Morro Bay hasn’t raised water rates for 20 years.
But that’s changing, as the City Council says it’s trying to play catch up with the costs of upgrading aging infrastructure and complying with requirements to cover bond debt.
The council voted 5-0 on Tuesday to approve rate structures that would roughly double water and sewage treatment costs by the fiscal year starting July 1, 2019. The new rates would rise each year.
In addition, the city must pay for planning and designing a new sewage treatment plant, as it continues to operate a deteriorating 62-year-old plant.
Sewage treatment rates in Morro Bay haven’t gone up since 2007.
“The reason we’re making these tough choices now is because past councils didn’t make the necessary increases to keep up with costs,” Mayor Pro Tem Christine Johnson said. “Our water fund has a deficit of $900,000. We have to act responsibly. We’ll have an intensive public education campaign to make people aware of these costs and why we’re increasing rates.”
The typical family that uses just under 150 gallons of water per day is projected to pay $75.50 monthly in 2019, compared with $33.20 now for the same amount of water.
The proposed sewer rate for the average single family will be $83 per month by 2019 compared with $45.49 a month now.
With the approval of the rate structure, the city will be sending out Proposition 218 notices in early April that allow residents to protest the proposed rate increases. A successful protest would require more than 50 percent of ratepayers to object to the proposed hikes.
A public hearing to establish the new fees will be held May 26.
Several factors have contributed to the council’s decision to increase rates, according to a staff report by city Public Works Director Rob Livick and a rate study by consultant firm Bartle Wells Associates.
The city estimates it will have to pay about $9 million in infrastructure improvements to the water system over the next decade and about $10 million to maintain its aging sewage treatment system before its new sewage treatment plant is built. The city’s infrastructure costs include repairing water and sewer pipelines that are 50 years old.
Morro Bay also is falling behind on paying off bonds for its water services, and received a warning letter from the Central Coast Water Authority last year.
Morro Bay’s goal is to build the new sewage treatment plant in the next five years. Falling behind on debt payments could affect the city’s ability to obtain low-interest loans from agencies such as the State Revolving Fund to pay for the sewage treatment system.
Morro Bay also will incur expenses for its new sewage treatment facility, estimated to cost $75 million.
In addition to the new water and sewer rates, the City Council approved a temporary surcharge if the city needs to use its desalination plant. The surcharge would be based on the cost of producing the treated seawater with some reductions in total cost because it would then need to buy less water from the state.
The desal plant was used as the city’s primary water supplier for a few months in 2010 and is now being used on a limited basis to treat groundwater with high nitrate content.
The desalination treatment surcharge would be about $9 more per month for customers if the state were to supply no water to the city of Morro Bay and the desalination plant was fully operational during that month.
The City Council also approved an emergency water shortage measure that gives it the authority to adopt emergency rates, along with regular rate increases, in times of extreme water shortages to help pay for extra costs.
City Manager Dave Buckingham said he believes that by setting rate increases in motion, the council took bold action last week that past councils were unwilling to take.
“I applaud this City Council, unlike past councils, for making this decision,” Buckingham said. “It’s not easy to raise rates. Specifically on the water side, the inaction of past councils has caused a doubling instead of a gradual increase over 20 years.”