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Water and sewer rates will head skyward for Sacramento residents after July 1 – and will continue rising for three years – as the city tries to raise revenue needed to pay for infrastructure improvements.
City Council members Angelique Ashby, Steve Cohn, Rob Fong, Jay Schenirer, Kevin McCarty and Darrell Fong voted in favor of the rate increases, which were recommended by the Utilities Rate Commission and the city Department of Utilities.
City Councilwomen Sandy Sheedy and Bonnie Pannell were opposed.
“Our current water rates are among the lowest in the region, in the state and in the nation,” City Manager John Shirey said Tuesday, “and they will remain that way with the proposed rate increases.”
The Council approved a yearly 10 percent rate increase for water customers for the next three years, along with 16, 15 and 14 percent increases for wastewater rates over the same time period.
With the increased rates, the utility bill for the average single family residence is estimated by Utilities Department staff to average an increase of $288 per year.
Revenue from the fee increases will be directed toward long-awaited infrastructure projects in the city, including a retrofit of the city’s two water treatment plants and replacement of approximately 11 miles of worn-out water system pipes and four miles of wastewater/sewer system pipes, according to the city staff report.
Steve Archibald, chair of the Utilities Rate Commission, said the recommended rate increases are “absolutely necessary” to address the city’s increasingly inadequate water and sewer systems.
“Waiting until those systems fail should not be an option,” Archibald said.
The city will pay for the estimated $1.8 billion of infrastructure improvements with a mix of cash revenue (from the rate increases) and long-term bond financing, according to Dave Brent, interim director of the city Department of Utilities.
The proposed financing plan allows the city to invest in infrastructure and meet regulatory requirements while avoiding rate spikes for utility customers, the report states.
A study cited in the report indicates that the infrastructure projects will also create 6,446 new jobs over the first five years – 2,400 more than the proposed entertainment and sports complex is expected to create – and nearly $850 million of economic benefit to the region.
During public comment at Tuesday’s council meeting, 34 people signed up to speak about the rate hikes. The majority of speakers were in opposition to the proposal, largely because of the financial impact on lower-income residents.
“Are you completely insensitive to your rate-paying constituents?” asked Sacramento resident Lisa Garcia. “Do you think we have an extra $229 laying around to add to our utility bills? We don’t.”
Craig Powell, president of local watchdog organization Eye on Sacramento, said in a press release Monday that the rate increases are part of a “high-debt, high-tax, high-rate plan” that will result in costs to the average taxpayer in excess of $32,000 over the next 30 years – the financing timeframe for the infrastructure project.
“The city should fix city pipes the smart way, with less debt, less interest cost, less credit risk to the city and ratepayers and lower future rate hikes," Powell told Council members Tuesday.
Powell said his group recommends paying for the bulk of the infrastructure repairs on a "pay-as-you-go" basis.
Council members in favor of the rate increase said it would be painful – but critical to improve the city and avoid complete system failure in the future.
“I think it’s a necessary evil,” McCarty said.
“We need to strike a balance here,” Ashby said. “We don’t want to create such a burden on our citizens that they can’t handle, but we are talking about our water supply, and we can’t ignore it.”
Before casting an opposing vote, Sheedy said she was not in favor of the plan because she believes the cost is too steep for the current economy.
“It’s impossible for people who are struggling to keep going,” Sheedy said. “With all that is going on with the economy now, and not knowing what’s going to happen tomorrow – it’s just not the right time to do this.”
Details of the utilities rate increases can be found on the city website here.
Melissa Corker is a staff reporter for The Sacramento Press. Follow her on Twitter @MelissaCorker.