15% 5 year increase earlier in the evening, 3 shy of the 17 needed to pass the rate increase ordinance. This rate increase had already been approved by a majority of the Board at the May Board meeting. However, a 2/3 majority, or 17 votes, are needed to pass the ordinance at the second reading of the ordinance, which can occur at the Wednesday hearing. Therefore, 3 more votes are needed.

After careful consideration, I support the 5 year 15% plan for the following reasons:

1. It is the minimum amount to support debt service on the District's borrowings. A 10% increase does not do this, for example. Borrowing rates from Wall Street will be less if a rate structure is in place. This will save taxpayers in the long run.

2. Much was made of "intergenerational equity". That is, our generation should pay our fair share so our children don't have to. By the same token, we should not have to pay more than our fair share. Each generation should pay its fair share. A 15% increase puts more burden on our generation, but it flattens out and is less in the future for the next generation, decreasing the rates somewhat ultimately. A 10% increase gives a slower rate of increase for our generation, but increases the rates over time for the next generation.

3. Currently, the rates are in the lowest 4% of sewer rates in the nation. Even after 5 years, the rates will be lower than the national average, which is $244 a year currently. OCSD rates, at a maximum, will be $175 a year at the end of the 5 years. If there is a 5% increase in rates across the nation, OCSD will still be in the lowest 30% of rates in the nation after 5 years.

4. The 15% plan is a reduction from the previously approved 20% plan which would have raised rates to $217 per year after 5 years.

5. While we all recognize that full secondary represents only 18% of the total Capital Improvement Plan (CIP), the whole CIP is necessary to ensure that the sewer infrastructure and collection system is up to date and can handle all the flows, including projects to improve handling urban runoff. The costs for additional secondary is $423 million out of a $2.4 billion CIP, but only $271 million is the increase in secondary facilities over the current 50/50 treatment practice to go to full secondary. Actually, therefore, the cost of getting rid of the waiver is $271 million/$2.4 billion, or 11% of the CIP.

6. It was brought out in the hearing that if the rate increases did not go through, or if only a 10% increase was approved, that OCSD would have to dip into its reserves. This might not be such a bad thing, but the reserves are saving the taxpayer $25 a year. Therefore, ultimately, the rates would have to increase by $25 a year anyway if the reserves are not there.

7. Approving a 5 year plan for 15% each year does not automatically mean a 15% increase each year. Each year, the Board will vote on next year's rates, which may be less than 15%, but not more than 15%.

8. A 5 year plan will avoid angry taxpayers from derailing the process each year, if public momentum increases to avoid paying increased fees. A 5 year plan will ensure that we have the resources to pay for the full secondary, which will not begin to be built until 2007, or 4 years from now. We want to make sure that OCSD has the money to complete the CIP and build the secondary facilities. Having to approve rate increases each and every year means a contentious fight each year that might not succeed.

So all, in all, it is the best fiscal and practical policy to accomplish the entire CIP, including the full secondary component, with the 5 year 15% plan. This is the fairest policy for our generation and the next, and it gives OCSD the necessary resources to accomplish its job, while keeping rates well below the national average.

Since I doubt that the continued public hearing will reopen the Public Comment section, I suggest OOGers send emails to the Board of Directors instead:

Send to: forinformation@ocsd.com or call OCSD at (714) 962-2411.

Here is a sample email:

Address to: forinformation@ocsd.com

Subject line: Please approve 15% 5 year rate plan

Body of email:

Dear OCSD Board of Directors:

I support the proposed 5 year 15% rate plan. I believe this plan is the fairest plan to pay for the whole Capital Improvement Plan and to pay for the secondary facilities needed to get rid of the waiver. Thank you.

Sincerely,

Name
Address
Phone number

Please email the Board and call on Monday, Tuesday, and Wednesday. If you can, attend the Board meeting at 5:30 PM on Wednesday. Remember, only 3 more Board votes are needed. I've been informed that the Los Alamitos City Council voted for the rate increase, so only 2 more are needed. The Fullerton and Costa Mesa City Councils both voted to get rid of the waiver, so if these two cities join in, we'll have the necessary votes. People who live in these cities might call their respective Board members (Don Bankhead, Fullerton, and Jim Ferryman, Costa Mesa Sanitary District) and lobby for their votes.

Thanks.

Jan Vandersloot (949) 548-6326

Back to T.O.C. 3