Scotts Valley residents could see an increase in wastewater rates as the city looks to fund improvements to its collection and treatment system.
The last time the Scotts Valley City Council voted to increase wastewater rates, which currently sit at $46.49 a month for single-family homes, was back in 2017. The fee hike was applied to the 2017-18 and 2019-20 fiscal years with rates remaining the same in the current year in part because of the Covid-19 pandemic.
In the next five years though, the city has plans to make “a significant investment in the wastewater collection and treatment system…totaling over $7 million,” according to a memo penned by City Manager Tina Friend.
“In addition, the city is estimating a placeholder amount of up to $20 million for investment in new technologies for the treatment plant that may likely be required subject to the completion of the wastewater system master plan,” Friend added.
The city contracted Berkeley-based public finance consulting firm Bartle Wells Associates to craft three scenarios of how Scotts Valley will fund the capital improvement projects, a decision that will ultimately affect how much fees are increased. The council is slated to review the firm’s report at its virtual meeting Wednesday evening.
The first of the three scenarios to fund the projects would be for the city to pay-as-they-go and take on no debt, which would result in a 19%––or $8.84––increase to $55.33 a month for the upcoming fiscal year. By 2025-26, rates would increase to $76.94 a month.
In the second scenario, the city would take on $1.5 million of debt in the 2022-23 fiscal year to fund improvements, with a plan to pay the money back over a five-year period. Residents’ rates would increase by 15%, or $6.98, in 2021, to $53.47 a month and eventually raise to $76.71 a month in the 2025-26 fiscal year.
The third and final scenario would have the city take on $4.5 million of debt to be paid back in the following five years. The option, which city officials recommend, has the smallest rate increase for residents at 9%, or $4.19, to $50.68 a month for the upcoming year. By the 2025-26 fiscal year, residents could expect to pay $71.54 a month.
In her memo, Friend said that officials are recommending the third scenario because it “will have a lower impact on ratepayers and will allow the city to leverage its otherwise debt-free wastewater operations to obtain low-interest financing to mitigate the impacts on ratepayers over the course of the next five years.”
A review of 15 nearby cities by Bartle Wells Associates found that the average single family wastewater bill is $61.30 a month—nearly $15 more than Scotts Valley’s current rate. And even with the proposed increases, Scotts Valley residents would be paying less than residents in every other city in Santa Cruz County aside from Watsonville.
After reviewing the report at its Wednesday meeting, the council will make a final decision on rate increases on June 16 with the adoption of the city’s 2021-22 fiscal year budget. The new rate would take effect July 1.