Del Rio challenges Modesto over water rate increases

Modesto is facing a legal challenge over its proposal to raise water rates.

An attorney representing the Del Rio Property Owners Association sent a letter to the city Monday asking it to postpone a City Council public hearing scheduled for Tuesday to raise rates for Modesto’s roughly 73,000 water customers, including the few hundred in Del Rio, the affluent community a few miles north of Modesto. The delay is requested to give the city and the association time to resolve their differences.

Assistant City Attorney Jose Sanchez said the city received the letter from attorney Andrew B. Sabey with the San Francisco law firm of Cox, Castle & Nicholson just before 2 p.m. Monday. He said city officials will analyze the letter, but he expects the public hearing will take place as scheduled. He declined further comment.

The letter states that in regard to Del Rio, the proposed rate increases violate Proposition 218, the state law that governs how local governments raise water rates, in part because Modesto is charging Del Rio customers more than what it costs to provide them with water. Del Rio uses 0.54 percent of Modesto’s water but pays 1.09 percent of the revenue, according to the letter.

The letter also states that the proposed increases violate a July 2005 legal settlement between the city and the association. The association sued the city in January 2005 over similar issues, including claiming Modesto was violating Proposition 218.

The settlement called for Modesto to improve Del Rio’s water system within eight years, including replacing one of its three wells and adding a fourth well to accommodate new development, as well as replacing pipeline and installing emergency generators at the wells. Modesto has replaced pipeline and installed generators, but it has not replaced the one well or added the fourth.

City officials say that work has been delayed because of litigation brought against the city by nearby property owners outside Del Rio, where the city wants to put the fourth well. But Del Rio Property Owners Association board member Joyce Parker said the litigation is related to the new well and not the replacement well.

Del Rio Property Owners Association board President Bret de St. Jeor said reports by city consultants show Del Rio’s water pressure does not meet state standards for fighting fires. The low flows also are a major inconvenience for residents. “We do have serious water pressure issues,” he said.

The letter states that under the terms of the 2005 settlement, Modesto cannot increase Del Rio’s water rates to pay for the two wells but says that is what Modesto would do under the proposed rate increases. “We have that on the table as an option,” de St. Jeor said when asked whether the association would look to the courts if it could not reach an agreement with Modesto.

In addition, de St. Jeor said Del Rio Property Owners Association board members are unanimous in this effort to hold Modesto accountable. “I don’t know how they could do what they are trying to do and expect us to go sleep,” said Parker, who is one of the board’s experts on the settlement and proposed rate increases.

The city provides water to Modesto and the communities of Del Rio, Salida and Grayson, as well as some customers in Ceres and Turlock. The proposed rate increases are steep. For instance, a city consultant says the typical single-family home could see its monthly bill rise from $41.77 to as much as $71.31 over five years. The city’s other water customers – including apartments, businesses and industrial users – also are facing big increases.

The rate increases would take effect Sept. 1 if approved by the council Tuesday.

Modesto has seen its water sales revenue fall because of the drought and state mandates to conserve water. Modesto Utilities Director Larry Parlin has said the rate increases are needed so Modesto can stay in compliance with the terms of the bonds it issued for water projects. He also has said the increases are needed for infrastructure projects, such as replacing water mains and drilling new wells.

Parlin has said about half of the proposed increases are needed for Modesto to stay in compliance with its bonds. He has said without the increases, Modesto will be out of compliance by the end of September.

Board members and Del Rio residents plan to protest at Tuesday’s public hearing, de St. Jeor said.

The council will meet at 5:30 p.m. in the basement chambers of Tenth Street Place, 1010 10th St.

This story was originally published August 8, 2016 at 4:13 PM with the headline "Del Rio challenges Modesto over water rate increases."