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Santa Monica City Poised to Cut Hike in Water Use Rates Prompted by Drought

Santa Monica Real Estate Company, Roque and Mark

Pacific Park, Santa Monica Pier

Harding Larmore Kutcher & Kozal, LLP  law firm
Harding, Larmore
Kutcher & Kozal, LLP

Convention and Visitors Bureau Santa Monica

By Niki Cervantes
Staff Writer

February 23, 2016 -- The City of Santa Monica is poised to cut – by nearly half – the increases in water rates it originally proposed for customers, with officials saying costs for the City’s anti-drought campaign are coming in under budget, at least for now.

The Santa Monica City Council is scheduled at its meeting Tuesday to consider increasing water rates for customers by five percent this year, instead of the nine percent originally anticipated, according City staff reports.

Under the recommendations, a single family at the First Tier would pay $2.87 per 100 cubic feet of water this year, compared to the $2.73 per 100 cubic feet of water now being charged. By contrast, a nine-percent increase would have put the rate at $2.98, said Martin Pastucha, Public Works Director.

A family at the Fourth Tier now plays $9.59. With a five-percent increase, the amount would be $10.07; at nine-percent, the rate would rise to $10.45, he said.

The bigger rate increase was set to go into effect January 1. If approved as recommended, it would be suspended and pegged at a five-percent hike until next year, when the nine-percent hike likely would resurface, Pastucha said, and stay in effect until December 31.

He said, however, that the City is scheduled to re-evaluate the rate each year.

He said City customers actually beat their own conservation goals of a 20 percent cut in water use, some major water-improvement projects by the city came in under budget or were completed sooner than expected and other costs were less than anticipated – all adding up to savings and the possibility of lower rate hike.

“It’s a good news thing,” Pastucha said. “We can do this and still meet our reserve requirement.”
Like the rest of drought-stricken California, Santa Monica has ramped up to meet state-imposed requirements to conserve badly needed water. Last February, the Council approved a nine-percent rate increase, with rates expected to jump the same amount for each of the following four years. It became effective in March.

The rate increases were approved in hopes of curbing losses to the City’s water fund, which was starting to sink because of rising costs and City-mandates meant to offset the drought. Without the increases, the fund would have slipped into the red soon, officials said.

But Pastucha said it was always understood that City staff would monitor costs and spending after the first wave of rate hikes in 2015, and come back with findings on whether the same rate increase was needed this year.

It isn’t, he said, because spending last year wasn’t as high as anticipated and still left enough for the City to maintain a reserve fund for emergencies of at least $7 million.

“There were a whole lot of variable conditions,” he said.

Although higher water rates helped pump up water funds, so did much lower-than-anticipated costs for capital projects, he said. The City Water Fund took some major hits for big projects, like water-related work to the California Incline, the Colorado Avenue Esplanade near and the coming Metro Expo Line, he said, drawing down water funds from $45 million in 2014-2015 to about $22 million by the end of this fiscal year.

Nonetheless, the City still finished the last fiscal year with enough in its coffers to maintain a healthy reserve and help bring down the rate increase for 2016 from nine percent to five percent, he said.

The new rate will be reflected in March water bills, the report said.

Since the City launched its aggressive water-conservation goals, residential customers posted some significant cuts. The City’s customers fells below the state target of a 20 percent cut, actually reducing use by 22 percent last June.

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