With Guadalupe sewer and garbage funds short of money, the City Council reluctantly agreed Tuesday to hike the fees, approving increases, some of which will take place over several years, in an effort to stem financial woes.
The approval of the rate hikes came after the council held two hearings, neither of which gathered the required number of protests but still attracted several speakers in opposition. More than 100 written protests were submitted, far short of the needed number of 867 for parcels or 980 for ratepayers.
“It’s a tough one,” Councilman Ariston Julian said, adding the council and staff understand the city’s residents don’t have a lot of money. “It’s a use-based charge — we use it, we have to pay for it.”
The garbage hike passed on a 3-0 vote. Councilman Jerry Beatty recused himself since he works for the city’s garbage collection contractor, Waste Management; Councilwoman Virginia Ponce was absent.
The wastewater increase was adopted by a 4-0 vote.
The city garbage rate will rise 19 percent spread out over more than four years with the first boosts planned June 1 and Aug. 1 of this year. The wastewater rate will climb 30 percent, effective June 1.
“The reason is that the fund balance for the garbage is in the negative, in the red.” City Administrator Andrew Carter said, later echoing similar status for the city’s wastewater fund.
The separate rate hikes are blamed on a number of problems most of which originated several years ago including a catastrophic collapse of an underground sewage line, a loan that must be repaid to the state and the prior staff’s failure to pass along several years of increases from the trash contractor.
The shortage in those special accounts is in addition to the money woes affecting the Guadalupe general fund, that put the future of the small city in doubt until voters approved in November three measures to generate revenue.
On Tuesday night, Miguel Hernandez from Central Coast Alliance United for A Sustainable Economy (CAUSE) called for the council to consider fair and equitable rates, based on the amount of wastewater or trash generated. Others noted the small city’s high number of poor residents unable to shoulder increases.
“Take into consideration where we are and who resides here and then decide the rate increase,” said Jorge Gil, a local homeowner.
As of June 30, the trash fund had a negative balance of $280,000, Carter said, explaining the debt can be traced to 2002 and auditors annually spotlight the problem. Even with the increases the fund balance won’t return to zero until June 30, 2020, Carter said.
The garbage rate hike is needed for several reasons, including that previous city officials failed to pass along to customers when Waste Management implemented an annual increase, according to Carter.
“Unfortunately in the past, the city did not always increase the rates on an annual basis but waited,” he said.
Complicating Guadalupe’s situation is that it hires Waste Management to collect garbage but the city handles billing.
This has led to a big discrepancy in the number of customers the city bills compared to the number of customers Waste Management said it collects garbage from in the city.
And thirdly, the city borrowed money $180,000 from the affordable housing fund from 2002 through 2007. That’s also caused the balance to go negative.
The proposal calls for a 6 percent hike followed by 3 percent increases for the next four years and a 1 percent hike.
These increases would be in addition to normal Consumer Price Index hike called for under the city’s contract with its contractor, Waste Management Inc.
The current rate for a 15-gallon can is $14.78 a month and climb to $15.67 June 1. Five addition increases are planned Aug. 1, beginning this year and continuing until Aug. 1, 2019 when the rate would rise to $19.17.
Carter said that annual increase is included in the proposed rates shown.
Over the last eight years, the CPI adjustment averages 1.2 percent “so it’s pretty low,” Carter said.
The wastewater increase is due to the 2013 failure of a critical sewage line that collapsed, requiring expensive repairs.
Additionally, the former city staff borrowed money from another fund, a loan the state has insisted must be repaid, Carter said.
If the city didn’t take steps to solve the money problem, the fund balance would climb to negative $710,000 by June, according to Carter.
With the increase the monthly wastewater rate would go to $34.97, up from current rate of $27.28, he said.
In addition to the huge debt, some critical sewer lines needs to be upgraded and expanded. One line is at risk of spilling out of the manholes, which if that happened would cause huge fines.
“Not only do we need to correct the current negative fund balance we need to start saving money to make these improvements,” Carter said.
Even with the increase the sewer rates will still be blow the average for northern Santa Barbara County, Carter added.
— Noozhawk North County editor Janene Scully can be reached at jscully@noozhawk.com. Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.