City Council to weigh water, sewer rate increases

MILPITAS » Residents could see multiple increases in their water and sewer bills over the next several years if the City Council approves new proposed rates for both services Tuesday.

Milpitas city staff is recommending hiking water rates by about 30 percent, fixed water meter charges by about 75 percent, and sewer rates by about 37 percent between April 1, 2019, and July 1, 2022, for the average residential customer.

The increases are needed to help cover increasing water costs and planned infrastructure upgrades, Tony Ndah, the city’s public works director, said.

The city maintains about 200 miles of water pipes, as well as 179 miles of sewer pipes, many of which are several decades old, Ndah said, and need to be upgraded or replaced.

There are also two aging pumps in the sewer system that need upgrading, and plans are underway to add another well and reservoir so residents can have enough water if there were a future shortage or supply problem, Ndah said.

“It’s a living system,” Ndah said of the water and sewer infrastructure in Milpitas.

“Like your vehicle, like your home, as it ages, there are needs that need to be met, repairs that need to be done, and we have been working hard on trying to keep up with those, but it requires finances to make sure we keep a solid system that is financially stable,” he said.

Ndah also said water prices overall have been increasing. The city buys about two-thirds of its water from the San Francisco Public Utilities Commission, and the other third from the Santa Clara Valley Water District.

San Francisco has been charging the same rate for water since 2016, and the rates will remain the same until the middle of 2022, Ndah said, when a nine percent increase is expected.

However, Santa Clara Valley has recently increased what it charges the city, and plans to continue with 9.7 percent average annual increases through 2023, Ndah said.

Ndah said city staff wants to show residents the expected impact of the cost increases over time.

“We want to make sure we put a longer picture in place so that folks have a good sense of stability that the system is going to be strong,” he said, “but also get a good picture on where their price is going to be for years to come, instead of year-to-year, coming to them with one change after the other.”

Although costs to supply water have increased, Milpitas has not raised customers’ water rates since April 2016. As a result, Ndah estimated the city will have to dip into its water fund reserves to the tune of about $2.4 million by the end of this fiscal year to cover losses.

Ndah said for an average residential customer in a single-family home, a current water bill, issued every two months, is about $109.44. If the new rates are approved, that customer’s bill would increase to $116.47 after April 1.

Four more increases would kick in between July 1 and July 1, 2022, according to city staff reports.

Ndah said the city plans to spend about $46.3 million over the next five years to upgrade water supply systems and facilities, but to help offset the impact to residents, the city plans to use debt financing to cover about $20 million of that cost through bond funds.

As a result, the new rate proposal includes a reduction in the capital surcharge portion of a customer’s bill, which is used to cover improvements to the system. The surcharge would drop from $1.30 for each 748 gallons a customer uses to $1.08 for the next five years.

Sewer rates are also facing a significant increase over the same period of time. Currently, residential customers pay $90.27 every two months for sewer service. That would jump to $124.14 by July 1, 2022, if the proposed increases are approved, according to staff reports.

Ndah said the city plans to spend about $10 million of the increased potential revenue over that time period to make upgrades to the sewer infrastructure, including replacing aging pipes and upgrading or replacing two pumps.

He also said the city is planning to pay about $65 million between this year and 2022 to the San Jose- Santa Clara Regional Wastewater Facility, which Milpitas contracts with to treat the city’s sewage. The facility is currently undergoing upgrades, and Milpitas needs to kick in its share to help pay for them.

The City Council will consider the proposed rate increases at its meeting on Feb. 5, at 7 p.m. at City Hall, located at 455 E Calaveras Blvd.

To formally protest the rate increase, written protests must be submitted to the city clerk’s office no later than 5 p.m. on Feb. 5, or be submitted in writing in the Council Chambers before the public hearing on water rates is closed, the city said.

Written protests must include the address of the property for which the protest is made, a statement whether the protest is submitted in opposition to increases to the water and/or sewer rate, and the name and signature of the person submitting the protest.

Written protests should be sent to City of Milpitas Water and Sewer Rate Changes Office of the City Clerk 455 E. Calaveras Blvd., Milpitas, CA 95035.