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Sewer rate hike comes under fire
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As the city enters a process to raise water and sewer rates, a former city councilman publicly brought up the issue of fairness.

Rates for water and sewer service are proposed to go up as revenues are not covering expenses. Water rates will have to be increased 65 percent and sewer rates by 41 percent in order to have revenues match this year's budgeted expenses. The current deficits combined are between $600,000 and $1 million per year.

Rates have not been raised in Ceres for over a decade and Ceres residents pay one of the lowest rates in the area, noted Steven Dalrymple, president of West Yost Associates, the firm hired by the city to study the rate structure. Besides covering expenses, rates need to go up to build up monies for significant capital improvements to its aging water and sewer systems. Improving both systems will enable the city to satisfy health regulations imposed by state agencies.

Years ago the city of Ceres linked its wastewater treatment plant with the Turlock plant as the least expensive way to expand disposal capacity. Likewise, most of the sewer water flowing out of homes and businesses north of Hatch Road flows to the city of Modesto plant.

At the Dec. 8 City Council meeting, Blair Bradley questioned the fairness of Ceres' depending on both Modesto and Turlock wastewater systems and being defenseless against rate hikes being passed onto Ceres residents. The former vice mayor commented that Ceres residents cannot hold Modesto and Turlock city officials accountable.

"We shouldn't have to pay for administrative overhead in Modesto and Turlock," said Bradley.

The Lehi Avenue resident also expressed that he had no faith in the analysis of the proposed rate hikes. Mayor Anthony Cannella expressed concerns about Ceres being "beholden" to other cities for services but said the council and staff spent a vast amount of time going over rates. Cannella said he felt the proposed rates were "right on" accurate and also stated his belief that Turlock and Modesto officials are not overcharging Ceres.

Vice Mayor Chris Vierra said he doesn't like the city depending on any other city but said as the customer, the city of Ceres has no control. "Any time they make improvements .... we really have no options."

City Manager Brad Kilger noted that he probably needs to talk to the two neighbors about rates. But he said delays rate increases would result in eventual harm to the systems and "our community's health and safety."

Notices went out last week to residents explaining the rate increase. A protest hearing will be held on Jan. 26. Under the terms of Proposition 218, no increases may take place if more than 50 percent of property owners return protest ballots. Renters will be allowed to protest, if they choose, but only one protest vote will be counted per parcel, said City Attorney Michael Lyions.

Cannella said if rates are not increased, sewer and water services will have to be subsidized by the general fund. Approximately 75 percent of the general fund currently supports police and fire services.

The city proposes to increase water rates from the current $15.30 per month per single-family home to $22.30 in 2008-09 fiscal year, $26.85 by 2009, $28.20 by 2010 and $31.40 by 2012-13.

Sewer rates would need to go from $22.25 per month to $58.75 per month by 2012 in north Ceres and $43.99 per month in other parts of Ceres. The rates would be higher in north Ceres because wastewater is processed at the city of Modesto plant.

While the proposed rate hikes are designed to bring the services into the black and pay for infrastructure upgrades, the city will need to raise rates again for water at a later date. Rates will need to be raised when the city is forced by state law to install meters on homes. Dalrymple estimated that 95 percent of all Ceres houses don't have meters. By the end of 2010, the city must install water meters on all homes built after 1992. And by January 2025, the state requires all cities to have meters installed on home built prior to 1992.

Wates will also need to be raised if the city agrees to participate in a regional surface water plant coordinated by the Turlock Irrigation District. Officials say the plant is necessary to guarantee a supply of water that meets state water quality standards since groundwater is no longer reliable.

Cannella said the plant will be necessary because the city is having a tough time bringing wells into compliance. He said any time the city builds a well, it's a cost of $1.5 million because of expensive wellhead treatment.

TID is planning to build the plant near Fox Grove Fishing Access on the Tuolumne River northeast of Hughson and will be sized to supply water to Ceres, Hughson, Modesto and Turlock. The plant would be financed upfront by TID with the debt and water costs covered by the participating cities.

The city doesn't know what the hard costs are, said Cannella, and therefore cannot increase the rates now to include costs of the plant.

TID officials estimate that the cost of supplying Ceres with 6 million gallons per day will be $49 million, or $4.5 million per year over a 27-year period. If Ceres needs its maximum allotment of 11.5 MGD, the cost would be $86.3 million with annual payments of $7.4 million for 27 years. Cannella, however, is not confident in TID's numbers.

Consultants recommend that the city begin raising rates for the plant before it goes out to bid in the spring or before the plant goes on line in 2012.

City leaders said they regret the rate hike proposal in bad economic times but the city has to "stop the bleeding," in the words of Vierra.