$700 Million Increase in Sewer Service Charge Lacks Transparency

Last Updated: June 5, 2024By Tags:

The Katy Yaroslavsky led Energy and Environment Committee approved the Bureau of Sanitation’s request for a $700 million rate increase in the Sewer Service Charge over the next four years. This will result in the doubling of our current rates and includes a 22% increase on October 1st.

This approval was railroaded through the E & E Committee. Softball questions by Committee Chair Yaroslavsky and Councilmembers McOsker, Blumenfield, and Raman (deLeon was absent) demonstrated a lack of knowledge of Sanitation’s operations and finances.  But then again, Sanitation’s presentation to the Committee did not have any meaningful financial information or multiyear projections and the report by Black & Vetch, the Bureau’s consultant, was dense and difficult to understand, far beyond the comprehension of the Councilmembers.

The ball is now in the hands of the Paul Krekorian led City Council which will hopefully conduct an open and transparent process when it reviews and analyzes this massive rate increase.

Sanitation is in a hurry to implement this rate increase.  But these time pressures are self-inflicted because it failed to respond in a timely manner to the City Council’s instruction of May 18, 2023 to develop a fee study that would, among other things, “moderate fee impacts on residents and constituents.” So, what took Sanitation so long to respond?

Sanitation and the City Administrative Officer are also putting pressure on the City Council by using fear tactics, saying if Sanitation does not get this rate increase, it will be in violation of its bond covenants and hence in default, possibly triggering a chain of events where its $2.7 billion of debt will be called, threating the organization’s very existence.  This is baloney since the bondholders have no desire to foreclose on the outstanding debt and an interim increase will satisfy the bondholders.

The City Council needs to follow the recommendations of Councilwomen Monica Rodriquez that “fee increases in this amount, a proposed 22% increase in just a few months, cannot be rushed and careful and detailed review is required.”

She also asked for the City to “engage the Office of Public Accountability/Ratepayer Advocate to do an independent analysis of the rate increase recommendations, establish a public engagement process to ensure the public’s trust, create a long-term solution to these fee adjustments and exercise fiscal responsibility. Collectively these actions will increase accountability and provide greater transparency to ratepayers.”

An alternative to this $700 million rate increase that will allow for a thorough review and analysis of the Sewer Service Charge and the accompanying operations and finances is for the City Council to approve an interim rate increase of 18%, an amount equal to the rate of inflation since July 1, 2021, the date that the last rate increase expired. This should satisfy the bondholders and the rating agencies.

With trust and confidence in the City Council in short supply, it is imperative that the City Council conduct an open and transparent process, hopefully with the assistance of the Office of Public Accountability/Ratepayer Advocate who has earned our trust over the past twelve years by saving us over $3 billion.

And thank you Councilwoman Monica Rodriquez for your on-point recommendations.

Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee, the Budget and DWP representative for the Greater Wilshire Neighborhood Council, and a Neighborhood Council Budget Advocate.  He can be reached at:  lajack@gmail.com.

This article was first published on CityWatchLA.com

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