The Pleasanton City Council voted to delay the decision about implementing 62% in increases over three years for water rates after dozens of residents packed the meeting room on Tuesday to ask the council to slow down so that staff can conduct more analysis on the topic.
That work, the council concurred, should include evaluating comments from the public, responding to resident questions and figuring out any possible alternatives to the three-year water rate hikes. Afterward, staff will present their next recommendation for the rates during the Nov. 7 council meeting.
"We've been talking about this subject, since I don't even know when ... We've talked about a lot of different things and our staff has addressed a lot of those things," Councilmember Valerie Arkin said. "But if there is new information or additional information our staff wants to provide, I think that will be great based on public input."
"Increasing rates is not something I take lightly. We are all residents here too ... I have a pool, I have a garden, I get it," Arkin added after addressing Pleasanton resident Vicki LaBarge's concerns about paying more money for her own pool and garden. "A suggestion of just not doing the rate is not what I'm talking about. We need to fix the problem, and that's what we're going to need to do and that's a responsibility of the city. But we need questions answered, I completely agree."
City officials have been looking at raising water rates since 2019, but the water rate study was paused due to the COVID-19 pandemic. Since then, city officials have said that three years of no rate increases have put the city in a difficult position of having to raise the rates so that the city's water enterprise fund doesn't go bankrupt in the next three years.
"We certainly needed to do more in terms of proactively planning for the needs of the system," City Manager Gerry Beaudin said Tuesday. "We have the water rate program that essentially resets the enterprise fund ... This is a fund that is on its way to becoming insolvent in the next two years, as in not enough money to do the work that needs to be done."
He said that the rate increase would help in the long run with possibly funding efforts to address the city's issues with PFAS, otherwise known as forever chemicals, in the city's groundwater and other aging water infrastructure issues.
"For as much as we could say tonight that we don't know what we're up against. We know that when we haven't done a citywide master plan in 30 years for our water system. And when we have PFAS contamination and we're trying to get 3,500 acre-feet out of the ground, we know we have tens of millions of dollars on the horizon to address those needs," Beaudin said.
The proposed rate structure from staff would have seen rates increase by 30% beginning Nov. 1, followed by another 20% increase beginning Jan. 1, 2025 and a 12% increase the following year.
According to the staff presentation, the first proposed rate increase would raise the average homeowner's bimonthly bill by $33, which equates to an approximately 30% increase in the total water portion of the utility bill, or about a 13% increase to the overall utility bill.
This would also mark the first rate structure overhaul since 2011 -- water rates have only been adjusted for inflation since 2011, except for 2017, 2020, 2021 and 2022 when there weren't any increases at all, according to staff.
That all led to the water fund becoming unsustainable, which needs to be addressed in order to move forward with future water-related projects and operations in the city, according to Beaudin.
The council voted 4-1 in July, with Vice Mayor Jack Balch in dissent, to initiate the public notification process ahead of final rate increase consideration Tuesday night. However, Balch had initially asked the city to push pause and to actually wait until November so that more analysis could be done and so that more residents could weigh in on the discussion.
"This is welcome news, because on July 18, that's exactly what I asked for to happen, so I appreciate the willingness by the council to do it," Balch said.
He also said that back then, he had wanted a pause because when Raftelis, a water and utility consulting company, conducted a report to determine the water rates, it did not take into account variables on the assumptions it made regarding "debt, interest rates, how much capital projects will cost, when they will be done and a variety of other factors."
"What I asked for in July, was a sensitivity analysis to understand if we altered those variables, how it would change the ultimate rate we would be producing as a result of that report and that work," Balch said.
But while many residents had issues with not understanding how the rate increases would affect them and where the money generated from the increases would go toward, city officials held on to their claims that some type of increases will be necessary in order to help accomplish several water related goals.
Those goals, according to city officials, include executing immediate city infrastructure system upgrades, increasing funding for the water supply alternative project design work, increasing funding to purchase water from the Zone 7 Water Agency for the next couple of years, increasing staffing to help implement solutions for the water distribution system and restoring the water enterprise fund.
Beaudin also said that the rate increases, along with the city's water supply alternatives study which the council discussed Tuesday night as well, are both part of a more comprehensive effort to reboot the city's water program.
However, many of the residents who spoke during Tuesday's meeting continued to say that the city has not done enough due diligence in informing residents on the specifics of the rate increases.
Mayor Karla Brown at one point had to call for a recess during the public comment period as many residents were going over time to ask back-and-forth nuanced questions, which many said proved their point that the information is not clear.
"Many of the messages you've heard here tonight, if you've been truly listening to people, should indicate to you that you haven't been clear enough," Pleasanton resident Dean Wallace told the council. "It isn't a matter of you repeating yourselves. It's a matter of actually making yourselves clearer than you have been up to this point, engaging with the community the right way, being fully transparent, with straightforward and clear language."
Even though the city only received 202 validated written protests against the increases as of Tuesday night -- in order to table the recommended rate increases the city would have had to receive 11,243 protests, or a majority of property owners in the city -- the council remained unanimous in delaying the decision so that staff could appropriately respond to resident concerns. Councilmember Julie Testa was absent for the decision, having to leave at the beginning of the discussion due to a family emergency.