Council Revisits Sewer Rates Tuesday

Seven months after the Mill Valley City Council increased sewer rates by more than 100 percent to pay for an overhaul of its aging sewer infrastructure, the city is set to move to a system whereby people will pay a sewer rate based on how much they discharge into the sewers – at least in part.

The council will hear a preliminary proposal from city staff Tuesday night about moving to a so-called “flow-based” sewer rate system, whereby those who consume the most water in their homes or businesses, and therefore send the most wastewater into the sewers, pay more.

In June 2011, the council approved a sewer rate hike for residential customers from $297 annually to $600 annually, a 102 percent increase that drew the ire of some members of the community but also got the city in line with the rates charged throughout Marin. For businesses, the increase was even higher, as much as 140 percent in some cases. The sewer rate hike has been cited by city officials as a key driver for road improvements that have languished.

In raising the rates, the council directed city staff to determine how the city could shift to a flow-based rate structure. A key component of Tuesday night’s discussion focuses on the anticipated reaction by users to paying based on their water consumption: they’ll use less.

City officials based the rate hike on generating at least $4 million in annual revenue over the next five years to pay for rising costs and a much-needed overhaul of the city’s 59 miles of sewer pipes, much of which dates back some 50 years. Because the city would take a hit to its bottom line if significant conservation occurs – just as the Marin Municipal Water District (MMWD) has – city officials want to make a certain portion of its rate fixed, or not dependant on use.

The report recommends that the fixed portion of the sewer rate fall between 30 and 50 percent, preferably closer to 50. “Agencies have found that within this range, enough revenue is generated by fixed charges to provide adequate revenue stability and enough revenue is generated by flow-based charges to adequately differentiate among customers based on flow,” Public Works Director Jill Barnes wrote in a staff report, based on research from HF&H Consultants.

As one might expect from a shift to a flow-based system, at least in part, those who consume the lowest amount of water in the city would see their rates go down, while the biggest consumers would see another rate hike.

For instance, city staff projected that while a residential customer consuming half of the median amount of water per month would see their bill decrease from $600 per month to $507 per month, a 15 percent drop, a house consuming twice as much as the median would see its bill jump from $600 to $919, a 53 percent spike.

For commercial customers, the impact of the shift would vary widely depending on consumption and type of business. Restaurants and markets would be the big winners under the proposal, seeing their monthly bills drop from between 15 percent and 47 percent.

City staff also makes its case in the report that while the council did increase rates substantially in June 2011, it did not do so to the degree to which city officials believe is necessary. While the approved rate hike looks to raise approximately $4 million and rises to $4.6 million in 2015-2016, the new proposal calls for revenue of $4.9 million this year and up to $5.4 million in 2015-2016.

To raise that additional revenue, city staff is asking for an additional 25 percent rate increase between this year and 2013-2014 on top of the 102 percent increase for this year.

City officials expect to present a final, multi-year rate structure to the council at its March 19 meeting.

The 411: The Mill Valley City Council will hear a report on flow-based sewer rates and direct staff how to proceed. Meeting is at 7:30 p.m. on Tuesday, Feb. 21 in the council chambers at City Hall, 26 Corte Madera Avenue. Click here to watch the meeting online.