Manteca hiked water rates a few years ago. Last year the city increased solid waste rates that are bumped up even more every Jan. 1 through 2021.
The city has just commissioned another garbage rate hike study due to an unexpected increase in the costs of handling recyclables. And we’ve been told to expect a big sewer increase in the near future.
It is against that backdrop a split 3-2 Manteca City Council voted to take revenue generated from land the city would not have owned if they hadn’t spent $3.4 million in funds collected on the backs of sewer ratepayers as opposed to general taxpayers and put it in a fund that could potentially subsidize more corporations that may want to locate in Manteca.
There is no other way to describe what the council did this week if you’re a working grunt struggling except to characterize it as robbing sewer ratepayers — many of which at are living in the edge — in order to help new business.
This is not giving up a future share of sales tax Manteca never would have gotten if Bass Pro Shops hadn’t located here or room tax if Great Wolf Lodge was not built. Nor is it getting taxable sales back that Manteca was losing to Tracy and Modesto because we did not have a Costco.
Those three deals designed to secure private sector investment can be justified given they secured new quantifiable revenue the city would not otherwise have obtained without hurting existing sources or hurting Manteca residents.
What the City Council did Tuesday was a game changer. Whether it is legal or not isn’t the issue. Elected officials have a moral obligation to be good stewards of the public’s money as well as public trust.
They may be making money available to invest in economic stimulus but they are less than stellar stewards for the city’s sewer ratepayers.
There is a clear separation of an enterprise account such as the sewer fund and the city’s general fund that contains the economic investment reserve where the council agreed to park the $1 million.
Mayor Steve DeBrum and Councilman Mike Morowit clearly understood that and tried unsuccessfully to warn their elected colleagues of the Pandora’s Box they were about to open. They came out on the losing end.
That means the $1 million generated from the sale of a perpetual conservation easement because will not go back to the sewer fund to be used to scale down the size of the pending sewer rate increase.
Councilman Richard Silverman is correct that the 422 acres is an asset on the sewer fund’s general ledger. However, it is a dubious asset since the act of selling conservation easements has reduced its market value. That’s because the conservation easement assures it will never be able to be sold for its highest potential value which is for home building or other development. That’s the purpose of a conservation easement but it’s not the reason why you collect monthly sewer charges.
There is also the real world. What farmer — since ag is now the only viable market for the land — in their right mind is going to pay $8 million that the city now contends the land is worth when they can lease the 422 acres as a farmer is doing now for $97,000 a year? And given there is now a conservation easement on it that prohibits the most profitable farm uses — orchards such as almonds and walnuts as well as grapes — the farm market value is even depressed given the lower returns that row crops offer.
There is also a shell game complete with a slight of hand that DeBrum and Morowit alluded to in their unsuccessful bid to keep the $1 million in the sewer account. The primary reason the city gave in 2011 to buy the 422 acres with sewer funds was that the land would have a use tied directly to the wastewater treatment plant such for land disposal of piped treated sewer effluent. A conservation easement was a byproduct. That’s why DeBrum was comfortable with his vote in 2011 and frustrated with the council’s decision Tuesday night.
DeBrum and Morowit get that the city would not have $1 million today to possibly subsidize a future business if the sewer account didn’t buy the asset that is represented by the 422 acres. The $1 million was generated by sewer funds and therefore should be used for sewer costs instead of giving the city play money for the next big deal. The same thing goes for the additional $1 million worth of unsold conservation credits the city still holds on 200 acres that staff suggests using as a “freebie” as an incentive to pay down development costs for private sector projects required to pay conservation fees.
Essentially an asset of an enterprise account is being used to subsidize general fund activity that DeBrum correctly points out city staff has been adamant for the better part of four decades as being an absolute cardinal sin not to mention potentially illegal.
On top of that $3.4 million that could have taken the edge off future sewer rate hikes is now basically a stranded asset for the sewer account given it likely will never be sold.
When the city spends enterprise money to purchase assets those assets need to perform — financially and other wise — in the best interests of ratepayers.
This column is the opinion of executive editor, Dennis Wyatt, and does not necessarily represent the opinion of The Bulletin or Morris Newspaper Corp. of CA. He can be contacted at firstname.lastname@example.org or 209.249.3519.