Sacramento County borrowed millions to expand water infrastructure, now it needs help paying the bill

Rate increases can be slippery when debt

Following a civilian career with the Department of Defense, Joanne Hughes returned from overseas and settled in a handsome one-story home in the Vineyard area of south Sacramento. Back then, in 2004, her utilities bill from the county topped out at maybe $150 every 60 days.

“Now it’s up to almost $300 every month,” she told county supervisors last week. “That’s unsustainable.”

Unfortunately for Hughes and 50,000 fellow water customers, it’s about to get even more so.

This past Tuesday, the Sacramento County Board of Supervisors was set to approve rate increases for the second time in two years. Bi-monthly user fees will climb $7 for unmetered residential customers in the unincorporated county beginning August 23, and another $5 starting July 1 of next year.

The additional $4.1 million the Sacramento County Water Agency anticipates by 2015 will help chip away at a hefty bond debt the county incurred while muscling through a $200 million expansion in water infrastructure.

But that additional supply came before the need. The county built it, but they haven’t come. Not yet.

Rate increases have flown higher “than the growth of our customer base,” acknowledged water resources director Michael L. Peterson.

As the county waits for new residents, those already here are fronting the costs of both future customers and the developers who stopped building in 2008, when the recession hit. Peterson expects construction fees to start picking up the slack again in 2015, but even then, rate increases will only slow, not stop.

Bonds paid for new surface water facilities in the Freeport and Vineyard areas. There’s an annual debt service of $25 million attached to those two projects, held by Union Bank.

“Your elected board members should not be borrowing money that you can’t pay back,” chided Hughes, one of 57 affected customers to send in a letter of protest.

State law requires a majority of affected water customers to formally object to prevent rate increases. The retiree in the pink sun hat was the only one who attended last Tuesday’s hearing.

Rate increases will also fund new water-monitoring regulations and fluoridation costs covered by an expiring grant, and jump-start mothballed maintenance projects. Water officials expect an increase in well failures because they deferred maintenance to keep rates from climbing even higher, Peterson said. There are north of 75 wells of varying ages in the system.

Board chairwoman Susan Peters reluctantly agreed to rate hikes after ensuring the money wasn’t for new water department employees or projects. “There’s not empire expansion going on here,” she said.

Also rumpled by the sticker shock, Supervisor Don Nottoli asked staff to look into ways to allow customers to spread out their utility payments in the future.

“You still have folks who are on fixed incomes of less than a thousand dollars a month,” he said. “And when you look at that, that $150 a month goes in just for essentials—water, sewer, garbage and storm drains if you’re in the unincorporated area—that’s a big bite.”