But that wasn't to be. While it is true the City Council did push these questions around their plates a little, it seemed pretty obvious they were not happy about the position they'd been put into. It hardly being the style of Mayor Mosca and his 3 amigos to allow themselves to be seen supporting something quite this unpopular. Better instead to wait until there is an opportunity to blame it on someone, or something, else. You know, like the water pipes. Which was the original strategy.
So what the City Council eventually got around to doing was order City Staff to go back, do a little research, and then at an unspecified later date present them with 3 options related to servicing the water bond debt. The real cause for raising water rates, as I am sure you know by now. City Staff then apparently referred this "guidance" to the same consultants that cooked up the original water rate hike. You know, the proposal that sent folks out into the streets gathering signatures to protest what seemed like a water rate increase that made absolutely no logical sense.
However, that was hardly the point. The actual process here being to make absolutely certain that no possible strategy for avoiding responsibility on charging more money for water was not carefully examined. Which is why this effort was passed on from the City Council to the City Staff, and from there to the appropriate consultants. Thereby covering all endangered fannies.
We here at The Tattler, however, engage in no such responsibility avoidance. And since the City Council refused take the bull by the tail and face this situation, we feel that duty now falls upon us. So we will answer City Staff's 7 questions on behalf of the City Council. And in a way that more accurately reflects their real concerns.
Question #1: Should the City comply with the bond obligation to achieve 120% net revenues ratio, achieved after operations, capital expenditures, and debt services? If yes, by which year should the ratio be achieved?
What the City Staff needs to realize is that the only thing the Gang of 4 really cares about is servicing the bond debt. By publicly relegating bond debt behind such things as fixing water pipes and reservoir dams, they put the City Council into the position of appearing to not care very much about water infrastructure maintenance. Which, while true, is not how they want to be perceived. Only when Sierra Madre's bond rating is once again at the "AAA" level can those other matters be considered. And then only by the sale of yet more bonds to raise the necessary capital.
Question #2: Should the Water Utility Fund be self-supporting; meaning should the City General Fund subsidize the Water Utility? If yes, by how much?
The General Fund is going to have to support the Water Utility, at least for a while. With $19 million dollars worth of water bond debt to take care of, there really aren't any other options. Once the rates are hiked and the bond companies and banks assured that their pound of flesh is secured, only then can we raise the needed cash by selling more bonds. Only at that time will we be able to take the burden for paying the Water Company's debts off the shoulders of the General Fund.
Question #3: Over the five year period, what dollar amount, if any, should be set-aside or accumulated toward capital projects?
The City cannot do both. If we service the bond debt, there is no money for capital improvements. And if the City spends the Water Department's dwindling reserves on capital improvements, we'll get into to trouble with the banks holding the bond paper. The only way that both needs are to be met is through the sale of more bonds. Which means we must take care of existing bonds first so that our ratings improve. Then we can sell new bonds and raise some cash. Which is when we can start replacing pipes. Short answer: Not one dime for maintenance until new bond sales are executed.
Question #4: What dollar amount (or percentage of fund reserves to operations) of cash reserves should be available to meet contingencies and emergencies?
The least possible amount.
Question #5: Should the Water Utility have a tiered consumption rate structure? If yes, what is the preferred differential between tiers? What is the preferred number of tiers?
If the tiers are taken out of the water rate increase process, it will change that document to the point of becoming an entirely new proposal. Which means that Proposition 218 would once again be triggered, and God only knows what those people will do with that opportunity back in their pockets. So the tiers have to stay. As far as the technical aspects of the tiers, that is for City Staff to figure out. Or, if they don't want to dirty their hands with it, assign the responsibility to the consultants.
Question #6: Should the Water Utility continue to maintain different meter charges, based upon the size of the meter?
Again, any change to the original proposal changes it to the point where Proposition 218 would come back into play. Which could screw up the whole bond situation. Besides repairing water infrastructure, we will also require bonds for both sewer upgrades and street repaving. If we are ever to initiate new large scale (i.e. profitable) development in this town, we will first need to rebuild all sorts of infrastructure. And to do that we will need to sell at least three new rounds of bonds.
Question #7: Should the Water Utility continue to maintain the same rate structure for all customers? Or, should rates be based upon type of use: I.e. commercial, single-family residential, or agricultural?
Again, the original proposal for the water rate hike must not be changed. We don't need another Prop 218 uprising in this town. Do whatever it takes to make it seem like we are dealing with the concerns of the residents, but do not, under any circumstance, actually initiate anything new. And please, take your time with this. People are much too aware of this situation right now. Better to hold off for several months until things are quiet again. In other words, engage in the process.
There you go. The Sierra Madre Tattler. Here to help.