Water rates too high? City of Sonoma orders review

After nearly a year of hard questions from self-described water policy “nerd” Chris Petlock and others, the City Council recently took steps to resolve questions about its 2014 water rates study, and come up with a new one.|

Relief for Fire Emergency Water Bills

On Nov. 20, the Sonoma City Council also authorized a special October 2017 water bill adjustment, to account for excess emergency usage by water fund customers.

“The October fires impacted the Sonoma area in many ways,” reads a notice on sonomacity.org. “Some City of Sonoma water customers responded to the fire threat by applying water to their property to reduce their fire risk. Others evacuated and returned home to find that a hose or sprinkler had been left on, or that their water facilities had been damaged by CalFire response activities.”

So the City Council agreed that customers may request a waiver for above-normal usage in the month of October.

Customers may request a water bill adjustment by using the October Fires Water Bill Adjustment Request Form, available on the City website at sonomacity.org. The form must be completed, signed and returned to the City by Jan. 1, 2018.

Normal water usage will be billed at standard water billing rates and the usual service rates apply.

After nearly a year of tough questions from self-described water policy “nerd” Chris Petlock and others, the Sonoma City Council has finally taken steps to resolve questions about its water rates policy, last reviewed in 2014.

The council voted 5-0 at its Nov. 20 meeting to allocate $75,000 to Raftelis Financial Consultants to work for about seven months on a public, transparent review of city water policies, and come up with a new water rates study to replace the 2014 study by Spilman & Associates.

At the meeting, the City Council heard from Michael Colantuono – who has been working under a $30,000 consulting contract to review the city’s water rates policy since the spring – and the product manager for Raftelis, Sally Van Etten.

Due in large measure to Petlock’s inquiries, the city has been under scrutiny for sizeable transfers from its Water Fund to the General Fund dating since at least 2011, transfers which may be illegal under the state’s Proposition 218.

As described by Colantuono, Proposition 218 has had an unanticipated but dramatic impact on municipal water rates since 2011, though it was adopted by voters 15 years earlier in 1996. The measure was called the “Right to Vote on Taxes Act,” and required public vote to approve any taxes imposed.

It became applicable to municipal utility bills with a 2006 state Supreme Court decision, and in 2015 it became painfully evident that it even applied to water billing, with an appeals court decision against the City of San Juan Capistrano for levying tiered water rates based on different water usage patterns by its customers. Charging differing rates to customers for the same utility service was seen as a revenue-raising device, or a tax; Prop. 218 prohibits such taxes without a public vote.

Like many other municipalities in the state, the City of Sonoma charges higher rates for higher volumes of usage – or tiers – ostensibly in an effort to encourage water conservation by making higher use more expensive.

Ironically, it was Colantuono who represented San Juan Capistrano in that city’s case, and who lost it before the state appeals court. Because of that background, he suggested he would be better able to handle Sonoma’s water rate requirements, and provide appropriate legal justification for any new water rate study “to satisfy judicial review.”

As Colantuono noted in his comments to the council, “The law is a moving target and you made your rates last before we got a clear picture of what is required,” referring to the 2014 water rate study.

It was on Colantuono’s recommendation that in June the City discontinued its practice of transferring funds from the water fund to the general fund, and sequestered over half a million dollars from previous transfers over the past three years. (That motion took place in closed session and without any public disclosure, which continues to rankle Petlock and other critics.)

By hiring Raftelis, the City’s stated goal is “to create a water rate study that is both simple to understand and yet also complex enough to fairly and equitably allocate the costs of the water system to its users,” according to City Manager Cathy Capriola’s report. In addition, it added, “The 2018 Water Study will look carefully at all costs and historical transfers/reimbursements to the General Fund,” presumably to include June’s vote and the transfers prior to 2014.

But Colantuono seemed to throw cold water on hopes for refunds to water customers based on the faulty assumptions of the 2014 rate study. “When you make rates, you’re making a set of predictions about what your costs are going to be, and what your revenues are going to be,” he said. “And the only thing that we know about predictions is that they’re always wrong.”

Therefore, he continued, “Because rate-settings are necessarily good-faith estimates, and we know you’re going to be wrong, there’s no duty to make refunds if you change your rates.”

In her presentation to the council, Van Etten outlined a four-step process of review, which Raftelis and the City intend to make as public as soon as possible, with multiple hearings and reviews between now and next June to come up with a new water fund study that can stand the tests of drought, flood and Prop. 218.

Following the presentations, Petlock himself – whose pointed critiques to the media and the City Council precipitated the review – was the first to approach the podium for public comment, bearing a stack of binders and reports signaling his pre-occupation with the issue.

After noticing that Sonoma’s were among the highest rates in the North Bay – yet “all buy from a similar utility, so why are costs so much higher?” – Petlock continued to analyze the water fund records. “Once I dug in I start seeing things like transfers for rent, payment in lieu of property tax, allocations for general fund support – all of these things were not OK.”

Though a Sonoma resident, Petlock works for the neighboring Valley of the Moon Water District, serving as finance administration manager and deputy secretary of the board.

He was generally supportive of the City’s hires to perform the water rate study – calling them “a great firm and a great attorney” – going so far as to say, “It’s more than anybody could ask for, going forward.”

But he insisted that “over $1 million a year being illegally transferred out to pay for other government activities (is) an illegal tax.” Though he’s not opposed to the activities or services thus supported, he’s adamant that the absence of a public vote for them constitutes a constitutional violation, and he remains insistent on a full disclosure of the process by which the fund transfers were authorized – and how the interim sequestration of funds was decided upon.

“It’s not a water issue, it’s a financial issue,” he said.

Contact at christian.kallen@sonomanews.com.

Relief for Fire Emergency Water Bills

On Nov. 20, the Sonoma City Council also authorized a special October 2017 water bill adjustment, to account for excess emergency usage by water fund customers.

“The October fires impacted the Sonoma area in many ways,” reads a notice on sonomacity.org. “Some City of Sonoma water customers responded to the fire threat by applying water to their property to reduce their fire risk. Others evacuated and returned home to find that a hose or sprinkler had been left on, or that their water facilities had been damaged by CalFire response activities.”

So the City Council agreed that customers may request a waiver for above-normal usage in the month of October.

Customers may request a water bill adjustment by using the October Fires Water Bill Adjustment Request Form, available on the City website at sonomacity.org. The form must be completed, signed and returned to the City by Jan. 1, 2018.

Normal water usage will be billed at standard water billing rates and the usual service rates apply.

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