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June 4, 2023

City proposes five-year schedule for water rate increases

Year one would include a 2% increase for water rate payers

The City of Healdsburg is moving forward with a proposal to increase water rates. In year one, the rates people will see might include a decrease or increase, but in general, the sum nets out to a 2% increase. A five year schedule of the proposed rates show that in years two, three, four and five all of the rates will go up.

Single families will see a larger increase in year one, between 10 to 11%. Duplexes and apartments will see an increase of 5% and retail and businesses 9 to 11%.

With a presentation, the future water rate increases were discussed during Monday’s Healdsburg City Council meeting.

During the meeting, a motion was made and approved to accept the 2022 water and wastewater rate study as the basis for proposing multiyear rate increases, as well as a motion to prepare mail on the notice of public hearing on the proposed increases on June 21.

Mark Hildebrand, part of the Hildebrand consulting group, explained why the rates will increase and described the budget plans the city has to accommodate them.

Hildebrand said the main drivers to increase the rates are the reduction of water usage but also fixed costs utilities have.

According to him, less water means less revenue. Rates need to go up in order to cover the costs. Hildebrand said costs have been increasing at the rate of inflation as well.

“There was significant debt from a few years back, the city is looking at addressing infrastructure,” he said.

Debt is 20% of expenses and it dates from 15 years ago. Hildebrand added projects that have happened were expensive ways to fix ruptured pipes.

“It is better to have a proactive capital program that replaces aging pipes before they rupture.

Historically, capital spending has been under a million dollars over the last five years,” he said.

According to the presentation, city engineers were looking at spending 3.7 million per year based on the needs assessment.

Hildebrand said they revised capital spending and projects that were critical to being able to provide quality water service.

Single families will see a larger increase in year one, between 10 to 11%. Duplexes and apartments will see an increase of 5% and retail and businesses 9 to 11%.

The city is also proposing a water shortage financial strategy. In the event of a significant water shortage event, the rates will be adjusted in order to make sure the utility can still pay for its financial obligations. 

Hildebrand reiterated what is driving the rates is the debt from 20 years ago and utilities are focusing on deferring such debt. They are also subject to inflation and financially impacted by the new water use.

In the last graph presented, it compared a single family home bill to existing rates and proposed rates.

“A lot of these customers and many few of them carry the kind of debt the city carries,” he said.

Healdsburg Utility Director Terry Crowley said the next steps are to send mail notifications to people. It gives them the option to either accept the rate increase or protest it. The protest would come back to council on June 21 and protests will be counted. Upon the numbers, it will be decided if they can move forward with the rate increases or if they have to go back to the drawing board.

“These rates would be implemented in the July billing,” Crowley said.

Councilmember Evelyn Mitchell asked if debt ratios would not be met without the rate increases. The city has a microfiltration treatment for the water department. Crowley said the city was having issues with the wastewater treatment plan at the same time when such treatment was created.

“They have this compounding impact on the city and that becomes a big portion on our rates,” he said.

Public commenter Laura said she has been a resident of Healdsburg for seven years and is already concerned of current water rates.

“I have two questions for the council to consider. I am very concerned with the increased development that continues in this town. I see buildings everywhere and the more we develop the less supply. My question is to please stop this development and take it into consideration,” she said.

“Are there no other areas where we can get the funding to pay down this debt as opposed to raising rates so significantly?” Laura said.

In addition, public commenter Heather said knowing this debt needed to be paid, ‘How could we have better mitigate knowing we had this debt to cover?’

“I am looking at these increases echoing the comments of the person who spoke prior to me. Could we possibly look at raising rates more to the businesses instead of residents? Maybe their rates could go up at a percent that is higher than residents who are living with this on a daily basis,” Heather said.

Vice Mayor Ariel Kelley said they recognize there are other ways to think about the situation but because of the rules that govern the city, the city is restricted.

“We cannot go after other revenues but I wanted to acknowledge what the member of the public said. It is unfortunate and we are in a situation where there are folks where this is going to put a major strain on their finances. I agree we have to move forward with this but it is difficult to do because people in our community are in a tough financial situation,” she said.


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