by Ruth Musser-Lopez
NEEDLES—Over the objections of a number of residents, the Needles City Council on Tuesday April 12 voted 4-2 to raise water and water treatment rates in this city of 4,884 at San Bernardino’s extreme east end on the west bank of the Colorado River.
In the weeks prior to the vote, local opposition against the rate increase had mounted, with activists encouraging rate payers they spoke with to hand deliver written opposition to City Hall, particularly with regard to the planned sewer rate increases. Nevertheless, only two of the council’s members, Louise Evans and Shawn Gudmundson, dissented in the vote at the public hearing calling for an increase in water and wastewater service rates.
The new water calculation will include a basic fixed charge of $38.49 for a 3/4” size water meter, which is in the “lower half of water rates in San Bernardino County,” according to Needles City Manager Rick Daniels. The current method of calculating the rate provides for the first 1,000 cubic feet as part of the fixed basic service charge of $38.91, but the new rate structure does not include a given amount of water as part of the new basic service charge. It is thus unclear whether the city is making a straight across comparison in its countywide rate ranking.
Ratepayers will now pay the base rate and for all water that they use on top of that. Further, the amount they pay for those precious drops will increase 20% from $1.54 to $1.85 imposed on every 100 cubic feet of water. Thus, the old basic supply of 1,000 cubic feet will cost $18.50 and every 1,000 cubic feet after that will be increased from $15.40 to $18.50, a net increase of $3.10 or a 20% increase. Daniels stated the volumetric rate is in addition to the 42 cent reduced base charge “in order to allow folks to control their bills by regulating their use to achieve conservation requirements of the state.”
The city estimates that the average charge will be $65.00 per month for water and Daniels asserts that the typical residence will see an overall decrease of $.44 in their monthly bill. Gudmundsen objected strongly to the basis of this “overall” calculation, saying it was misleading since the Prop 218 adjustments lowering electricity rates were figured in and should have nothing to do with how the water rate restructuring is presented to the public.
Controversy also centered around the need for the rate increase—how the increase can be justified —and how the rates are calculated. Three concerns expressed by the public pertained to 1) cutting losses — considerable concern has been expressed in recent weeks that the increased rates were based upon artificially low historic utility income due to the fact that the city failed to collect payment for services from a privileged class; 2) controlling costs — concern was expressed that the city included in its calculations the cost of improvements that under the requirements of Proposition 218 would have required a vote of affected residents to approve a neighborhood specific property assessment instead of a rate increase on the entire community; and 3) the city is using what some residents maintain is an unfair standard, known as an equivalent dwelling unit (EDU) system, to calculate the sewerage rate increases. Proposition 218 allows city officials to minimize the requirement that those subjected to tax or rate increases by a governmental entity approve them first by allowing cities to call for a show of opposition to the rate or tax increases through letters of protest. Thus, if a majority of residents do not send in such letters of protest, the rate or tax increase stands. Virtually never do such letter of protest efforts reach the crucial majority threshold.
City officials sought to put the best face on the increases. Prior to the water rate increase vote, utility board member Steve Moffitt stated that “It’s real simple and fair…you use more, you pay more.” City manager Rick Daniels asserted that the city’s collections policy had been revised and now would be fairly applied and enforced with cutoff being thirty days after non-payment. As far as funding repairs and improvements, Daniels said that the city’s operations will comply with state regulations as far as what can be funded and what can’t. Public sentiment was expressed however that the city was not doing enough to cut costs. Some charged that the city manager glossed over the fact that of the $290,000 figure paid to a contracted firm to run the sewer plant, much of that cost would not be necessary if the city had its own certified Class IV plant operator/manager.
The new flat rate of $1.85 per 100 cubic feet is estimated by the city to be the cost of service or the cost of delivering water. But some rate payers expressed concern that the rate increases reflect a cost greater than the actual cost to the city in delivering the service and that the ratepayers are thus defraying the increases in pay and benefits to the management echelon at Needles City Hall and within the city’s utility division.
Resident activists characterized those pay increases as “extravagant,” given Needles standing as San Bernardino County’s least populous city and one which ranks at the bottom of the county’s 24 cities in terms of household income and tax revenue into municipal coffers per capita. Needles’ low income ranking is on the order of the cities of San Bernardino, which declared bankruptcy in 2012, and Adelanto, which declared a fiscal emergency in 2013. The same critics of municipal operations also cited the city’s failed collections program in the very recent past.
Needles’ city attorney, John Pinkney, reported that his firm had prepared or reviewed the Prop 218 notifications, related resolutions and the method in which the protests would be validated and interpreted as to whether a majority existed in the count. He clarified that the Prop 218 allows the council to take action, or not, at their discretion. The city clerk, Dale Jones, announced that 75 protests had been received against the waste water rate restructure plan and that 26 protests had been received against the water rate restructuring plan.
Opponents allege that the low number of written objections is due to lack of voter education and the fact that in the local media, the opportunity to object was couched in long articles predicated by the oratory on city officials’ assertions that more funds were necessary to provide the services. Opponents have further asserted that the only notification that rate payers received regarding the need to put their objection in writing was surreptitiously printed in small print on a confusing brochure available at the public presentations that were made by the city manager.
Public comment was received from Debra Downey, who said that she had been appointed by a larger circle of citizens to ask why the city had waited so long to comply with Prop 218, citing the city’s assertion that the law went into effect in 2010. Prop 218 was actually passed in 1996 according to the Public Policy Institute of California. Pinkney claimed that he began working on the changes soon after he was appointed city attorney. Needles Utility Board members Steve Moffitt and Terry Campbell testified and indicated that compliance efforts began around 2010.
The controversial brochure, opponents say, obfuscated the manner in which the sewer rate increase was calculated. Needles Utility Board Member Terry Campbell, a former councilman who was ousted in 2014, asserts that the new rate structure is fair because it is based upon an Equivalent Dwelling Unit system. When concerned citizens learned that the “engineer” who designed the system had “retired” and could not be contacted to corroborate some publicly contested calculations, many lost confidence in Mr. Campbell’s plan.
The brochure asserted that the EDU is generally calculated as the cost of providing service to a typical single family residence (one unit). The EDU is established at $41.54 per month. The monthly service charge up until this week was $39.67 for a single family residence. Thus, the basic increase is calculated at 4.7% more than what was being charged up until this point. Further, the city plans to authorize annual inflationary adjustments or cost of living adjustments (COLA) which will be added to all rates on October 1st of each year beginning in 2017 subject to the proration of the initial COLA.
Under the rates approved this week, the Needles Unified District’s sewer bill will increase 300% to $8,000 per month, a price that members of the Needles Unified School District Board objected to. School board president Shane Breaux expressed to the utility board in March that the school district wanted to pay its fair share and do its part to enhance the community, but district officials did not believe the formula to be fair. Further, Breaux emphasized that the district had not budgeted for the kind of rate shock the city was suddenly imposing on the district. Breaux was deeply concerned that it would be the school children who suffer from the rate increase because the district would most likely need to cut back on staff and student’s educational programs.
The largest user of water and water treatment services in Needles is the school district. Prior to the council’s action this week, the school board had earlier met with city manager Rick Daniels, who relayed to the utility board the concerns the school district was having with the calculation. Daniels informed the utility board that the EDU for the school was calculated using a formula based on total enrolled students (1005) rather than average daily attendance (795). He explained that the higher figure had been provided to the engineer doing the calculation but that the city staff could have used the average daily attendance figure instead. Daniels provided very articulate advice to the utility board and informed them that “Schultz” the “engineer” who calculated the amounts, had retired and could not be contacted. Daniels asserted that had the engineer been at the meeting he could have substantiated that the average daily attendance figures would more accurately reflect a proportional fair charge. The utility board seemed to dismiss Daniels’ advice and moved forward to approve the rate restructuring.
Had the utility board, made the correction in accordance with its legal authority, the school’s charges would have been lowered to $7,000/month a savings of $12,000 year. The utility board refused to make that downward adjustment, saying the revenue stream from the school district was needed to balance the utility division’s budget. One board member suggested that the consequences would be even higher rates in the future if the current rate increase is not effectuated. Daniels told the utility board the city would need to go through the Proposition 218 protest process again.
Bruce Pocock, chairman the utility board was concerned that if the board changed the calculation for one party prepared by the engineer based upon an empirical rate study, then there would be others who would want changes.
Robert Benoit, the head of the city’s waste water division, attempted to add support to the argument that the school rate should be higher since potency of the waste is an issue. He claimed that homes have showers that dilute the waste but said nothing about the fact that the schools also have showers. Absent the engineer who did the calculations, questions could not be answered as to the intensity or dilution of the schools effluent or whether the schools being closed on weekends, holidays and during the summer was taken into consideration.
Other utility board members echoed the sentiments of Pocock and Benoit, expressing their view that the utility division must concern itself with the fiscal integrity of the utility division and could not make special allowances for the school district. They said the city would have the option of adjusting the rates downward without having to use the Proposition 218 process if the utilities department’s financial problems were straightened out.
The Utility Board’s meeting was held on March 15. On April 8, four days prior to the council meeting, Daniels responded to questions from the Sentinel saying that an adjustment had since been made to the school district’s EDU calculation to use as its basis the average daily attendance figure rather than the 1005 enrolled students figure. Needles Unified School District superintendent, Dr. Mary McNeil appeared before the council to thank them for working with the district on this matter.
Since February, about 85 people in total showed up at the eight community meetings and workshops that Rick Daniels held to discuss the rate increases.