As Paso Robles pushes through the controversy of raising its water rates to fund the Nacimiento Water Project, it remains the last partner of the project to secure funding for it.The city faces severe hits to its reserves if it can’t increase customers’ water rates to pay for its share.
The county fronted $176.1 million for work on the 45-mile pipeline through bonds sold in 2007.
And now those who signed up for the water — Paso Robles, San Luis Obispo, Atascadero Mutual Water Co., Templeton Community Service Services District and a county water treatment plant that serves Cayucos — will have to start paying it back when the bills come due in mid-2010.
Each entity is contracted into 30-year repayment plans with additional interest charges.County officials confirmed that Paso Robles is the final participant to secure its revenue. Four attempts to raise water rates in Paso Robles have failed or have been redone for various reasons.
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“We do not want to speculate on Paso’s ability to pay their future bills at this time,” said Will Clemens, administrator with the county Public Works Department. “In the unlikely event of possible default, our first step would be to meet with Paso to assess the situation.”
Paso Robles leaders are working to develop another rate plan and will seek public comment for additional ideas at a workshop set for Wednesday.
The city will then unveil its newest proposal early this year using input from that meeting and plans already in the works.
The city has proposed four water rate plans in the past three years in hopes of addressing concerns raised by a local citizens group.
Voters rejected the latest proposal in November. Previous attempts were stopped through a mix of protest ballots headed by the Concerned Citizens of Paso Robles and the city rethinking its efforts to meet public needs.
A consultant was hired, a method based on a fixed monthly amount was re-thought and a consumption-based structure was added. Its newest plan is said to include a low-income aspect.
In July 2004, Paso Robles created a rate increase plan to help pay for the water, similar to what San Luis Obispo implemented.
However, in early 2007, actual project costs came in higher than the 2004 estimates, according to City Manager Jim App, and the rates needed to be higher.
That is when Paso Robles hit trouble. The Concerned Citizens, headed by John Borst, began its effort to change the way rate hikes were established.
Concerned Citizens’ main sticking point is that the city should refer to the rate increases as a special tax, Borst said, not as a charge on a water bill.
Some group members — including those representing seniors on fixed incomes, for example — also presented concerns about the rising costs of their utilities.
City staffers and elected leaders have long said Paso Robles is acting within the law in finding a way to pay for the new water and maintain that it’s not a question of whether to raise rates, but how. The water will benefit current and future residents, officials have said.
Here’s a look at how the other entities are paying for their share of Nacimiento water, according to Clemens and other officials:
• The county water treatment plant that serves Cayucos paid cash for the capital component, and its current water rates are sufficient to cover annual operations and maintenance.
• San Luis Obispo has completed seven of the nine scheduled rate increases that the city set in 2004 and 2005 to pay for the Nacimiento pipeline, plus other water projects for the city, officials said. All water rates are based solely on usage. The increases are scheduled to end in July.
• The Templeton Community Services District partially paid cash for the capital component and has increased rates and charges to cover annual debt and operations and maintenance payments.
• The Atascadero Mutual Water Co. increased rates and charges to cover annual debt and operations and maintenance payments.