06/15/2009-Pasadena: Board letter to Council on Water Cost Increases

This letter was sent to the Pasadena City Council from the Chamber regarding the significant water rate increase proposed by PWP.

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June 2, 2009

Mayor Bill Bogaard
Pasadena City Council
100 North Garfield Avenue
Pasadena, CA 91109

Dear Mayor Bogaard and Pasadena City Council,

The Board of Directors of the Pasadena Chamber of Commerce at its meeting of May 26, 2009 formally chose to express concern about the significant increase in the cost of water service proposed by the City of Pasadena.

The Chamber Board is very concerned that water costs for commercial customers will rise by 10% to 30% on July 1, 2009, with additional increases proposed for July 1, 2010. Residential customers may see an increase of 10% to 20% over the same period, with a second increase in 2010.

The Board and staff of the Chamber have heard a significant level of unease that has been expressed by Chamber membership over the recent spate of cost increases imposed by the City of Pasadena, especially the proposed hike in the cost of water.

Concerns being expressed very strongly by Chamber members are (followed by the pertinent recommendation by the Chamber Board):

* These increases are coming in the midst of a very severe economic downturn. Many businesses, and residents, have to make difficult decisions to maintain their financial viability. Added costs for City services, especially the dramatic increase in water costs, may have far reaching negative impacts on Chamber members and the local economy.
o The Chamber Board recommends cushioning the water rate impacts by phasing the increases in over a four year period, rather than the two years currently being proposed. That would provide some time for the economy to begin to grow again, and for businesses to get back on their feet before having to cope with the entirety of the increases proposed by the water department. If that were not deemed appropriate, the Chamber would recommend mitigating the potentially negative consequences of the increase by lowering the percentage increase.

* The Board also expressed concern that the Pasadena Water Department needs to demonstrate efficiencies and cost reductions before asking for a rate increase. Businesses in Pasadena, throughout Los Angeles County, our state and nation are forced to reduce budgets, many by 20% or more. Pasadena Water Department is seeking an increase to maintain its budget at present levels without demonstrating to its customers that a thorough evaluation of department operations has resulted in cost savings.
o The Chamber Board recommends the City Council ask for significant reductions in operating costs from the Water Department before imposing these increases on customers. The Chamber Board reasons that a thorough and exacting surgical evaluation of the operations of the Water Company could result in significant cost savings that have no impact on vital services or the supply of water for Pasadena Water Company customers.  While it is clear there have been efforts to reduce costs, both within the Water Department and the City, the Chamber Board would like to see a significant effort made to reduce costs further. It is also suggested that the City look at reducing some costs, or eliminating costly processes in other departments to help mitigate the increased cost of water for commercial customers.

* Pasadena Water Department’s commercial customers are paying a disproportionate amount of the proposed increases, especially when departmental reports indicate that residential customers may waste water at a disproportionately high level compared to businesses.  Pasadena Water’s larger customers will pay significantly more for water while likely being unable to make substantial savings as they already have implemented conservation measures and may have already reached the 10% reduction level targeted by the water company. The commercial customers are unable to recoup the additional costs associated with this significant increase in water costs, so likely will have to reduce costs in other areas. This could mean workforce reductions, temporary or permanent closures, curtailment of some services or restriction in operating hours. Those measures could impact our community in lost jobs for residents, lost opportunities to do business and decreased revenues to the City.
o The Chamber Board recommends the increases be adjusted so that those customers who are wasting water are responsible for paying the costs in the highest rate tiers, not simply the largest users of water. Simply because a customer uses a large amount of water does not mean they waste the resource.  In fact, most of the large commercial water customers are running very efficient operations, but their operation may be dependent on using significant amounts of water. The Board also recommends that those customers who have reduced their water usage by the requested 10% from 2006 levels be rewarded by being exempt from charges in the tier 4 and tier 5 range and that those costs be shifted to those customers who are shown to be wasting the resource.

* An examination of budget-based water rates has been ordered by the Council and will be considered for implementation next year.
o The Chamber Board recommends that the City Council consider all rate adjustments together at one time, and forego the current proposal in favor of a comprehensive program that adjusts rates to achieve real conservation and that places the cost for wasting water on those who are known to be ignoring conservation measures.

The Board of Directors of the Pasadena Chamber of Commerce considered the water increases carefully.  After a lengthy discussion and debate, the Board unanimously approved expressing the above concerns about the proposal to increase the cost of water.

The Chamber Board recommends very strongly that the City Council reconsider the proposal to increase costs of water for commercial and residential customers. This cost increase was proposed by the Department to stabilize its income for the future, according to the report to the Council made by Phyllis Currie, Director of the Water and Power Department. The Chamber Board feels that the current state of the economy, and the impacts being felt by important businesses here in Pasadena, as well as our residential community, requires that a very thorough and comprehensive public evaluation of the water increases be undertaken before these hikes are implemented.  The Chamber Board recommends that review take into account economic conditions and potential consequences to the local employment base and economy, as well as Water Department and City finances.

While it is very likely the department has made some operational efficiencies to reduce costs, the Chamber Board also strongly suggests the department be induced to make significant cuts in its own operational budget that could mitigate some of the cost increases being proposed by the Department.

During its deliberations, the Chamber Board was very mindful of the challenges faced by all businesses, including the Pasadena Water Department and the City of Pasadena, as well as the effect the economy is having on the residents of Pasadena. We all know the City Council and city staff are aware of the impact the recession has had on local businesses and residents and we are all concerned about the prospect of rising costs. The Chamber Board is urging the Council and senior level staff to bring that concern into the deliberations of the proposed increase to the cost of water and give significant weight to the impact these increases may have on some of the cornerstone institutions and businesses in our community as well as our employment and revenue base.

Thank you for your consideration.

Sincerely,

Paul Little