In the News

Santa Cruz council takes first step toward raising water rates
Residential customers cut use 23 percent in June

By J.M. Brown, Santa Cruz Sentinel, 7/23/14

SANTA CRUZ — The Santa Cruz City Council agreed Tuesday to consider a five-year water rate increase and two-year drought-recovery fee to recover revenue losses from mandated conservation, fund improvements and setting reserves as bulwarks against future dry periods and other emergencies.

"If we ask people to reduce, we have to fill the financial gap to keep our head above water," Water Director Rosemary Menard said.

Menard proposes increases of 10 percent in the basic service charge and separate usage charge every year for the next five starting in October and continuing every July thereafter. The drought recovery fee would only be for this year and next.

A public hearing will be set for Sept. 23. At Vice Mayor Don Lane's urging and in response to concerns about the plan's duration, the council agreed also to look at only a 21-month increase and await the outcome of a study to more closely tie rates to consumption.

During the proposed five-year period, the Water Department anticipates raising $40.5 million in additional funding and $3.25 million in drought recovery money. By comparison, the department's annual operating budget is $25 million and its capital improvement budget for 2015-2017 is $38 million.

The rate increases also will generate new general fund tax revenue for the city because of a utility users tax of 8.25 percent applied to water charges. The Finance Department expects up to $880,000 in new revenue available to pay for basic city services during the five-year period under the proposed rates — a figure that includes the city's own increased costs for buying service from itself for municipal property.

Some residents urged the council to hold off on a long-term increase until the rate study is done and a citizens advisory panel makes recommendations about a future long-term water supply. Also, the city will know then whether customers return to typical use if normal rain levels return this winter.

"You can see how much your customers bounce back to old practices," water activist John Aird said.

Water officials updated the council on consumption patterns nearly three months into the city's first rationing program in nearly 25 years. The department sought to reduce water production 20 percent less than in 2012-13 and to keep Loch Lomond Reservoir at no less than 45 percent full by October.

The city's conservation is on target, 18 percent down in May and 23 percent down in June, compared to last year. So far for July, production is down 20 percent over last year, and 92 percent of residential customers are using their allotment of water or less.

"There is a whole lot of reduction in water use going on," said Toby Goddard, administrative services manager. "July is typically the time we peak, so this is a real important month for us to make sure we achieve our targets."

The city has already tapped a $2.3 million fund to stabilize rates for customers during the drought.

Lynda Sisk, owner of Hot Springs Spas, urged the council to drop restrictions on filling hot tubs, which she said is creating a big downturn in her business. She said hot tubs save water for people who need them for therapeutic reasons who will likely take long showers and baths instead.

"Make your allotments and allow consumers to determine how to use their allotments and not tell me what to do with them," she said. "We should not be singled out as one industry."

At Lane's urging, the council directed staff to study whether to exempt hot tubs as the city compiles a list of possible changes to its ordinance.

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