Signal Hill raises water rates in absence of enough protests

Rates to increase by 15% on March 1 and another 15% next year.

A+graph+from+a+2019+City+of+Signal+Hill+water-rate+study+showing+the+city%E2%80%99s+relatively+low+residential+water+charge+compared+to+comparable+cities.

Anita W. Harris | Signal Tribune

A graph from a 2019 City of Signal Hill water-rate study showing the city’s relatively low residential water charge compared to comparable cities.

The Signal Hill City Council conducted a protest hearing during its Tuesday, Jan. 14 meeting before agreeing to increase municipal water-rates by 15% in 2020 and 2021, 12% in 2022 and 7.5% in 2023 and 2024.

This year’s rate will go up March 1 and includes an 8% increase already budgeted under a 2015 five-year rate adjustment.

City Manager Hannah Shin-Heydorn said the City had conducted three public workshops about the proposed rate increase to address concerns, two during the Oct. 8 and Nov. 12 council meetings, and one at a community workshop on Oct. 28, as reported in the Signal Tribune.

Proposition 218, the Right to Vote on Taxes Act of 1996, requires that the City conduct a protest hearing prior to increasing water rates. The City notified property owners on Nov. 25 that they had 45 days to protest in writing if they objected to the increase.

If the City had received protests by a majority of property owners, then it wouldn’t have been able to enact the increase under Prop 218, according to the staff report. Property owners could also submit written protests, along with verbal comments, during the council’s public hearing Tuesday.

The council received a total of eight written protests by the end of the hearing, four prior to the meeting and four during, according to City Clerk Carmen Brooks.
Mayor Lori Woods said that the city has 4,629 parcels of land so 2,315 letters of protest would have represented a majority.

At the close of the hearing, having received significantly less than the number of written protests required not to raise rates, the council voted unanimously to pass an ordinance amending the municipal code to adjust water rates according to a subcommittee’s recommendation.

The council will conduct a second reading of the ordinance during its Jan. 28 meeting and, if it passes, increase rates as of March 1.

Public hearing
At the start of the hearing, Water Systems Superintendent Matt Tryon offered an overview of Signal Hill’s water supply, as he did at each of the previous public workshops, noting that the city’s primary source is 2,022 acre-feet of groundwater that it pumps through wells, but that it also buys more expensive water as needed from the Metropolitan Water District (MWD).

The Signal Hill Water Department has 3,161 customer accounts, which it serves with 50 miles of pipeline– some 50 to 80 years old– spread over the city’s 2.2 square miles and four pressure zones due to its topography, Tryon said.

Of the city’s three wells, one– Well 8– has been inactive since early 2017 due to deterioration, leaving only Well 7 and Well 9 operational, he added. Well 8 also went offline before Well 9 was completed, forcing the city to purchase MWD water for eight months for an additional $400,000 that year.

Lower than budgeted revenue due to water conservation under drought conditions during that time further contributed to the water department’s losses, Tryon said.
Accounting Manager Kim Engel said that the city’s three water funds total to $3.8 million, but cash reserves are dwindling and expected to be completely depleted by fiscal-year 2021-2022 and operating costs will exceed revenue by 2022.

Nevertheless, she said a 2019 water-rate comparison survey showed that Signal Hill’s current rates are very low compared to other comparable cities.

“This is due in part to rigorous cost control and management of resources,” Engel said.

Engel further noted that necessary capital-improvement projects totaling $7.65 million over five years to address the water system’s aging infrastructure, including getting Well 8 back online, cannot be completed without a water-rate increase.

Public Works Analyst Sara Russo noted that previous water-rate increases since 2004 have always been lower than consumer-price index increases, with no increase at all between 2010 and 2015 due to a recession. A 2015 water-rate study led to an increase of 8% per year for five years, ending in 2020.

Despite those increases, Russo said it hasn’t been enough due to residents’ water-conservation measures. As an example, she said the 2019 monthly average residential water bill of $39.51 is more than $9 lower than the $48.81 anticipated in the 2015 study.

Public Works Director Kelli Tunnicliff added that groundwater replenishment fees the City is required to pay are projected to rise by 6% per year after 2020.

A subcommittee consisting of city officials and consultants from AKM Consulting Engineers recommended one of three scenarios for the council to implement that increased the water rate and replaced Well 8, Tunnicliff said. The other two scenarios were to a) not increase the rate and b) increase the rate but without rebuilding Well 8.

The City will also take advantage of a $1.5 million, zero-interest loan from the MWD toward that rebuild, Tunnicliff said, accounting for about half its cost.

Typical water rates in 2020 will still be less than projected in the 2015 study– a monthly average of $45.44 instead of $48.81, Tunnicliff said, going up to $67.64 by 2024.
Low-income households will continue to receive a water-rate discount based on household income and number of residents, she said.

Protests
Three of the four residents who submitted protest letters during the meeting also spoke to the council. Resident Cecilia Fidora objected to the high rates and said that Signal Hill residents are being punished for having conserved water since 2015.

“[Despite] all those thousands of gallons of water that we saved […], it seems like the City, through no fault of your own, has to pay more for a less amount of water,” she said. “What incentive do we now have to continue to conserve? It doesn’t seem ethical to ask residents to pay more because we’re using less water.”

Resident Alice Loo also questioned why the rate was so high, especially in the initial two years, comparing it to an exercise regimen that should ramp up slowly rather than heavily at first.

“That’s hefty,” she said, referring to the 15% increase in 2020. “There’s no two ways about it.”

Tunnicliff responded that increasing revenue at a higher rate early helped minimize the rate increase over the five years.

“In evaluating all the different scenarios, we found that by going in with a larger increase up front, it helps us to recover some of those costs and to use that […] going forward to keep the overall rate lower,” she said.

Resident Matt Herman wondered what was wrong with Well 8, and also how much businesses such as Signal Hill Petroleum pay for water compared to residents.

“How much of this is being passed on to residents as opposed being parlayed over to the actual industries who uses most of the water in the city?” he asked.

Herman also questioned the cost of maintaining the infrastructure and how much conservation really impacts revenue because the drought is now lessened.

“There’s a few things that just don’t add up,” he said.

Tunnicliff said that businesses and industries have larger water meters and three tiers of cost rather than two for residents because commercial users put more demand on the system.

Tryon explained that Well 8’s metal casing is 40 years old and holes have developed in weaker spots, allowing sand to enter. The sand had pumped through the well, deteriorating the shafts and having to be filtered out of the water.

“That’s why we have it turned off right now,” he said.

In terms of the conservation question, Councilmember Tina Hansen said it still exists and the state doesn’t consider the impact of lower revenues.

“You still need to maintain the same infrastructure that you have with less money,” Hansen said. “The state doesn’t cover that issue. They leave that up to the city.”

Tunnicliff added that while it seems counterintuitive, conserving water actually creates a burden on cities.

“You would think […] that because you’re using less water, that your costs would go down,” she said. “But [with] the infrastructure that we have– the pipelines, the wells, the operations– you have to spread that cost over less water.”

The next Signal Hill City Council meeting will take place Tuesday, Jan. 28 at 7pm in the council chamber at 2175 Cherry Ave.