SLO City Council OKs water, sewer rate hikes

San Luis Obispo residents will face higher water and sewer bills starting July 1, with a second rate increase next summer.

With about 730 water customers protesting — thousands less than needed to stop the increase — the San Luis Obispo City Council on Tuesday voted 4-1 in two separate votes to raise rates to cover ongoing maintenance costs, debt payments, and a drop in revenues from conservation.

Councilman Dan Carpenter dissented.

Part of the rate hike includes a drought surcharge to cover an anticipated decline in revenues because people are using less water.

The city’s water fund is expected to end the 2014-15 fiscal year with a $1 million shortfall, which will be covered by reserves. The drought surcharge was built into the water and sewer rates to cover any further decrease in revenues.

"Unfortunately the drought paints a sad reality," Utilities Business Manager Brigitte Elke said, as water consumption drops and revenue falls but the cost to maintain the water fund remains.

If winter rains bring relief and revenues outpace what city staff anticipates, the utilities director could reduce the drought surcharge.

Average residential customers using 6 units of water a month will see their bill increase from $100.95 to $112.34 on July 1 and to $117.55 on July 1, 2016. (One unit is equal to 748 gallons).

The proposal was met with frustration by some residents, who spoke at the meeting or sent protest letters beforehand.

“I have been conserving water for over three years now. I am down to bare-bones," resident Judith Griffin wrote to the council. "I feel like the less I use the more I am paying to keep the system in place that tracks the use and treatment of water.”

Other residents suggested the city cut staff or find other ways to save money to offset the increases, and consider halting building permits.

Two residents said they were upset that the hearing on rate increases was held at the end of Tuesday's meeting, possibly discouraging public participation. One woman, who declined to give her name, suggested the City Council put the 2016 increase on the ballot so all residents can vote on it.

"It's counterintuitive that as we conserve we continue to pay more," said Carpenter, who also suggested the city supplement its water enterprise fund with money from the general fund to avoid the rate increase.

That idea did not receive support for the idea from the council majority.

"If things turn around it's certainly possible for the rates to go the other way," Mayor Jan Marx said. "Right now we have a difficult situation and we need to move forward on this tonight."

The rate increase is not the first that residents have faced because of conservation. In 2011, a decrease in water use also caused a $1 million drop in revenues and later prompted rate hikes.

Some of the past increases paid for improvements to San Luis Obispo’s water system and for the city’s share of the Nacimiento Water Project.

Some money from the current sewer increase will go toward paying debt service for a large upgrade to the city’s sewage treatment plant, scheduled to start construction in 2016-17.

In the water rate increase, the base fee will increase from $5.28 to $7.63 on July 1 and to $9.98 on July 1, 2016. A drought surcharge of 37 cents will be added to the base fee on July 1, increasing to 74 cents next summer.

In addition, a drought surcharge will be added to the volume charges. The city has a two-tier structure with water use over 8 units charged at a higher rate than the first 8 units.

The sewer rate will increase 4.6 percent on July 1 and an additional 3 percent on July 1, 2016, with increases to the base fee and the volume charges.