting tomorrow, Sept. 11, at 10 a.m. to review written protests and hear more public comment on the proposed new rates.
Each property owner has the opportunity to protest the new rates by submitting a written protest before or at the hearing. If the total number of protests represents more than 50 percent of the landowners in the district, the rate increase will fail, and, as board chair Bonnie Mullaney said, “We'll go back to Square One.”
Discussion of the rate increase was complicated by the fact that CDPH found 19 violations in PCSD's water treatment and distribution system during a recent inspection. Many of these violations refer to monitoring, reporting, and mapping, which will require additional staff time.
But a handful of the violations have apparently been caused by flaws in physical parts of the plant, particularly in the filtration system and other parts of the infrastructure installed during the recent upgrade project, which was funded entirely through a grant from the American Reinvestment and Recovery Act (ARRA).
Members of the public expressed anger that they were being asked to raise rates because of errors in the construction of their new system, which will require fixes and replacements that PCSD will have to pay for out of its own pocket.
Asked what she thought was the cause of the mistakes, Mullaney said she thought it was “collective,” but Lund was extremely critical of the engineer.
Apparently the engineer assigned by SHN Engineering of Eureka, who designed the project, was not onsite to check the contractor's work to make sure they followed specifications in the contracts and drawings. Nevertheless the engineer signed off on the drawings, stating the completed work was “as is.”
”But it wasn't ‘as is,'” said Mullaney, adding, “For the record, we have no problem with the contractor.”
Mullaney and the board concluded that the problem was in large part due to the district's lack of an operations manager to oversee the work of outside contractors.
”I was at Redway and Garberville CSDs [talking to their field staff] today,” said Lund, who represents CDPH to other local districts. “It's the same everywhere. You need to have staff there on site every day to babysit the project.”
Qualified operations managers are expensive, however. Mullaney said she hoped the proposed rate increase would pass so the district could afford to hire someone to professionally manage the district. Down the line, this would save money because the in-house manager knows what the district needs to do to comply and can plan and direct successful projects, as well as oversee day-to-day operations to be sure the system is operating in compliance with all regulations.
A number of people called for legal action against the engineer individually or against SHN, but board member Terry Wogan, as well as Lund, pointed out that the cost and time needed to do so would not be worth the results. “And it's not the subject of this meeting,” Wogan added.
Lund admitted that some of the compliance issues had been ignored by CDPH during the several years it took to find funding that would enable PCSD to afford the improvement project. There was no point in inspecting a system they knew was out of compliance when the district was working on how to fund the needed improvements, she said.
After about an hour discussing this issue, consultant John Van Den Bergh, who advises public water districts at no charge on behalf of the California Rural Water Association, gave a Power Point presentation on how the new rate structure was developed.
The main purpose of the rate increase is to provide adequate funding for both day-to-day operations and to set aside for capital improvements that will be needed as the existing infrastructure deteriorates. The long-term goal is the equivalent of complete replacement of the system in the next 50 years.
The purpose of tiered rates is first, to encourage conservation in a time of growing water shortages, and second, fairness by charging the largest users the most.
CDPH requires all public water districts to have a capital improvement plan that establishes priority projects and accounts for funding them for the next five years. At the end of five years - or sooner, if the district wishes - a new five-year plan must be developed.
The plan Van den Bergh and the board proposed begins with some relatively simple and inexpensive improvements, such as repairing the well generator and electronic monitoring devices, re-working the piping at the spring, and moving an unused 5,000-gallon tank to the spring for increased storage capacity.
It also includes some larger projects that possibly could be funded through grants, including installing a “seriously larger” tank at the spring, as well as an electronic monitoring system, and a booster station that could pump well water to the spring to accommodate changes in supply and demand at both points of water intake.
Additionally, PCSD needs to set aside at least $5,000 in reserves for emergencies.
Finally, the biggest item is compensating for depreciation of the current system by saving for future replacement. Van den Bergh explained that the actual amount needed to fully cover depreciation would be unrealistic compared to ratepayers' ability to pay, so he based his figures and the rate increase on covering half the depreciation.
In spite of that, Mullaney characterized the increases as “scary.” Customers who currently use the average household amount of 1,000 cubic feet per month will see increases from the current $30 per month to $42.50 as soon as the rates go into effect, $48.88 a year from now, up to $69.56 per month in Year Five (late 2017).
Members of the public agreed the increase was scary, and discussion continued. One person repeatedly noted the low-income status of most households in Phillipsville and urged the board to find some other way to find funding, or to find subsidies to help the lowest-income residents pay their bills.
Lund pointed out that under California law, everyone in a public district must pay the water rates by the same rules; exceptions cannot be made because of hardship or status, such as age or income level. If the district wishes to subsidize rates for these types of reasons, it must find another source of funding to pay for the subsidies, such as grants or fundraising.
Landowners within the PCSD boundaries, whether or not their parcels are connected to the system, are entitled to one protest vote per parcel. Protest votes must be in writing and can either be mailed in, brought to the district office upstairs in the fire hall, or placed in the PCSD box outside the fire hall.
Protests will be accepted up to a point in tomorrow's hearing when Mullaney closes the protest period. Oral comment is welcome but does not count as a protest vote.
If the proposal fails because of protest, the board cannot raise rates until a new proposal is developed, dully noticed to every landowner, and aired at public hearings as required by California Proposition 218.
Tomorrow's hearing will be held at 10 a.m. at the Phillipsville fire hall.