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Santa Rosa readies water rate hike, grapples with overdue bills in pandemic

As $1.4 million in long-overdue city water bills stack up due to the coronavirus pandemic, Santa Rosa is moving ahead with a plan to increase utility rates this summer while adding new penalties for high use in times of drought.

Santa Rosa water department staff last week presented a proposal to raise rates for water customers by 2% as of July 1, with annual rate increases from 3% to 4% expected starting in 2022.

A city analysis indicates the typical residential water bill would increase by an average $2.38 per month, or $28.56 in the first year of the new rate plan, with higher increases in subsequent years. That includes annual wastewater rate increases of 2%.

The plan comes as the city grapples with the impact of COVID-19. Water officials decided in March 2020 to avoid shutting off service due to nonpayment and to waive late fees, and they’re now trying to work with 1,700 accounts, or about 3% of Santa Rosa water customers whose bills are more than 90 days past due.

The city’s billing system wasn’t designed to consider the possibility that a customer wouldn’t pay their water bill for three months or more, forcing staff to track long-overdue bills manually, said Kimberly Zunino, the city’s deputy director of water administration, at a City Council last week.

The unpaid balance is not creating an “unmanageable financial burden” for the water department, and city staff will be flexible with overdue customers to create payment plans with “any” terms, Zunino said.

“With our restrictive regulations on our rates, we cannot just forgive account balances, so we will continue to work on the collection and helping customers with assistance that may become available to them,” Zunino said.

City Council is set to vote on the proposed rate increases on May 25.

Council members expressed interest in looking for ways to help customers struggling with overdue bills during the pandemic.

They also raised alarm about the prospect of drought conditions, for which the city plans to charge additional costs for high water use during shortage conditions.

“We always hate to see those rates go up,” said Councilman Jack Tibbetts, adding, “It’s probably going to be the worst drought we’ve ever had. I think it’s the right direction.”

This effort by Santa Rosa to revamp its water and wastewater utility fees, like so many initiatives in recent years, arose in part from the Tubbs fire in October 2017. The city in 2018 contracted with The Reed Group, a Sacramento-based consulting firm specializing in water and wastewater financial management, to develop a 10-year financial plan.

The Reed Group, led by consultant Bob Reed, has helped Santa Rosa with water-related emergency recovery planning and has put together a new cost-of-service analysis and fresh recommendations for the city’s water and wastewater utility charges. The consultant’s contract also includes an update to the city’s water shortage plan.

Santa Rosa’s forthcoming rate changes would not reflect a significant change in city processes, Reed told the City Council.

“We’re not making any significant changes to the rate structures at all,” Reed said. “We’re just really updating the cost-of-service analysis and reflecting the revenue needs of the utilities.”

Reed also walked the council through the new water shortage charges, which are designed to curb water use and prop up the utility system’s financial condition when rainfall declines — an increasingly common phenomenon amid an era of dramatic global heating driven by human activity.

Shortages can raise the cost of water the city buys from Sonoma County’s water agency, potentially causing utility spending to outstrip revenue and forcing deferrals of capital projects.

Last year’s rainy season was the third-driest on record in Sonoma County. The current winter precipitation is well behind where it needs to be, and that lack of rain has placed the county in various stages of drought from “moderate to ”extreme,“ according to the University of Nebraska-Lincoln’s Drought Monitor.

These water shortage charges would be assessed based on eight stages of water shortage conditions, starting with a voluntary 10% use reductions and capping at mandatory limits of less than half of typical use. On top of that, “excess use penalties” for high-level water users could be assessed “to ensure enforcement of the (water) allocations,” according to city documents.

The water shortage declarations that would trigger these customer charges would have to be approved by City Council at a public meeting.

City officials pointed out that if and when it declares water shortages under this plan, customers who follow the rules and use less water would, of course, have lower than usual bills. And Reed said the excess-use penalties are not something the city banks on in its financial forecasts.

“If any revenue is generated, they would be used to help defray the costs associated with shortage, replenish the reserves that have been drawn down,” Reed said.

You can reach Staff Writer Will Schmitt at 707-521-5207 or will.schmitt@pressdemocrat.com. On Twitter @wsreports.

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