Council Takes Another Look at Flow-Based Sewer Rate Shift

 After by more than 100 percent and who saw their rates skyrocket, Mill Valley city officials are hoping that the – charging people based on how much water they consume and thus discharge into the sewers – is explained clearly and includes a range of options for the City Council to consider.

The council will have a number of decisions to make at its meeting Monday night. All of them center on striking a balance between competing notions: charging customers based on their water consumption and thus encouraging conservation, but doing so without jeopardizing the .

To that end, is proposing a different formula than she did at the . Instead of charging rates derived half on water consumption and half on fixed charges that wouldn’t fluctuate based on usage – and thus providing revenue stability for the city – Barnes is showing the council a formula based on 100 percent of the bill depending on water consumption. To account for customers whose water usage plummets or for vacant buildings, there would be a minimum charge, Barnes said.

Based on that proposal, the highest residential water users in Mill Valley would see their rates rise from $600 in 2011-2012 to an estimated $1,276 in 2012-2013 (see charts at right), a 113 percent increase. The lowest users – those whose water consumption is half of the median – would see their rates drop to $327, a nearly 46 percent reduction.

For commercial customers, the formula is more complicated, depending on the type of business. Restaurants and markets would benefit from the proposal. Depending on the type of restaurant and market, those businesses could see anywhere from a 31 to 47 percent drop in rates compared to what they would pay in 2012-2013 under the current formula, which includes both flow-based and fixed charges.

The move to flow-based rates came after the council in June 2011 for residential customers from $297 annually to $600 annually, a 102 percent increase that drew the attention and ire from the community. For businesses, the increase was even higher, as much as 140 percent in some cases.

The council directed staff at that time to explore a flow-based structure, calling it the fairest way to charge customers and noting that it would encourage conservation.

City Hall 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.

In backing the 100 percent flow-based proposal, Barnes cited similar structures in Los Alto, Half Moon Bay and San Mateo.

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 outlines a number of revenue-generating scenarios, including debt financing to raise money for the sewer system upgrade as well as raising rates beyond what the council improved in June 2011.

At Monday night’s meeting, Barnes expects the council to choose the rate structure, the revenue-generating scenario as well as a number of technical formulas, such as how businesses are categorized under the new structure.

The city sent out notices (attached at right) to all customers who would see a rate increase of 20 percent or more under the new system. Barnes said that includes approximately 1,300 customers.

The city is hosting a public workshop on the sewer rate structure on March 26 at the at 7 p.m. City officials also created a web page on the issue. The council is expected to approve the change to the sewer rate structure at its June 18 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 Monday, March 19 in the council chambers at , 26 Corte Madera Avenue. Click here to watch the meeting online.