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Adam, I found Wednesday’s sewer rate hike story informative and irritating. Informative because it is the first time city staff has run actual numbers up the flagpole. They should shock many readers. Irritating for many reasons, including the fact that not one councilman or woman had the guts to say anything, or admit that they are dancing to staff’s tune. It proves once again that staff is the ringmaster, and the council is the barking dog in the ring. And they can only bark “AYE”. But the real irritation comes from the comment attributed to a staffer, “The city effectively subsidizes school sewer rates…” The irresponsible bureaucrats really think the money belongs to the “City”. They never understand it is the People’s money!! You were told other incorrect things. An example is the flow rates. The Primary plant can handle 25 MGD, but the Secondary can handle an additional 40 MGD. So, Eric and I did some research and math. Since Dan Day says that he talks to both sides, and analyzes the “facts” and then tells the truth, we decided to give him the facts. We extracted the numbers below from the city’s CAFR (Financial Report) because we want to be accurate. I have put those numbers in columns for ease of understanding. And, now that you have the rest of the facts, I would expect Dan to report them in the BEE. Fiscal Year Annual Operating Surplus Total End-of-Year Unrestricted Net Assets (Cumulative) “Subtotal Profit” Total Actual Profits Including All Overcharges 2002-03 $ 3,090,393 $ 10,600,000 2003-04 3,172,602 18,000,000 2004-05 3,072,213 25,000,000 2005-06 2,273,893 30,000,000 Two things should be very clear from these actual profits. First, the city council has authorized staff to overcharge the residents of Modesto $11,609,101 in the last 4 years. Second, that in addition to operating profits, the city realizes additional profit from builder’s fees, leases, sale of product, interest and other non-operating activities. Where then is the “subsidy”??? In fact, the city is irresponsibly over charging all of us, including the schools, churches and business. Where are all those council people? Will the BEE actually fulfill its promise to be a watchdog over an irresponsible and greedy city staff? I also took the numbers published in that story to highlight additional facts. I subtracted the current monthly residential fee from the increased fee as published. I multiplied the result by 12 months and only 55,000 homes for the first 2 years and by 60,000 for the next 3 years. That is a very conservative multiplier when you consider the city has 75,000 total water customers. Here is what I found. Year Total Funds Attributable to the Rate Increase 2008 $ 2,824,800 2009 8,329,200 2010 14,896,800 2011 15,897,600 2012 16,948,800 Total $58,897,200 If rates are frozen at the level of 2012, in the next 15 years, the additional increase collected will Total $254,232,000. Add back in the $59 million collected during the first 5 years of the rate hike, you get $313,132,200!!!! And you can bet they will not freeze the rates. This staff intends to bury the People with gross overcharges and this council will let them get away with it. The BEE story says, “Current Modesto residents are on the hook for $245 million…under a cost allocation plan the Council approved Tuesday.” My very conservative figures show they plan to collect much more than they need!! Note, that does not include ANY school money (another $25,781,855 just from the schools! And just who is going to pay for that?) One can only come to the conclusion that the staff is already overcharging us for sewers, plans to continue overcharging and does not tell the BEE, or the People, the true facts. Someone needs to bring this to the attention of the People. This council is a total waste of time. Thank you very much, Dave P S Did staff provide any written documentation of their numbers; any study, any consultant’s report? Or, did they do the same as with the water rates, throw some rates up for discussion, and hire someone to justify them later? We are particularly interested in the allocation ratio. Did they show work product? Finally, the dirty little secret is that staff plans these things around PEAK demand and PEAK flows. The water treatment plant was built to guarantee Tri Valley Packers good water, and in the summer, they were responsible for 75% to 80% of the gross Modesto demand. Alan Short gave me the numbers, and he confirmed my percentages. The packers and grape crushers, and other “wet Industries” are responsible for 65% of the peak sewage flows. Do you think that Tri Valley or Gallo is going to pay their fair share for either water or sewer? Of course not, the homeowners of Modesto will bear that burden. Will Dan print that? Dave
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