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Failure to increase water rates makes it hard for city to pay bill

OCEANSIDE — A shortfall of a three-fourths vote by City Council on a water and wastewater rate increase Oct. 14 puts Oceanside in financial jeopardy. The vote means a possibility that the city could be called on to pay in full for more than $105 million in debt for water infrastructure that is already in the ground.
“It’s the worse financial mistake the city has ever made,” Councilman Jerry Kern said. “We no longer have debt coverage.”
The present debt coverage for water infrastructure requires that the city give a 115 percent insurance that the debt will be paid.
A vote by council on the minimum of four proposed water rate increases — a $6.34 a month increase in water rates for an average family of four and a $4.96 a month wastewater increase — would have ensured debt coverage.
The 3-2 vote on that option, in which Mayor Jim Wood and Councilwoman Esther Sanchez voted no, failed to reach the three-fourths approval required to increase fees and puts the city in a financially vulnerable spot.
“It’s back to the drawing board,” Lonnie Thibodeaux, water utilities director, said.
The Metropolitan Water District is already charging the city higher water rates. Current water and wastewater rates paid by consumers do not cover the increase in wholesale water costs charged by the Metropolitan Water District since September. Water utilities reserves will be dipped into to cover the difference while the process to increase rates starts again.
Dipping into reserves is not favorable. “The sewer and water fund will be bankrupt by next year,” Kern said.
The water utilities department must reinitiate the Proposition 218 process to increase fees and notify water customers of proposed increases as well as provide opportunities for community input.
“It took us five months get to this point,” Kern said. “Now the 218 process must start again.”
If the process to increase rates does take another five months to bring revised rate changes to council, the price increase may also include an additional 17 percent increase in pass through charges that is expected to be billed by the Metropolitan Water District in January.
Wood and Sanchez stood against any rate increases.
“This is the time to say no,” Sanchez said. “We need to make fundamental challenges to the way we do business.”
The city received 218 protests from residents against rate increases. Most residents who spoke against the increases suggested going with the lowest increase in rates from the four rate options presented.
“Consider how a large increase will affect our seniors and those on a fixed income,” Rex Martin, Oceanside resident said. “It would literally take the food off their table. Adopt the least rate increase possible to assist seniors and veterans. That’s what I would do.”
“I am one of the seniors that is facing a fixed income,” Jim Townson, Oceanside resident, said. “I’m living on a 20-year retirement. Go the lowest you can.”
Some residents did ask for no increases. “We’re getting nickeled and dimed to death,” Jason McDonald, an Oceanside resident, said. “Twenty bucks, 30 bucks a month is tough. Consider no increase at all.”
No increase in fees fails to pay the current city water bill in full and leaves zero margin for infrastructure repair. “The big consequence is eating up our reserves,” Thibodeaux said.
While city staff determines how to pay for water rate increases, legislation to stop continued cost increases by the Metropolitan Water District will also be looked into.