GILROY
– Even if Gilroyans use the same amount of water in July as they
did last month, bills they’ll receive in August will cost 10
percent more than ones received in July.
GILROY – Even if Gilroyans use the same amount of water in July as they did last month, bills they’ll receive in August will cost 10 percent more than ones received in July.
City Council on Monday approved, 4-0 with three absences, an across-the-board 10 percent increase in water rates along with a 2 percent increase in sewer rates. The water rate hike is the largest increase in at least five years and the jump in sewer rates is the first since 1996. Both increases took effect July 1.
Gilroy officials enacted the rate hikes almost entirely to offset rate increases by the Santa Clara Valley Water District, the city said.
“Cost of water to the city has gone up significantly and we have to pass on our costs,” Mayor Tom Springer said. “It’s like any business that has to pass on wholesale costs to its consumers when those costs go up.”
The rate hikes are not related to cost increases from perchlorate contamination between Morgan Hill and Gilroy, the water district said.
“We put up money to handle the problem, but we expect to get reimbursed,” water district spokesperson Mike DiMarco said. “We didn’t factor those into the rate increases. We’re not going to burn the community with those costs.”
The water district says it has increased its rates to pay off a current $2 million deficit by 2010. The district also needs to pay its share of a massive water recycling expansion with South County Regional Wastewater Authority.
“We have a lot going on in South County, and we’ve been running at a deficit for a while,” DiMarco said. “I think people confuse us sometimes for a private company that makes a profit. The theory we work by is that we only charge what it costs us to provide water.”
Both the monthly base rates and per-gallon charges increase under the city’s new billing plan. Most Gilroy residences use a three-quarter inch meter with a base rate that is now $4.20 a month. In 2002-03, the monthly charge was $3.82, meaning the average home owner will pay $4.56 more per year for base rate charges.
Potentially larger increases on user bills will come from the change in per-gallon charges. A large family home that uses 30,000 gallons of water per month, for instance, will see their $64.92 bill jump to $71.40 next month. Over the course of a year, that translates into paying $77.76 more for water this fiscal year.
Under Gilroy’s billing plan, users outside the city service boundary pay double the regular rates. City Administrator Jay Baksa said the policy has long been in place since users outside Gilroy boundaries pay less city taxes. It affects few users, Baksa added.
“One example is Gavilan College. They would pay this rate if they had an emergency with one of their wells,” Baksa said.
The rate increases will impact local growers significantly. Bill Christopher, an owner and operator of Christopher Ranch, said Gilroy’s largest garlic grower will not increase its prices. Instead, the company will absorb the rate hike.
“We’re competing against the (San Joaquin) valley and China who didn’t get an increase. We have to stay competitive and every little thing adds up,” Christopher said.
In Morgan Hill, water rates also shot up to offset wholesale costs. However, officials there were able to keep increases at 2 percent for each of the next four years. Gilroy is projecting another 10 percent hike in 2004-05 and 6 percent hikes through fiscal year 2007.
“They’ve decided to subsidize,” Springer said. “We have a water policy that (says) we pass our wholesale cost on to the customers. We can’t subsidize it out of general funds or anything else.”
As for Gilroy’s sewer rates, Baksa said the 2 percent hike is to help pay off a bond the city will need to issue three to four years down the road. The funding will pay for expansion of the wastewater facility on the south end of town.
Baksa said the money will go directly into a so-called rate stabilization fund. As that account grows, interest rates on bonds become cheaper, saving taxpayers large amounts of money later by making smaller payments now.
“An interest rate that’s half a percent lower adds up to significant chunks of money when you’re paying it off over 25 or 30 years,” Baksa said.
