Lodi council OKs 2.9% increase to wastewater rate

The Lodi City Council voted 3-2 in favor of a 2.9 percent wastewater rate increase at Wednesday evening’s council meeting.

Both Councilman Doug Kuehne and Councilwoman JoAnne Mounce contested the increase and countered with a lower increase of 2.5 percent.

Public Works Director Charles Swimley requested a 2.9 percent wastewater adjustment at a June 25 shirtsleeve meeting.

At the June 25 meeting, council members had preapproved the rate increase following a presentation led by Swimley, where he revealed the capital maintenance projects the city would need to fund over the next couple of years.

Mounce agreed. She said she knew the rate increase is needed but would be more willing to vote in favor of an increase that would equate to less than a dollar for residents.

Under the 2.9 increase, a three-bedroom house on a fixed rate that is currently paying $46.49 will be expected to pay $47.84, an increase of $1.35.

For homes with meters that use nine cubic feet of water — the typical monthly bill amount in Lodi — homeowners are expected to see an increase of $1.46.

“We are transitioning from flat rate to meter rate, last 100 residents without meters,” Swimley said.

Swimley stated the proposed rate increase is needed to generate sufficient revenue to meet ongoing operation and maintenance costs and debt service obligations, as well as necessary capital maintenance improvements.

“We have to invest money to maintain our facilities,” Swimley said.

The rate increase will fund the final stages of a state-mandated water meter program. A bill passed by the state legislature in 2004 requires all cities in California install water meters to monitor wastewater and water usage by January 2025.

Each phase of the metering program has cost the city about $5 million, bringing the total cost to about $40 million for the project.

“We have the South Electric building replacement project, which is expected to cost $15 million, a $1 million fan press installation project for the fiscal year 2023-24. We also need maintenance work for our pipe network and pump station in town,” Swimley said.

Since 2016, the city has not approved a wastewater rate increase, according to Swimley, who stated the need for an increase comes as a result of an updated financial model administered by the Sacramento based business management consulting group, Reed Group Inc.

At present, the wastewater operating fund balance exceeds target operating reserves. This surplus will be needed to fund wastewater expenditures amounting to over $30 million over the next five years without borrowing with a pay as it goes model, according to Swimley.

“In relation to reserves, it is important to point that the balance of the reserve is a representation of our pay go model funding for capital projects, but when we have multimillion dollar projects, that money gets spent very fast,” Deputy City Manager Andrew Keys said.

Keys stated that the city could fund capital projects on debt by borrowing money, but the city has avoided that method of funding because ratepayers end up paying the interest costs, and cost more in the long run.

Lodi resident Michael Lusk said he did not oppose the rate increase. He believes there is an obvious need to maintain the city’s infrastructure but requested the city put more of a fiscal onus on developers and builders to pay their fair share of the capital improvement costs through developer impact fees.

City Manager Steve Schwabauer responded to Lusk, stating that the current city council has not been lenient on developers. Developer impact fees have allowed the city to move forward with capital improvement projects in Lodi, he added.

Swimley believes that an inflation-based increase will prevent larger increases in the future and will work to balance the city’s budget as Lodi completes the capital improvement projects.

“By 2022, we can decrease our wastewater rates to reflect our financial plan,” Swimley said.

The rate increase is expected to take effect on August 1.