Santa Ana leaders are considering water and sewer rate hikes that could amount to nearly 7 cents a day -- a step officials say is necessary to keep up with replacing miles of aging pipelines.
At Tuesday night’s City Council meeting, council members unanimously directed staff to set a public hearing to consider the rate hikes as well as prepare and mail notices to all property owners in the city.
Most of the city’s water and sewer lines were installed before the 1980s, and a significant portion is approaching the age when breaks become very likely, according to a city staff report. The report estimates that 13 miles of water pipes and 62 miles of sewer lines have a high probability of failing over the next five years.
To pay for the wave of replacements and other costs – such as line inspections, the rehab of a water well, and an advanced metering infrastructure plan – the city plans to float bonds and then raise the money to finance the debt through phased-in rate hikes over the five-year period.
The combined water and sewer rate increases would amount to 3.2 percent annually, according to the city staff report. The sewer rate hike would also include new fixed fees – a capital recovery charge and a lateral repair program charge, the report states.
The financing costs for the capital improvement bonds will total $42.2 million, according estimates in the staff report. Both the replacement plans and financing structure are the result of a study by Kansas City-based Black & Veatch that was commissioned in 2011.
According to that study, the city has been replacing lines at half the rate of the industry standard, which is 1 percent of the system per year. At minimum, the study suggested that the city invest $8 million annually toward water and sewer infrastructure.
The last water rate hike was in 2011, and, since then, the cost of importing water has shot up 25 percent, the study says. The city has gone without increasing the water rate by deferring capital improvements, but the study claims that “is no longer a viable or sustainable option.”
Currently, a water customer’s average monthly bill is less than $50 and cheaper than the majority of surrounding cities, according to the study.
Only Councilwoman Michele Martinez commented on the rate hike, saying she almost opposed it because the city has for years transferred millions of dollars from its water fund to its general fund in order to pay for public safety costs, a budget-balancing method that a legal advisor with the Howard Jarvis Taxpayers Association claims violates the state constitution.
“I’ve never supported the water transfer,” Martinez said.