This will lower the initial rate increase

During the Pine Cove Water District’s board meeting last week, General Manager Jerry Holldber offered some options to modify the water rate increase proposal made at the March 14 meeting. Letters have notified property owners with meters within the district of a public hearing on the rate increases at 10 a.m. Wednesday, May 9.

“We’ve had good comments and bad comments, and a lot of questions,” Holldber told the board. “But our charge of $1.80 per 1,000 gallons for water is a long way from its $7.35 cost.”

Instead of increasing the charge for the first 7,500 gallons from $1.80 per 1,000 to $4, Holldber recommended lowering the increase to $3 per 1,000 in fiscal year 2018-19. Each succeeding year, the rate would increase $1 until it reaches $8 per 1,000 in fiscal year 2023-24. The ultimate goal of $8 is reached but it takes one more year. 

“The plan arrives at the same revenue numbers, but [the increases are] evenly distributed,” he said.

The same change would apply to the water charge for use of 7,501 gallons to 15,000 gallons. The initial increase would be $5, rather than $6, and would reach the $10 goal one year later in 2023-24. The same change would be applied to the cost of using more than 15,000 gallons. The first year, it would be $7 rather than $8 but still grow to $12 in 2023-24 rather than 2022-23.

The bimonthly fixed charge would be increased $3 per year, starting in fiscal year 2018-19 and also ending in 2023-24. In March, the proposed increase in the first year was $6. In the next two years, it was a $4 bimonthly increase and only $2 bimonthly in fiscal years 2021-22 and 2022-23.

This proposal would be a $3 bimonthly annual increase through fiscal year 2023-24. While lowering the initial increase and extending the total increase, this proposal slows the collections of revenue for the district’s reserves and future capital projects.

Currently, PCWD collects about $410,000 from its bimonthly fee, but Engineer John Egan estimated that the district’s annual fixed costs were more than $600,000. At the end of the rate increases, the annual fixed revenue would be about $535,000.

“Even with raises, the rates do not cover all of the fixed costs. It just gets us closer,” Holldber said.

Since these changes are less than the original rate-increase proposals, Holldber told the board it was not required to change the public hearing date. This is necessary if the board might consider or approve rates higher than the original proposal described in the notification letter.

Board members appreciated Holldber’s response to the initial public comments. Director Steven King said, “The new plan reduces the shock value.”

And Director Lou Padula added, “It’s necessary. We need the increases, but do it as gently as possible.”

Resident Laura Wilson asked why the letter explaining the increases and announcing the public hearing was not sent to district renters.

In response, Holldber explained that the district bills property owners, even if the property is rented. The property owner is responsible for any water usage through the property’s meter.

Office Manager Becky Smith said 1,108 letters were mailed. If 51 percent or 564 property owners opposed the rate increase, it would not be approved.