Starting January 9, 2025, Newman residents will see an increase in water rates, fees and other related services after the city council voted unanimously for the change at a recent meeting..
With the change, rate increases will vary depending on the monthly service charge per meter. Currently, a five-eighth-inch, three-fourth-inch and one-inch meter will go up from the current rate of $28.42 to $32.24 per month next year. The most substantial increase is the 10-inch meter where it goes from $1,648.22 to $1,870.02, a $221.80 increase.
For the monthly water service meter replacement fee, a five-eighth-inch fee will increase from its current price of $1.45 to $2.73 next year. The 10-inch water meter monthly replacement fee will increase to $137.79 next year, a $58 increase from the current fee price.
With the agenda item passing, the city will be required to publish a second summary of the item within 15 days of the adoption.
In March 2024, the city contracted Hansford Economic Consulting LLC - a firm that specializes in infrastructure analysis, economic development studies, and water analysis with economic analysis - to conduct a study on Newman’s water enterprise fund.
According to a water rates study done by the firm, projections were made for costs that are projected to have a yearly increase. Based on historical increases and discussions with the city staff, personnel costs could increase by 7%, electric costs and utility costs may increase by 10% and other annual expenses could increase by 3% or 5%.
The study also mentioned that while the city is meeting its target cash balance, the balance will be short in the future if rates are not increased.
Following the Sept. 10 meeting, notices were given to residents residing in properties that will be affected by the new water rate as required by Proposition 218. According to the meeting staff report, the city council received 105 protests on the change, thus not meeting the required amount of 1,787 for the item to not go through.
Mayor Casey Graham said while he understands the concern about the increased rates especially when the cost of necessities such as groceries increased within the last year, he believes it’s important for meters and plumbing to be replaced to help maintain good drinking water.
“Looking at from a standpoint as the city can be able to continue to provide pretty fresh water. These rates have to reach a certain extent We want to try to keep that as minimal as possible,” Graham said.
Currently, the city is paying off a $9.4 million loan from the State Water Board Drinking Water State Revolving Fund program for the construction of Well 10, located northwest of the city. Newman is making an annual payment of $236,300 and the loan is expected to be paid off in 2063.
Additionally, the study also mentioned that the total water system capital improvement costs are estimated at $4.86 million with $4.07 million from existing players and $780,000 from new customers.
With operating expenses expected to increase annually, the annual operating revenue from the increased rates could generate a surplus of net revenue. According to Hansford’s study, the projected operating revenue for next year is expected to be $3.1 million with use fees being its largest contributor at $1.5 million. After paying off next year’s projected operating expenses of $2.8 million and the annual loan payment, Newman will have $93,906 in net revenue. From January 2025 to January 2023, the total net revenue will be more than $2 million.
Following the decision to vote on increasing the water rates and fees, the city council also voted unanimously for a low-income utility rate subsidy.
According to the staff report, the city council requested staff to draft a low-income subsidy program for water customers when the first reading of the ordinance for increased water rates was held.
The subsidy will decrease the cost of all utilities including residential water, wastewater and refuse charges by 20%, according to the staff report. The program’s funding will be from the General Fund and based on current qualified residents, it could have a projected annual impact of $3,427.20 on the General Fund.
For residents who want to qualify, they will need to complete a City Service Subsidy Application and provide their most recent Form 1040 or 1040ez tax return or proof of receiving assistance from any of the assistance programs such as CalFresh, Supplemental Security Income and Medicaid/Medi-Cal for those who are under and over age 65.
