The city of Ceres received a report Monday that calls for water rates to be increased by 40 percent on Jan. 1 - and more than double from current rates within five years - to help fund the new surface water plant, other capital improvements and operations and maintenance.
Representatives from HF&H Consultants, LLC of Walnut Creek delivered the results of their water rate study. The firm is also recommending the city enact a large increase in water connection fees for new homes being constructed.
The proposed rate increased cover the period from Jan. 1, 2018 to 2022.
The increases, if enacted, would result in the average Ceres single-family household water bill climbing from $40.13 per month now to $56.18 on Jan. 1, 2018; to $76.97 on Jan. 1, 2019; to $80.82 on Jan. 1, 2020; to $84.86 on Jan. 1, 2021; and $88.25 on Jan. 1, 2022.
Mayor Chris Vierra commented that the reality of rate hikes is "painful."
Councilwoman Linda Ryno said she hates the idea of enacting a 40 percent increase for one year alone but said "we have to pay for it too. We live in the city and I understand why we are (raising rates); I just don't think it's going to be easy for us to accept that."
Ceres has approximately 12,000 households connected to the city water system. Most single-family residences are serviced through a one-inch diameter connection or smaller.
Currently water rates are based on a basic service charge of $20.23 per month plus a rate of $2 per 1,000 gallons of water used if less than 75,000 gallons are used each month. The current volumetric charge goes to $2.90 per thousand gallons if more than 75,000 gallons is used. Less than two percent of all accounts fall into the second tier of pricing. The average single-family household uses about 10,000 gallons each month.
Much of the rate hike is required to enable the city to pay for its expected $100 million share of cost to build the regional surface water plant. The city is in a partnership with the city of Turlock and Turlock Irrigation District to build the plant at Fox Grove near Hughson and pipe treated water to area homes to be comingled with ground water. City officials insist the river will be a dependable source of water as groundwater quantity and quality has become shaky. The plant is expected to be up and operating by 2022 or 2023.
Rates also must be increased to cover the higher costs of operations and maintenance as well as capital projects to upgrade the system.
John W. Farnkopf, P.E., HF&H's senior vice president, said the city has taken great effort in recent years to address water system deficiencies such as low water pressure in some areas and addressing water quality problems. The last series of increases helped the city pay for installation of water meters on all homes as mandated by the state.
"You're not completely through the woods," said Farnkopf concerning rate hikes. He last came before the city in 2012 to set up a five-year series of water rate increases.
Richard J. Simonson, vice president of HF&H, said capital costs continue to climb, including $10 million for wellhead treatment over the next five years.
The city is also proposing to raise the water hook-up fee for new homes from $6,697 to $7,657 on Jan. 1 and increase annually to $8,729 by Jan. 1, 2022. City Manager Toby Wells said the city will reach out to the Building Industry Association to communicate the city's plans. Vice Mayor Mike Kline expressed concern that Ceres will be pricing itself out of the construction market, something which Mayor Chris Vierra dismissed.
"Our (connection) fees are still lowest third within Stanislaus County," added Wells. "Fees generally have been proven over and over again are not the driving factor of the overall cost of building a house."
To enact the series of water rate increases, the city must conduct the Prop. 218 protest hearing process. A public hearing will be held on Monday, Nov. 27. The rate hike will not be able to occur if more than 50 percent of all households - over about 6,000 households - file written protest, something that rarely happens in a community. Connection fees are not subject to Prop. 218.
With the rate hikes, Simonson said Ceres will be less than some comparable communities and more than others.
Ceres City Manager Toby Wells said both cities want to break its 100 percent reliance on groundwater. He said the recent drought has "impacted our groundwater levels as well as water quality changes ... that come from federal and state regulations changing. Those water quality challenges continue to get worse and worse."
Wells said Ceres and Turlock are dealing with the same water issues.