Water rates rise in Palo Alto

City residents asked to pay for major repairs to Hetch Hetchy system

Palo Alto residents will be asked to swallow higher water rates starting next month to help pay for a colossal regional effort to repair the aged Hetch Hetchy water system.

With little discussion and few protests, the City Council unanimously approved on Monday night new water rates that would add 25 percent, or about $18.31, to the monthly bill of the average water customer. The smallest customers, meanwhile, will see a 10 percent increase, which will add about $2.91 to the average bill.

The new rates would further increase what are already some of the highest water bills in the region. According to a report from Ipek Connoly, a senior resource planner in the Utilities Department, the city's water rates are about 14 percent higher than the average surrounding city. The lone exception is Menlo Park, where water rates are about 14 percent higher.

The main driver behind the latest increase is the $4.6 billion project undertaken by the San Francisco Public Utilities Commission to fix up the vast network of pipes, reservoirs and dams that makes up the Hetch Hetchy system. Palo Alto is one of 26 municipalities that draw its water from the Hetch Hetchy through the SFPUC.

Though a few dozen residents sent in letters protesting the increase, only two speakers showed up at the meeting to criticize the latest proposal. One of them, Larry Hootnick, accused the council of adopting a "soak the rich" strategy and urged staff to be more transparent about where the money is going.

"If you're not going to be transparent, just send us the rates and say, 'Here it is,'" Hootnick said.

But the council agreed that the rate hike is necessary to ensure a clean and reliable water supply. Councilman Larry Klein noted that the Hetch Hetchy water, which originates in the Yosemite, is consistently rated as among the best in the nation. Klein, who represents the city on the Bay Area Water Supply and Conservation Agency, a coalition of municipalities that get water from the SFPUC, said the city's share of the repair bill would total about $200 million.

The effort, known as the Water System Improvement Project, involves about 80 projects across the state, including replacement of the Calaveras Reservoir in Alameda County, a new tunnel stretching under the San Francisco Bay and extending from the East Bay to Menlo Park, and dozens of other upgrades and seismic retrofits to the century-old system.

And while some customers wrote letters objecting to the new rates, the council agreed that these changes are necessary.

"Of course, nobody likes to pay higher rates," Klein said. "If the choice is between higher rates or doing without water in case of an earthquake, I think people will find that this is really a bargain."

"Trying to contemplate how life would be if the water supply were interrupted is pretty scary."

Councilman Pat Burt also said the city's customers are getting a great product for their money.

"We have a higher cost," Burt said. "Frankly, for many of us, at least for drinking-water supply, we have a higher value."

Burt also urged utilities staff to do a better job breaking out the costs of the Hetch Hetchy project and making it clear to customers why their rates are going up. Without increased transparency, Burt said, the city risks losing public support.

Vice Mayor Yiaway Yeh said the city remains committed to keeping water costs as low as possible, the rate change notwithstanding. The city, he said, has recently refinanced the Utilities Department's bond obligations, which he said would achieve about $270,000 in annual savings.

"I know as a council we are very committed to looking at as many savings opportunities as possible," Yeh said.

The council also voted, with few questions and no public opposition, to add a $4.62 fee to all residential refuse bills. The city adopted the rate increase to help cover a projected $3.7 million deficit in the refuse operation. The new fee is a stop-gap measure aimed at keeping the Refuse Fund's budget balanced while staff and consultants consider more dramatic changes to the refuse rate structure.

The new refuse rates, like the water rates, are scheduled to take effect on Oct. 1.

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Like this comment
Posted by paloaltotreewatch
a resident of Palo Alto Orchards
on Sep 20, 2011 at 10:38 am

Didn't Palo Alto just receive 25 million from Stanford - as compensation for the coming gridlock of the Stanford overbuild?
The trustees are ruining their own campus - taking away every little corner of quiet and nature. For what??? MOre technology, more buildings, more cars, more water use, more consumers of O2 more output of carbon.

Isn't the water system a key infrastructure project for which funds like this should be spent???

Why should we be the only ones to pay for water system upgrade?
I can't handle anymore taxes. We are already still paying for the 2000 bad energy deals when the FERC looked the other way.

These items should be put to a vote. Not in the hands of a few part-time city councilors.

Like this comment
Posted by Disappointed
a resident of Old Palo Alto
on Sep 20, 2011 at 10:41 am

Time to recall this Council.

Like this comment
Posted by Anon.
a resident of Crescent Park
on Sep 20, 2011 at 10:45 am

>> Time to recall this Council.

Ditto, and everyone who makes any decisions in Palo Alto, they just seem to be totally incompetent spendthrifts with our money.

Like this comment
Posted by Anon
a resident of another community
on Sep 20, 2011 at 10:49 am

It would have been put to a vote had you turned in a request. But you didn't. Instead you sat here and complained. The time for the residents to act has sadly passed with only about 50 of you noticing.

Like this comment
Posted by Frank
a resident of Ventura
on Sep 20, 2011 at 11:40 am

-Anon - you are correct; if you won't get involved (like go to the council meetings) then stop whining.

If you want to put this on the ballot - go ahead, a bit of research will show you how to create a referendum and put it on the ballot. You might even win. But bad mouthing the city council here is not going to do anything.

Personally I support the idea. I want clean reliable water, yes even after the inevitable earthquake and I don't mind paying for it.

Like this comment
Posted by Sandy
a resident of Crescent Park
on Sep 20, 2011 at 11:44 am

I agree with Disappointed and Anon - definately time to recall this City Council. We now have higher water rates even though we conserved. We have higher utility rates even though we conserved. This Council does not care how raising every rate in Palo Alto affects a lot of people. They sit on their high thrones and make decisions they are not even capable of making. Why is it every time we have a new project we have to hire a consultant at a high fee to tell the City how to do something? Aren't there any employees within the City of Palo Alto who are capable of doing this instead of hiring a consultant? If not, then those employees don't deserve their six figure salaries and retirement benefits.

Like this comment
Posted by kate
a resident of Duveneck/St. Francis
on Sep 20, 2011 at 1:23 pm

Try to understand this. The STATE has decreed that residents can protest rate increases BUT 50% plus ONE CUSTOMER must do so IN WRITING, no e-mails and individually for EACH rate change. So that stacks the cards again the resident utility customers. IF in a condo, there is one charge for the water making the entire complex the 'customer', then the individual owners can't write the letter. Many of the condo owners are not residents. And reportedly 50% of resident space in Palo Alto is rentals or multiple owners. So if 200 angry residents pack the CC Chamber and howl, it won't do a bit of good. And for rentals, do you really think an owner will take the time to protest? He/she will just increase the rent. But there is something to consider. Demand efficiency in the Utility Department, clean house, and think RECALL if nothing is done. Or start encouraging competent candidates for City Council to start their campaigns NOW.

Like this comment
Posted by David Pepperdine
a resident of Another Palo Alto neighborhood
on Sep 20, 2011 at 1:25 pm

First off, I disagree with Anon. The 50% of residents (vs. voters) requirement is too steep. It's difficult to get enough residents to participate in ANYTHING to provide that margin. That doesn't mean the people don't care. This issue wasn't in the public discourse for more than a week.

The Hetch Hetchy contribution is a legitimate cost that Palo Alto has to incur. That ducks the question of why the rates are sky high in the first place, even compared to other cities in the same SFPUC system. The Council earns no favors by ignoring this basic question.

The Utilities Department is Palo Alto's way of sidestepping Prop 13. By raising utility fees and having the rest of City Hall in effect being a wholly owned subsidiary of the Utilities Department, the City Council gets to raise revenues and provide more handouts to public employees. Their unions in turn trot out campaign literature to keep incumbents in office. Only the residents get shafted.

Like this comment
Posted by FS
a resident of Green Acres
on Sep 20, 2011 at 5:24 pm

Recall and then what? Who's going to run for those seats?
Who'd be foolish enough. Maybe a Palo Alto version of the Tea Party?
Then what?

Like this comment
Posted by WaterEssential
a resident of Midtown
on Sep 20, 2011 at 8:48 pm

I agree with Frank.
I don't really like it, but we need to do it for SURE!!
Water is essential for people, creatures, plants/trees......

Like this comment
Posted by Walter_E_Wallis
a resident of Midtown
on Sep 21, 2011 at 11:01 am

Walter_E_Wallis is a registered user.

While we can do little to stop this increase, we should do everything we can to prevent Frisco from using Hetch Hetchy as a cash cow.

Like this comment
Posted by musical
a resident of Palo Verde
on Sep 21, 2011 at 1:02 pm

Does San Francisco pay us anything for their Hetch Hetchy pipeline easement through Palo Alto?

Like this comment
Posted by u r history
a resident of Green Acres
on Sep 21, 2011 at 11:17 pm

the train is going to chop down your tree

Like this comment
Posted by Jo Ann
a resident of Embarcadero Oaks/Leland
on Sep 22, 2011 at 10:42 am

Enough already with the ridiculous increases. Motivate us toward good behavior. Stop recycling for a week or a month as a protest. Create enough garbage so it will stop the ridiculous increases because we don't have enough garbage.

Like this comment
Posted by Resident
a resident of Another Palo Alto neighborhood
on Sep 22, 2011 at 10:56 am

We need our water supply so we are stuck.

Funny how the excuse that we conserve so much that they are not getting enough revenue so charges have to go up is becoming the normal excuse for rate increases.

Like this comment
Posted by anonymous
a resident of Duveneck/St. Francis
on Sep 22, 2011 at 1:08 pm

Are all the other utilities and their customers raising rates, too, or is it just Palo Alto? Sorry, this wasn't clear to me and I am curious.
We certainly don't want to be paying for a system-wide upgrade or improvement. I am not arguing against such improvement, as a PA utility payer I DO want to be certain other users are ALSO paying for all this.
From what one hears of the City of San Francisco and poor financial management of public monies - they spend money on a lot of nonsense- I DO worry that any Hetch Hetchy project would be properly managed and accounted/budgeted...

Like this comment
Posted by Charlie
a resident of Barron Park
on Sep 22, 2011 at 1:50 pm

"Other city utilities and their customers raising rates, too.."
But this city raise one of the rates(W,S,G,E) at least once a year. And there is always a reason for it.

Like this comment
Posted by Cut the Blubber
a resident of another community
on Sep 22, 2011 at 4:18 pm

There should be a position by position audit of City of Palo Alto staffing.

Cut down the number of managers. That goes for the number of deputy city managers, assistant city managers, asssitants to the associate city managers and on and on to bring costs down.

Once all the blubber is cut from the organization, utility rates can come down, not go up.

Like this comment
Posted by Mike
a resident of Crescent Park
on Sep 22, 2011 at 5:59 pm

Tell me again why we have our own utilities departments in PA? Used to be our rates were among the best around and it made sense.

Now it is the opposite and another expensive liability.

A few years back at least the Hetch Hetchy sourced water had an incredibly pure taste-now whatever they are doing to it the result is typical municipal water...

Like this comment
Posted by Mike
a resident of Crescent Park
on Sep 22, 2011 at 6:06 pm

This below from an almost 10 year old report shows why we need to pay extremely high rates to fund deferred maintenance even though our past rates paid into SF Public Utilities as water supplier all those years were partly supposed to be allocated to a maintenance fund. The money was used elsewhere sort of like the way our general fund here is PA eats our utility money...

"The Hetch Hetchy water system is currently in disrepair and in need of substantial improvements. A combination of bad management, a water rate cap, and a practice of transferring funds from the San Francisco Public Utilities Commission (PUC) into the General Fund has conspired to create a giant backlog of deferred maintenance. Things have gotten so serious that the system is in grave danger of going down in an earthquake. It is estimated that with the system in its current state, a catastrophic seismic event could cut off the city's water supply for as long as 30 days."

Like this comment
Posted by Lassi
a resident of Midtown
on Sep 22, 2011 at 10:11 pm

Yes, living in Palo Alto has become a liability. Use to be a nice town to be associated with. One you felt proud be a part of. It was a close knit community. Not any more. This middle class resident is feeling the squeeze in my little bank account. Part of that is because of the utility department, and the people running this city. Seems to me, they start at the top of the list of fees on the utility bills. Raise each one. One by one. Till the bottom is reached. Then it's time to start at the top of the list again. There's no end in sight. The list of excuses for these supposed much needed increases, is a bottomless pit!
What next? Run the middle class out of town, to make room for more wealth to move in? So more money can be solicited from them, who can afford it? It certainly make me wonder.

Like this comment
Posted by Peter Carpenter
a resident of Atherton
on Sep 22, 2011 at 10:21 pm

Ten years ago:"It is estimated that with the system in its current state, a catastrophic seismic event could cut off the city's water supply for as long as 30 days."

Today the estimate is that the system would be down for 90 days or longer. Imagine what life would be like without water for 90 days.

Like this comment
Posted by Debra Katz
a resident of Downtown North
on Sep 23, 2011 at 10:37 am

I am the City Utilities Communications Manager and I realize many comments here are borne of frustration. However, the "facts" in many of the posts are simply incorrect.

For example, the main cause of this latest increase is not conservation and people who conserved in the past are better off economically and will continue to be so. Indeed, the first 6 units of water (6ccf x 748= 4,488 gallons) used are actually cheaper under the new rates and they were under the old rates, so low users are rewarded. And Palo Alto is by no means paying for the entire regional upgrade to the Hetch-Hetchy system; we are paying only our fair share based on the amount of water we use. The other 26 members of the system and San Francisco itself are all paying their shares.

I encourage readers to go to the City website at where they can get facts about both the impact and the primary reasons for the water rate increase. I also hope people realize that during the coming low water use months, the rate increase will have very little impact on most residents' bills. People can head off high water bills by thinking ahead about ways to improve their outdoor water use efficiency before the late spring and summer when water use is at its highest. Often 50% of a home's total water use is outdoors. For those residents who aren't aware of it, I should mention that the City Utilities offers many rebates and other services to help make improving efficiency easier.

Like this comment
Posted by Lassi
a resident of Midtown
on Sep 23, 2011 at 4:49 pm

I read your comments/response Mr. City Utilities Community Manager. I'm glad your watching. Yes there is a lot of frustration out here. For sure. But that doesn't explain the frustration away from me, since in part, I inherited it from the Department you represent. As for not feeling the pain of the water increase in the coming months? That offers me no comfort, knowing what I will have to look forward to in the following months after at that. I haven't had a raise for 2 years now, working for PAUSD. Then out of my earnings, I have to give some of it back to PAUSD, in the form of a higher property tax payment. So with everything else going up too, my check has become harder to live on in this city. When things start hitting close to home, namely the city I live in, every increase is a hard pill to swallow. No matter the reasons we are given. I did not choose the frustration I feel. As I'm sure many other didn't either.
Those are the true "facts" in my life.

Like this comment
Posted by common sense
a resident of Midtown
on Sep 23, 2011 at 10:06 pm

The utilities transfers around $38 million dollars a year to the City's general fund - from paying the city "rent", from the "return on investment that the city charges, and the Utility users tax. This amounts to $590 per resident; this amounts for an average household (ie. the utility bill) of $1,422 per year.

In other words $118 per month of your utility bill is going to fund the City's general fund operations, functions like the Children's theatre, or the Assistant to the City Manager for Sustainability (who helped set up the 3rd farmers market), all the art that get's purchased, etc.

Sorry, but further commenting on this topic has been closed.

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