Business owners and residents will see costs go up on their March water bill after the City Council approved a 5 percent rate increase for 2018 at their Jan. 9 meeting. The money will help pay for a Sustainable Water Master Plan update and other facility upgrades and studies needed for the city to reach its goal of water self-sufficiency by 2020. With the increase, the average bi-monthly residential bill rises from $91.64 to $96.27, according to staff estimates.

Before voting for the rate increase, Councilmember Terry O’Day said he was “disappointed” and “embarrassed” about the city’s progress toward its ambitious goals.

“What we don’t have is a real handle on the cost of what it will take to get us to this goal of self sufficiency and what it’s going to take to clean our groundwater basin and close the pollution case that we have with the regional board,” O’Day said.

To date, the City has been awarded $330 million in settlement funds over the pollution of Santa Monica’s groundwater by major oil companies. The Director of the Office of Sustainability and Environment told the Council that about $120 million of the funds are unrestricted.

“It can be used by council however it wants,” Kubani said.

In last year’s budget, the Council allocated $50 million of the funds for the City Yard project and $7 for the new City Services Building.

“I don’t remember ever being told that it was water remediation funds that was being used,” Councilmember Sue Himmelrich said, explaining she wasn’t aware she was voting to allocate settlement money when she voted for the 2017 budget.

The head of the city’s Task Force on the Environment and former president of Heal the Bay chastised the Council for spending the settlement money on projects unrelated to water. Mark Gold said he was “mortified” to hear Himmelrich wasn’t aware of the allocation.

“At least if you guys were going to do that you should have had the benefit of that discussion,” Gold said. In a letter to Council, Gold argued it was morally wrong to use the settlement funds for unrelated projects.

Mayor Ted Winterer and Councilmember Kevin McKeown both clarified for the record they were fully aware of the implications of their budget votes and staff had been fully transparent.

“It there’s an issue, it’s on us,” Winterer said.

The city’s water supply currently consists of 25 percent imported water and 75 percent local groundwater. Right now the City’s water fund balance is $36.7 million, which is more than half a million dollars more than predicted because of better than expected financial performance. In fact, Kubani said the City saved $300,000 by importing less water than prior years. Even with the savings, future improvement projects threaten to drain the fund.

“If we did not put in a 5 percent rate increase, basically, we’re going to spend through all that money and then we’re not making enough revenue to…keep us in the black,” Kubani told the City Council Tuesday. The rate increase will generate $5 million in additional revenue over five years.

“What is especially alarming… is that the settlement funds that we have that provided us with the confidence that we were going to get to all of these goals are being allocated in different ways and parcel out and it’s still not clear what the costs are and whether we’ll have the funding to get to these objectives,” O’Day said.

Because of current drought restrictions, the water use per person per day now averages at 110 gallons, down from 126 gallons per capita in 2014. Future projects include reservoir chlorination, a pilot reverse osmosis upgrade at the Arcadia Water Treatment Plant, as well as plans and studies to look at recycling water.

With the five percent increase, household rates go from $3.01/HCF to $3.16/HCF and commercial rates go from $4.27/HCF to $4.48/HCF.

Kate Cagle

Senior reporter for the Santa Monica Daily Press