Water bills in Santa Monica could rise by up to $36 for single family homes, $48 for multi-unit housing and $87 for commercial buildings based on new rate structures up for discussion at City Council this week.
City Hall will debate the next five-year rate structure on Tuesday and Council will hear two options. The first maximizes rate increases to pay for infrastructure improvement projects while the second delays repair work for at least three years.
“Water and wastewater enterprise funds are evaluated every five years to ensure proper funds are in place to carry out routine operation and maintenance activities, implement capital improvement programs for system resiliency, and achieve strategic sustainability goals such as water self-sufficiency,” said the staff report.
Staff are proposing two options for the water fund. Both fund routine operations and move the city toward water self-sufficiency but they take different approaches to funding new projects.
The first scenario has a tiered increase schedule, raising rates by 20 percent year one, 18 percent year two and 14 percent for the remaining three years. According to staff, this structure fully funds all Capital Improvement Programs.
The second scenario raises rates by 10 percent a year for five years but delays water main replacement for three years pending the achievement of self-sufficiency in 2023.
The wastewater adjustments also have two versions.
The first option would increase rates by 10 percent for four years and 3 percent for one year to fully fund capital improvement programs. The second option would increase rates by 9 percent for three years with a three percent increase in years four and five but would defer replacing the wastewater main/collection system until at least 2023.
According to the staff report, rate increases are necessary to: reach water self-sufficiency by 2023, increase local water resources to reduce water imports, fund conservation efforts to reduce demand, maintain necessary reserves and comply with state regulations.
In the past five years, the water Fund spent about $25.7 million per year and brought in $24.5 million per year.
“Revenues have been lower than originally projected and declining, attributable primarily to lower water demand from customers but also subject to climate change impacts, such as increased wet or cooler weather periods as experienced in the first half of 2019,” said the staff report.
Excluding one-time capital improvement projects, costs are expected to increase to an average of $35.3 million over the next five years.
Expenses for the Wastewater Fund have averaged $25.4 million per year for the past five year with revenues of $20.8 million.
“Wastewater rates have remained relatively flat for the past five years, with the last rate increase of 0.4% approved for the calendar year 2014. This was achieved due to healthy fund balance,” said the staff report.
Wastewater expenses for the next five years are projected at $27.8 million. According to the report, a rate increase will fund routine operations, onetime capital projects, cover increased costs associated with water sent to Los Angeles and bring reserve levels up to a necessary standard.
Council will meet on Tuesday, August 13 in City Hall, 1685 Main Street. Closed session begins at 5:30 and open session will not begin before 6:30 p.m.
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