The Santa Ana City Council Tuesday approved a schedule of water and sewer rate hikes -- which will increase rates on the average single family home by $7.88 per month by 2018 -- as part of an effort to replace the city's aging pipelines.
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.
“I think this is the right thing to do,” said Mayor Miguel Pulido, after the 5-1 vote. “It’s gonna enable us to be on the front end of problems.”
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.
City resident Leopoldo Arguello demanded to know what the money from the water and sewer bills was currently being spent on given the officials were planning to increase the rates.
“Where all this money has gone?” Arguello said.
Councilwoman Michele Martinez, the only no vote on the rate hikes, said she couldn’t vote for the increases while city officials continue to transfer money from the water fund to the general fund to subsidize costs like police and fire services.
In 2012, Voice of OC reported that a taxpayer advocate claimed the water fund transfer violated the state constitution. Since then, city officials say they’ve reduced the annual transfer from a high of over $10 million to just over $2 million.
“I wanna beg and urge my colleagues, to continue to reduce that transfer to the general fund,” Martinez said.