The Cupertino Courier

Residents persuade council on water bill

Rates will still increase, but compromise leads to smaller utility hike

By Pam Marino

Facing a roomful of angry residents, the City Council compromised on leasing the city's water utility by choosing a company with lower rates and discussing the possibility of a rebate to customers.

The council voted 3-2 at its meeting last week to award the lease to San Jose Water Company--which submitted a bid lower than the city staff-recommended California Water Company, but which will also charge customers lower rates.

San Jose bid $6.8 million for the lease, California $7.95 million. As a result of the lease, the city will realize a total of $10 million in cash, $3 million of it from reserves and the transfer of utility assets that the city will no longer need to set aside.

Affected residents, however, will be paying higher rates than they are now. Starting Jan. 1, 1998, a 22 percent rate increase will be phased in over a three-year period. For example, a customer who now pays $30 a month will pay $32.15 in 1998, $34.30 in 1999 and $36.46 in 2000.

California Water's proposal included a 32 percent pay hike for customers.

Cupertino's water utility services 4,200 homes and businesses in the western end of the city. The utility used to be the privately owned Monta Vista Water Company until Cupertino acquired it in 1960. The other two-thirds of the city are serviced by San Jose Water and California Water.

Public Works Director Bert Viskovich had recommended the lease as a way for the city to get a better return on its investment. He argued that the maintenance of the system would be cheaper and easier for a larger company, and that in emergencies the company could more readily provide back-up supplies. He also said that the newfound money could be used for other projects around the city, such as the building of a new library.

Residents, however, said they were offended by the city trying to make money off the utility, which they had paid into over the years. They argued the higher fees they are facing are in fact a tax, and that they will be subsidizing projects that benefit other parts of the city. They said they also took offense to the city recommending the company with the highest rates.

"No one took into account what's best for the people," John Eilts told the City Council.

Councilmembers Wally Dean and Lauralee Sorensen--both residents of the affected area--voted against the lease, saying they wanted the council to first discuss providing a rebate to customers. Dean suggested the rebate as a way to allow the city to lease the utility and reap the benefits of the up-front cash,--but still allow customers to keep water costs at about the current level.

Mayor John Bautista said the bids from the two companies expire soon. He and councilmembers Don Burnett and Michael Chang said they wanted to vote immediately on the lease and have staff come back with a report on a rebate plan later.

About 50 residents came to the council chambers to protest the lease. One of the biggest complaints was that the City Hall had not made a compelling case for why the Cupertino needed to give up its utility.

"What you haven't done very well is explain why you need to change," resident John Ennals told the council. He said it appeared to him as if the issue was about providing more money to the city, and not about water at all.

Many residents complained that the lease was in fact a hidden tax. Jan Stoeckenius said the arrangement "violates the spirit, if not the letter of Proposition 13."

When City Attorney Chuck Kilian was asked by the council about the legality of utility lease, Kilian said that a law that went into effect in January 1997 gives cities the ability to enter into leases, despite the raise in rates to citizens. A collective groan came up from the audience, as well as comments from those who contended the new law and the ability to acquire money was the real reason for the city's interest in leasing the utility.

Speakers at the hearing were also angry that they had paid into the system for years, both in rates and water hook-up fees, but were now having it taken away.

"I maintain the water system belongs to the people who paid for it," Eilts said, to applause from the audience.

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