In order to finance wastewater infrastructure improvements, City Hall is proposing rate increases for Morgan Hill residents.
Community input is still being considered for the increases and the council will not vote to approve the increases until the March 6 council meeting. After that time notices will be sent to users.
Wastewater prices are based on a family’s average winter water usage, meaning water usage over a three-month period. The new plans change three parts of the current wastewater program, in order to use additional revenue to fund wastewater infrastructure improvement in Morgan Hill.
The new rates would take effect July 2019.
The current proposal removes the 13 unit usage fee, so instead of paying at most for 13 units of usage, the resident will pay for the full amount of wastewater they are contributing. The plan also continues the lift station charge increasing at 3.6 percent and puts a 5 percent inflation increase into the low income subsidies for wastewater, so the rising costs don’t affect the subsidies received.
The proposed rate increases will adjust yearly, with a nine-percent increase for each of the first two years and a five-percent increase for each of the next three years. For the average residential customer who uses 800 cubic feet of water a month, their bill would raise from $53.03 to $57.80.
The council debated moving the unit cap from 13 to 20 units, but ultimately decided against the cap, which will make residents pay directly based on water consumption. Harjot Sangha, accounting manager for the city, told the council about the residents using over 13 units, “Theoretically they’re getting subsidised by the existing rate payers.”
The staff report identified that 10 percent of residential and multi-family homes would be affected by the cap removal. If a resident is being charged based on water usage that is over 13 units, he or she has the ability to refute that charge with the city. An analysis of the wastewater usage would then be conducted to determine if the large water usage was going to the wastewater system; if the water was found to be going toward another use like irrigation, then the user’s charge would be reduced.
Residents who receive a lift station charge currently pay $9.41 with a 3.6 percent annual increase. The proposal would continue that increase for the five years of rate adjustments.
Sangha told the Times that the wastewater increases came from the city’s 2017 sewer system master plan, which identified the infrastructure needs for Morgan Hill’s wastewater system and a lack of funding for the projects existing within the city limits.
The staff report for the proposal explained, “The city is planning to secure outside financing in the form of bonds or loans to fund the necessary capital improvement projects. The proposed rate increases would stabilize this deficit over the next five years as well as cover the annual debt service payments for the two new debt issues.”
Although Morgan Hill and Gilroy share a wastewater treatment facility, it is just Morgan Hill residents who will see rates change. This is because the improvements are within Morgan Hill’s city limits, made to the existing wastewater infrastructure.
Costs associated with the wastewater plant in Gilroy are split by the two cities. In the coming years, an expansion of the wastewater plant is planned. Sangha told the Times those costs will be paid by developer impact fees and that an estimate expansion budget would likely be ready within the next year.
Morgan Hill held a community meeting surrounding the proposed fees on Feb. 25, and will present the input at the March 7 council meeting where the council will vote on how to proceed with the proposed increases.
If the plan is approves the city will send out notices to ratepayers. Currently Morgan Hill has 13,000 wastewater accounts, both commercial and residential. For the wastewater increase plan to be overturned, 51 percent of those property owners would need to object.