San Angelo Water Rates Hiked 54.5 Percent

For the past month, city council members, officials from the City of San Angelo Water Utility and representatives from Raftelis Financial Consultants, Inc. set out to educate the public about why there was a need to raise the water rates on citizens, a need that has been met with public outrage and frustration.

City council members held special meetings, information was posted to the local media, both print and digital, and city officials even held a special water forum; however, approximately five people attended the event.

“It doesn’t matter what we say. They already made up their mind,” said more than one citizen on the San Angelo LIVE! Facebook.

As of this week, minds were indeed made up.

At Tuesday's City Council meeting held at the McNease Convention Center, Bill Riley, director of Water Utilities, said since he followed the City Council’s requests, which was to engage citizens in a conversation to help them understand the need for a 54.5 percent increase in rates over the next five years, he proposed forward movement.

“We had a meeting with Ms. Grindstaff and Ms. Farmer,” stated Riley. “We had a very good turnout. We had very good discussions and good questions; so, we’re bringing before you today the ordinance. This is the public hearing of the first reading.”

Riley did not go through the entire presentation as he did previously, but he once more reiterated what the proposed rates would be for both residential and commercial users over the five-year term. As stated, citizens will experience a 54.5 percent increase overall.

“We also have, as proposed, a drought rate which we discussed as a multiplier based on the projected water demand change less the water used during the drought stages; and we keep this revenue neutral,” Riley said.

After briefly re-reviewing the proposed changes, council members and the public gave their final views about the inevitable increases.

Mayor Dwain Morrison said, “We’ve been through this. We hired a consultant to come in and take all the politics out of it. I think we got a very honest appraisal. They proposed something that was twice as high as what we have now. We cut them down.”

The Mayor added that no one wants to go up or pay more, but COSA needs to have water for its citizens.

“This includes possibly the wastewater treatment that’s a $134-$135 million project. We are doing a study right now, and these rates would reflect us being able to do this,” Morrison stated. “We also have some infrastructure where we’re losing water. We have to fix it. We have to get started somewhere. It’s a necessary evil. I have no problem with it. People are not going to like it, but I’d rather pay a little more and have water than keep what we’ve got and not be able to provide water for our citizens. That, of course, is not an option.”

At that point, the Mayor made a motion to proceed the discussion forward.

Councilwoman Elizabeth Grindstaff, SMD5, clarified that the water rebate will always be reviewed twice a year in the event that there’s the ability to pay back the citizens if the city’s lakes are in good shape.

“I think that’s significant,” she said.

Mayor Morrison chimed in and said the city did a rebate in 2008, which was the last time a water increase occurred. The only increase since that time resulted from the Hickory Aquifer project in 2011.

“So if there is extra money, we will rebate it, and we have rebated it back twice,” Morrison said.

Riley reiterated that the five-year plan is what it takes to be financially sustainable, but each year the council can look at the plan, and if a change has to be made, there is certainly that opportunity to do so.

Councilwoman Lucy Gonzalez, SMD4, asked about the other cities comparable to San Angelo and how the water rates compared. Riley did provide that information and noted that based on 4,000 gallons, San Angelo is the third highest of the group.

“It’s very difficult to compare these rates because we really don’t have information as to what’s going on and what might be holding the rates up or down, whether that’s the industry or subsidized through tax rates, but it does give a picture of where we are,” Riley said.

In the 30,000-gallon range, San Angelo is lower. Although the average is 4,000 gallons, Riley said there are many users who go over that 30,000 range.

“It also lends to the fact that with these comparisons, there are so many variables, so you don’t really fall into that group,” Riley added.

As far as commercial usage, San Angelo goes up; however, in the larger usage group, San Angelo goes back down. Overall, San Angelo fits within the range of users and in the class range of other cities.

Grindstaff said during the break at the City Council meeting, people told her they felt they were being penalized for conserving water, so she wanted to know how the council could answer that.

“That’s a tough question,” Riley claimed. “One of the things with this process is we had a water supply issue, asked people to conserve, and I’ve seen nobody step up to the plate more in this state than San Angelo has; but unfortunately, it does have a negative impact on the revenue and this we’ve talked about also. The utility business is a fixed cost business. Just because water usage drops, the costs don’t go away.”

Riley stated that’s the dilemma the city has to fix, and the citizens have to consider how they value water.

City Manager Daniel Valenzuela said when it comes to that conservation, it’s important to secure that for future generations, so whatever the city is conserving, it’s extending that water as well.

“So although we’re not experiencing the benefits, the conservation is a true benefit to this community in extending the life of water,” he said.

Grindstaff added that expansion costs money, and the city has to pay for it. The rates help to accomplish that.

“I think it’s good that we have a plan that is not as aggressive as the consultants would have suggested, but it’s something we think we can live with,” the councilwoman stated. “It’s something that provides us the security in the short term, and it’s something we’re comfortable with.”

She also clarified that she's not interested in identifying what the next project is because she feels that has not been vetted properly. She also stated that she hasn’t seen the results of the studies going on with the Red Arroyo or the Water Reclamation Projects, so she agrees funds need to be set aside for the next project, but when she votes, she’s not naming a project.

“We’re not asking you today to do that,” Riley noted.

During her response, Farmer brought up the analogy of a hamburger in a restaurant. She said although times have changed, the owner does what he/she can to not charge more for that burger the people love. It still has the same taste and quality, and the price hasn’t changed for the customer, but the cost of those items necessary to make the burger have increased for the business owner.

“The water isn’t any different. The cost of putting that water at the tap stays the same even though each of us have conserved and are using less. The cost has stayed the same,” she said.

Farmer added that the biggest issue for the citizens is they cannot see what the council sees. They don't witness the results.

“So possibly a job the city can do is let the citizens know on a quarterly and semi-annually basis to show what improvements have been made, where they have been made and the dollars that have been spent,” Farmer stated.

She also said she foolishly tried to hold the water rates down because of a campaign promise, but reality has changed that.

“When you get in here and you see the cost of maintaining, you understand that we have to adjust those rates; and hopefully, we have been more aggressive in looking at (and not as foolish in trying to handle this in a long range plan) and telling you what your increase is going to be each year for the next five years,” she said.

With that, Famer approved to make the motion to submit the proposal of the water rates.

Councilman Marty Self, SMD2, said right or wrong, prior council had made a commitment to not have increases over the last years, and to a certain extent, the city kept the rates the same. He added that maybe the city should have increased rates a little bit back in those times.

“But that’s all water under the bridge,” Self said. “We have to move forward and bite the bullet. I don’t think anyone likes it, but it’s a necessary evil, so I’ll second the motion.”

Councilman Rodney Fleming, SMD1, also agreed with Farmer and Self and said, “We kicked this can far enough down the road where now somebody has to pay for this, and no one likes having increases in our bills, but it’s life. Things get more expensive as we go, especially where we’re at.”

He added that San Angelo is in the desert and so it gets little rain.

“Water will always be a problem for San Angelo now and in the future,” Fleming noted. “This is an important thing.”

He added that San Angelo is different than other cities and it’s hard to compare because the city’s infrastructure is very old and hasn’t been replaced in a long time.

“We’re behind, which will make it more expensive in the future,” stated Fleming. “We need to get caught up.”

The councilman finalized by saying this is a good thing, and one of the projects has to be done in the future for the city’s future.

Mayor Morrison at that point brought up the deficit of $1.8 million in the water fund previously that had built up over the years. It was receiving more than what it was making, so when the council went to trash services for a bid, the city received a check for $3.6 million from Republic.

“This council voted to take as much money as possible off that check to apply to the water deficit and bring it back up to zero," Morrison stated. "That was a move to help keep the rates from increasing at that time. The citizens didn’t have to pay this money. It could have been worse.”

When public comment opened on the topic, Danny Cardenas, who announced he will be running for City Council in 2016 for Single Member District 3, got up to speak. He said he’s heard the discussions, but he disagreed.

“I don’t want to get into an argument with anyone here, but that’s what we’re here for, to give public comment,” he said.

With that, Cardenas immediately addressed the mayor’s comments about the funds that went to the deficit. He didn’t agree that this didn’t cost the taxpayers money because they got this money from Republic.

“Well, who’s paying for that bill? We are,” he said.

Cardenas then went on to say when previous council members went into executive session during one council meeting, Republic put their bid “on the table,” but the bid was too high, so the company revised it to where San Angelo would gain $8.2 to $12.2 million over 10 years.

“You said that Republic just channeled $4 million dollars to the City of San Angelo. Where did it come from Mr. Mayor?” Cardenas asked. “It didn’t come as a gift. It came as a gift from the taxpayer. It’s costing us, the taxpayers.”

He added that the constituents of San Angelo are middle to low income people who are barely making it.

“It’s an indirect tax,” he noted.

He then brought up the concept of spending and pointed out that the city received $2.5 million dollars, but the council agreed to put that toward the City Auditorium when COSA’s infrastructure is falling apart.

“We need to somehow channel these moneys to where we really need it,” Cardenas admonished. “How many times a year do we utilize the auditorium? With that being said, $16 million was spent on City Hall. What happened to the auditorium? We have to hold people accountable when we accomplish projects.”

Cardenas told the council the city doesn’t hold people accountable. He then added that the city should take baby steps and consider a rate increase over an 8-year period instead. He said he agreed that rates haven’t been increased in the past years, but it’s not the citizen’s fault that didn’t take place.

“We can’t make it up over night,” Cardenas continued. “We have to take baby steps and accomplish what you still need to accomplish. That would be a relief to all of us. The middle to low income people are paying for this tab.”

Cardenas noted that if the big industries in town were picking up the tab, the room would have been filled with protestors, but they know the little people are picking it up.

“Look at it one more time, and maybe go seven or eight years and still accomplish what you want to accomplish,” he reiterated. “If we’re really in that bad of shape, then the $2.5 million going to the auditorium should be going to the water fund or our infrastructure.”

In response to Cardenas, the mayor clarified that those residents who use less than 4,000 gallons are not seeing the same increases as those using that amount or more. They will only see a base rate increase.

Jim Turner, another citizen, said in regards to the Hickory Aquifer project, the city was able to get a low cost loan, and the city may not be able to get that on the next project. Also, the amount of money was put in the fund by the sales tax. Without those two things, the increase would have been about $15.

Turner also said one thing that confuses the public is how the accounting numbers are presented and related to each other. “They’re not clear,” he said. He added that all the projects and aspects combined together make it hard for people who want to make an informed decision about the increase.

“We need to get a lot better at that,” Turner continued. “The water should be paying its way and should not be subsidized or subsidizing anything.”

Turner finalized by saying the infrastructure in most cities are failing because installation occurred in the early 20^th century. Most cities have infrastructure that’s older than 75 years.

“The bulk of the expense of the water bill is going to be supplying the water, but if the pipes don’t get repaired, pretty soon, you’re going to have to go pick up your gallons of water someplace because the pipes won’t be there,” Turner predicted.

Harry Thomas, community volunteer, who is also running for city council and will oppose Johnny Silvas and Cardenas (should Silvas choose to run again), said as somebody who is retired and on a fixed income, he’s not happy about the increase, but if the city fails to do something today, things will be worse.

“This is a five-year plan and a good plan, and we have to do something now,” he said. “We can’t focus on the past and what was done before. We’ve got to go forward from here on out. The bottom line is that it’s been vetted, and this is a great plan. We need to get on with it.”

In response to the public comments, particularly Cardenas, Valenzuela said he feels the five-year plan includes those baby steps.

“We need that water for our future,” he said. “Across this country, the can has been kicked down the road because of politics. I feel this council is making the right choice. It’s not easy, but a decision has to be made—a decision moving forward for our community. So again, it’s something that’s happening throughout this whole country. It’s just that San Angelo is choosing to do something about it.”

After those comments, Morrison motioned to accept the rate study and water rates as accepted, and all voted in favor with a 6-0 vote. Johnny Silvas, SMD3, was not present for the vote. Since this was the first public hearing and consideration in Amending Appendix A, Article A8.000, Subsection A8.002 Monthly Water Rates, there can still be more hearings before the item is moved to the Consent Agenda for final approval. However, based on the discussion at Tuesday’s meeting, the council members proved to be determined about moving forward with the rate hike.