Let’s call the proposed Manteca garbage rate hike as presented what it really is — a sham.
And if the Manteca City Council votes for it in its present form on Dec. 6 they will have participated in a massive deception of ratepayers.
It’s not that the expenses as outlined aren’t justified and needed. They are.
What isn’t kosher is Page 20 of the garbage rate study that reads, “City staff has considered including a street repair fee to be applied to all solid waste collection rates. At this time staff is recommending no fee, but if solid waste revenues exceed expectation excess fees could be used to mitigate for solid waste vehicle damage.”
Even though the staff indicates there is no plan to implement such a fee on the very next page (Appendix A) regarding “historic and anticipated revenue requirements by budget line item for Manteca Solid Waste”, street repair is listed as an operating expense with the column left blank.
If the council adopts the report as is at the Proposition 218 hearing on Dec. 6 it will have put in place the legal footprint for what expenses the rate revenue will cover.
This is not a small issue. It’s a big deal. Real big.
The rates as proposed includes spending $7 million to put in improvements to convert food waste into compressed natural gas. Besides creating fuel to power the solid waste trucks it also will provide a nice little byproduct known as renewable identification numbers (RIN). Simply put, the conversion of food waste into biofuels under the federal Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007 are assigned RINs. The RINs can be sold to industries that are failing to meet greenhouse emission standards such as the oil industry. This process generates a significant amount of money.
The city says they have no clue but based on past history of RIN values and the amount of compressed natural gas they estimate will be generated this could run into the hundreds of thousands of dollars a year. Under the staff’s plan that the council is being asked for all practical purposes to embrace at the Dec. 6 hearing this money would be excess revenue and siphoned off for street repairs.
And let’s not just be transparent but also finish connecting the dots. Page 10 of the solid waste rate study notes the city is in the running for a $3 million California Energy Commission grant to pay for some of the food waste recycling improvements. Language in the report states “revenue requirements will remain with projects until grants are secured.”
What the report doesn’t say is since that $3 million cost is built into the proposed rates to be financed by ratepayers, exactly what will become of the $3 million in revenue plus accompanying interest at 5 percent over 20 years the rate hike as proposed has built in to cover borrowing needed to finance the project? It obviously becomes excess revenue which means it would be going to the street division as well.
Here’s a novel thought. Since the theory behind an enterprise account is for ratepayers to pick up 100 percent of the cost of providing a specific service such as solid waste, sewer, or water and if reserves are being met, why not adopt a rate structure that takes the potential $3 million plus interest reduction for the solid waste project as well as revenue from RIN trading into consideration.
You don’t need any hard-fast numbers, just very specific language.
Since the rate hike is built on providing the solid waste fund with a 21 percent reserve by 2021, the wording could go something like this: “In any year the reserve reaches the 21 percent threshold then any savings on capital improvements connected directly with the solid waste conversion process as well as revenue from the sale of RIN biofuel credits will be used to implement rate reductions across all collection categories for the following year.”
So if in one year the city sees $400,000 above the reserve threshold from the conversion of food waste into compressed natural gas and there are 30,000 accounts, then rates would be reduced $1.11 by month.
That would take some of the sting out of the garbage rate hikes that are as much as $122.55 a year for many residential customers.
More importantly the city wouldn’t be playing fast and loose by using Proposition 218 to implement creative financing for street repairs.
Ratepayers being charged for a service should expect to pay for expenses directly related to providing that service.
If the City Council embraces the staff’s contention that street repair due to the wear and tear of pavements caused by solid waste trucks is such an expense then will the day come when the city will charge street wear and tear fees to any address where a fire tire truck responds to a medical emergency or fire?
Once you open Pandora’s Box anything goes.
CORRECTION: In Friday’s column, it wasreferenced that a “no” vote on Proposition 53 would preserve voter say in the funding of mega state projects using revenue bonds. A yes vote on Proposition 53 would require a statewide vote on revenue bonds used to finance projects $2 billion or more