Council Approves Revised Sewer Rate Hike

After a and another two hours of debate Monday night, the Mill Valley City Council unanimously approved a but scaled back an even higher hike for 2011-2012.

The council approved a revised rate hike that will see residential sewer rates rise from $297 this year to $600 next year, a 102 percent increase. City staff had proposed a first-year hike to $694, a 134 percent increase, and the council pulled back from that, citing sticker shock in an economic downturn in which a host of taxes and fees are going up, including and .

But city officials said the additional revenue was vital to pay for an overhaul of an aging infrastructure badly in need of repair. That work is expected to cost approximately $2.25 million a year over at least the next 10 years, according to city officials.

The council vowed that the city will institute flow-based sewer rates next year, allowing the rates to be adjusted based on the amount of wastewater a residence produces. Commercial entities already operate under flow-based rates, which encourage conservation.

The council will hold a second reading of the rate increase ordinance at its June 20 meeting but that will be a mere formality.

The vote concluded a process that began in early February, with city officials citing rising costs from the (SASM), the joint powers agency that collects and treats wastewater for approximately 28,000 residents in Mill Valley and five neighboring sanitary districts, as well as more stringent state regulations and an Environmental Protection Agency order issued in the wake of SASM’s massive 2008 spill of more than 3 million gallons of wastewater. The spills resulted in a $1.6 million fine.

The lion’s share of the rate hike goes towards an overhaul of a large chunk of the city’s 59 miles of sewer pipes, much of which dates back some 50 years. Under a mandate from the EPA, the city did a video-based inspection of 12.6 miles of its sewer lines as a basis for determining a sewer repair plan. The survey found the system to be laden with a variety of defects, including cracks, holes, blockages and tree root intrusion.

Monday’s hearing officially closed a 45-day protest period mandated by Proposition 218. If the city had received protest letters from a majority of residential customers within city limits – in this case at least 2,801 letters – the rate increase would have been halted. Instead, the city received 79 letters of protest.

Many attendees Monday night said the city had rushed the public process and made insufficient public outreach. Some asked the council to wait a year so that a rate hike and a conversion to flow-based rates could happen simultaneously, thereby easing the burden on those who produce less wastewater.

“Let’s wait and do it right,” said local resident Rufus Jeffris. “What’s one year of an increase? It’s not going to buy you a new system in one year.”

Some residents scoffed at city officials’ explanation that the rate hike was so steep because the city hadn’t raised its rates since 2004.

Councilman Andy Berman rejected the notion that the city had fallen asleep over the past seven years in not raising its rates to pay for repair to an aging sewer system. He said the city has balanced its desire to overhaul the system with the fact that the community has faced multiple parcel taxes, municipal service taxes and in recent years to pay for school district projects and other city services.

“We’re very sensitive to how many times you can dip into your pocket books,” he said.

Local resident Daniel Meltzer said he didn’t oppose a rate hike but said the city hadn’t shown sufficient detail of the scale of the sewer system overhaul.

“I don’t think you’re ready to vote on this right now,” he said. “I do not oppose a rate increase that is adequate for the task. It’s very important to do this but if we are going to buy what anyone would agree is a Cadillac level of improvement, then we should know what we’re getting.”

Meltzer also said the city should use some debt financing to pay for the project, thereby putting less of the initial burden on ratepayers,

Councilwomen Shawn Marshall and Stephanie Moulton-Peters backed the idea of using some level of debt financing to pay for the capital projects.

The council agreed to lower the first-year rate hike and revisit the subject in a year, when flow-based rates, debt financing and a revised rate structure will all be considered.

Under the council-approved plan, the city raises its rates as follows: $600 in 2011-12, 677 a year in 2012-13, $677 a year in 2013-14, $685 a year in 2014-15 and $685 a year in 2015-16. The earlier rate hike schedule called for the following: $694 in 2011-12, 757 a year in 2012-13, $784 a year in 2013-14, $792 a year in 2014-15 and $827 a year in 2015-16.

"We will be coming back to this," Mayor Ken Wachtel said.