Despite some of the things that were said at the City Council Meeting, I think we are lurching toward a common framework on water cost issues. Here’s where we seem to be: (1) Everyone agrees that the City is treating the water rate issue very differently than they are treating the water-connection fee issue. On the rates, the City is eager to make sure that citizens cover the projected costs; on the fees, the City does not propose to charge developers enough to cover projected costs. (2) Instead of denying the asymmetry in point (1), the City is trying to argue that it is (a) justified and/or (b) not important. (2a) The difference between rates and fees, says the City, is that the costs to be covered by rates are certain - we know how much the necessary upgrades will cost - and the costs to be covered by fees are uncertain - we do not have a good handle on the costs of new wells. (2b) The rate increase, says the City, is a much bigger part of the water package than any fee increase, so we need to worry about the bigger issue, not the smaller one. (3) There are a few miscellaneous issues left over - Harold Heiple, development lawyer, doesn’t seem to understand the relevant budget figures; several Councilmembers still seem beguiled by the rate comparisons across cities. Given the foregoing framework, let me make my #nountil position clear. (1) is true by common consensus. (2a) is false. The uncertainty of well costs is being over-rated - this is just normal budgeting uncertainty (what will people charge to do the work, how much material will we need when we get on the ground, etc.), analogous to uncertainty about road costs, etc. More importantly, the uncertainty of the water rate issue is vastly under-rated. There is the normal budgeting uncertainty on the cost side, but, much more importantly, huge uncertainty on how rates will translate into income. The whole argument about over-conservation in the rate structure is an admission that we do not have a very good idea about whether the proposed rates will bring in too little, too much, or just the right amount of revenue. Clearly, City staff has budgeted on the safe side, but there is nothing that distinguishes that from the budgeting of well costs. Even if (2a) were true, however, it wouldnt justify (1). By only charging certain (which is to say outdated) costs in an environment where we know costs are rising, the City is guaranteeing that its prices never fully cover costs. At a minimum, the City is bearing the risks of uncertainty for developers - via a low price guarantee - in a way that they have not built into the rate budgeting (however certain that is). (2b) misunderstands what is at stake here. Because of the threat of DEQ fines, etc., our water issues will get paid for, even if nothing else does. (The City can use general funds to prop up utilities if need be.) If the voters reject this rate increase on the grounds of fairness, we will get a more fair rate increase next time, albeit at a high price in terms of City government chaos. (Perhaps the City should be figuring out a contingency plan so we can make an informed decision here ....) What we wont have another crack at, however, is an opportunity to fix Normans complicated sprawl/center-city/environment/development issues. The City has shown that it is incapable of keeping all of the relevant features of this planning problem on the table at one time (for each Center City Visioning process, we approve a Wal-Mart to undermine it). The only mechanism that citizens have to cry foul with any real voice is a water rate election. In fact, the whole point of having citizens vote on water rates is to give them a lever to influence development policy - it isnt an elegant system, but we can make it effective. Fixing the relationship between the development community and the citizenry is crucial NOW. As we saw at the City Council Meeting, some people are starting to question the basic principle that development should pay its own way. It has even been suggested by some Councilmembers that we should be reconsidering our (currently inadequate) Wastewater Excise Tax (WWET). As underfunded as it is, the WWET is the crown jewel of past policies to hold new development responsible for the costs it imposes on our community. There seems to be sentiment on Council to study it down, which would be going in the wrong direction. The water-connection fee is a small issue compared to *that*, but now is the time to take a stand, while we have some leverage. The issues in (3) are just red herrings: the City has never backed off the budget numbers that show $1,530 to be the budgeted cost of a water connection; comparing your citys prices with other cities doesnt make sense if you already know your own costs - no one gets ahead by losing money on every deal!
Posted on: Wed, 12 Nov 2014 00:43:20 +0000