Acknowledging that the proposed rate increase for water service will be "painful" for Ceres residents to face at bill-paying time, members of the Ceres City Council on Monday ordered a required protest hearing to take place on Nov. 13.

By law the city must mail out notices and hold a protest hearing under Proposition 218 before the increases may be ordered. If more than 50 percent plus one of all Ceres households file a written protest, the council may not enact rate increases. It rarely ever happens though.

At Monday's City Council meeting, city staff members and councilmembers acknowledged they have fielded calls from residents unhappy about a proposal to increase water fees by 40 percent next year, followed by 37 percent the following year. Smaller increases follow for the three years following.

Much of the rate hike is designed to enable the city to pay for its expected $100 million share of cost to build the regional surface water plant, expected to be operating by 2022 or 2023. 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 since groundwater quantity and quality has become questionable in time.

The rate increases also will pay for the higher costs of operations and maintenance as well as capital projects to upgrade the system.

HF&H Consultants, LLC of Walnut Creek is also recommending the city enact a large increase in water connection fees paid by builders of new homes. Connection fees are not subject to Prop. 218.

The proposed rate increases cover the period from Jan. 1, 2018 to 2022. If enacted, the increases 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.

City Manager Toby Wells said the conversations he's heard within the community have indicated residents aren't "clear what's driving this water rate increase - our need to move away from the groundwater-only system to a junctive system that uses surface water and that surface water plant is expensive but provides us the reliability and sustainability for the long-term future.

"Very painful, yes, but this is something that is absolutely critical to our long-term sustainability, the ability to deliver safe drinking water that meets all the state and federal water standards."

Ceres Mayor Chris Vierra said the city is pursuing other funding options and announced that state Assemblyman Heath Flora is carrying legislation that could result in $30 million being allocated for the project if California voters approve a new water bond measure next year.

"It will help set those rates lower," commented Wells.

While saying she understands the need to increase water rates, Councilwoman Linda Ryno wondered if the city could "move out" the implementation of the rate hikes. Wells said the city could do that but that would mean no money upfront to get the plant financed. He said the design-build process calls for heavy-end capital expenditures needed. Besides, Wells offered, the city has some capital projects to ready for the surface water, including the building of a 2 million gallon water tank at Ceres River Bluff Regional Park.

Rate increases are also in order to help the city deal with challenges of filtering out TCP, or trichloropropane, a known carcinogen. TCP affects over half of Ceres' wells.

"We have to make improvements for those wells today in order to have our water system be viable and sustainable until the surface water project - and even under an expedited process, the surface water project is not functioning until 2022. We need to have these well improvements done and in essense that's where capital comes from, i.e., money, on the front end, to make those improvements."

Ryno wondered about borrowing from other funds to soften the sharp increases. Wells said the sewer fund has money but the city tries to stay away from it. Any borrowing would not stave off the painful increases, however, he said.

Mayor Chris Vierra said Sacramento seems to hold total control over city water supplies.

"With the stroke of a pen in Sacramento our groundwater wells could all be out of compliance and we would be spending a tremendous amount of money to try to play catchup on that," said Mayor Vierra. "It's imperative, even though it is painful, we give ourselves as many avenues to have a safe, reliable drinking water system that ensures our citizens have the same quality of life that they've experienced today."

Ceres resident Albert Avila asked if the city has considered that the steep rate hike could decrease water consumption and affect revenue projections. Wells said there is a balance that must be achieved but the city has no crystal ball. He noted his confidence in the analysis of the issue accomplished by the consultants.

Resident John Warren of Ceres commented that pushing the rate hike off would only delay surface water, which he said is needed.

"We can't keep pumping it out of the ground," said Warren. "A fix to the system is necessary and we need to move forward and do 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.

John W. Farnkopf, P.E., HF&H's senior vice president, told the council on Sept. 11 that 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.

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.