New tiered water rates are coming starting July 1 for Menlo Park Municipal Water customers.
In a split vote, the Menlo Park City Council voted 3-2 on May 11, with council members Ray Mueller and Cecilia Taylor opposed, to approve new water rates for the next five years for customers of the city's Municipal Water service. The water provider serves about 4,400 water connections and about 19,000 people throughout the city, mainly in the Sharon Heights neighborhood and areas closer to the Bay in Menlo Park.
The new rates create three tiers that set water prices lower for connections that use less water and higher for those that use more.
Rate increases are intended to address the fact that wholesale water rates through the San Francisco Public Utilities Commission are expected to increase 32.9% over the next five years, and that Menlo Park Municipal Water is expected to spend about $60 million on capital improvement projects over the next five years.
The newly adopted water rates have two components: a flat rate based on each customer's water meter size, and a consumption charge, based on the number of water units, measured in hundred cubic feet, that each household uses. Both are slated to rise over the next five years, from fiscal year 2022 to fiscal year 2026.
For single-family homes, average households using 12 units of 100 cubic feet of water are expected to see a decrease of around $9.50 in the 2021-22 fiscal year as the city transitions to a three-tier system that charges $5.09 per unit from zero to six units; $6.82 per unit from seven to 12 units, and $8.69 per unit over 12 units. Meanwhile, the flat meter rate charge is expected to rise to $33.53 in 2026 from $27.58 for customers with meters that are 5/8 or 3/4 inches wide, according to a staff report.
Council members were split primarily over issues raised by a number of residents of multifamily homes, who said that the city's tiered water rate system disadvantaged their households because the rates are based on usage from each water connection rather than each household. Since many multifamily apartment or condominium complexes share a single connection for all of the homes on a property, those connections will enter the higher-price tiers more quickly than single-family home water connections. As a result, residents of multifamily homes will face higher water prices than single-family home residents, even though the average water usage in a multifamily household is lower.
In a public comment, resident Anders Frisk called the approach discriminatory toward multifamily water customers that, under the new system, will be charged higher water consumption rates than single-family home customers even though they use less water.
"Did everyone just forget about the families in multifamily housing?" he asked.
One mitigating factor in the water cost equation, noted Chris Lamm, assistant public works director, is that single-family households also pay a flat rate for their home's water connection, while multifamily households can share that fixed cost, and that despite the higher water consumption rates to come for multifamily households, the average bill will still be lower than for single-family households.
Within the Bay Area Water Supply and Conservation Agency, of which Menlo Park is a part, only three out of 40 set tiered rates for multifamily water customers is based purely on water use per meter. More either set flat rates for multifamily households or set up tiers that consider the number of housing units each meter serves. Others set a flat rate for all customers or just have tiered rates for single-family homes, according to a staff report.
The council discussed the possibility of redoing the water rate study, led by the consultant firm Black and Veatch, at an estimated cost of around $20,000 and four or five additional months of time, to restructure the overall water rates by crafting an average rate for each unit in multifamily developments. However, since all of the units at a given multifamily property share a single water meter, such a system would still fall short of a truly egalitarian rate system based on each household's water use, consultant Ann Bui explained, since, without meters on every household, there's really no way to know how much water each household uses and charge each accordingly. The closest one can get is an average across the number of households in a multifamily property, which doesn't account for factors like some units being vacant or some units using extra water, she said.
If the study were redone, it would likely result in higher rates for at least the first tier of water usage, Lamm said.
Mueller said he favored redoing the water study to better reflect the water usage of multifamily households.
"I really believe the right thing to do is redo (the water rate study) and figure out how you charge at the correct consumption basis for a multifamily resident," he said. "At the end of the day, we charge for water by the consumption rate. It's difficult for me to say I'm going to charge someone in a single-family home less on a consumption rate, even though they're getting a capital charge for the water meter, and charge people in multifamily homes more for their consumption, even though they escaped that capital surcharge."
Taylor said that she opposed the rate increase at least partly because at "a time like now, some people don't have the means to increase any expenses." She said she also favored eliminating the credit card processing fees that water customers pay in addition to their bills.
Mayor Drew Combs, on the other hand, supported the updated water rates, noting that the fact that multifamily homes are on a single meter has more to do with considerations developers made at the time those properties were developed to reduce the infrastructure costs by putting all of those homes on a single meter. That was a financial bet that those developers made and it has consequences that may affect tenants, but it doesn't constitute discrimination against residents of multifamily homes, he argued.
Councilwoman Jen Wolosin explained her support for both sides of the proposal before eventually agreeing to pass the new rates after confirming with staff that even if the study were to be redone, the general rates would not be likely to change much.
"I don't think we're going to end up with a better answer," Vice Mayor Betsy Nash said in explaining her support for moving forward with the new rates.
While such approvals typically require a four-fifths majority to move forward, the council was able to pass the new rates with a simple three-fifths majority by eliminating provisions in the ordinance that relate to health and safety codes. Passing the new rates with simple majority provides the city less protection should a lawsuit or class action arise against the water rates, noted Assistant City Attorney Megan Burke.