Wilmont Board Letter about Oceana Hotel to Council 11/30/21
November 21, 2021
Mayor Himmelrich and Council Members,
The appeal of the Oceana Hotel should be denied for the following reasons:
· This is a classic example of spot zoning as described by three Planning Commissioners. It is a noncormforming 24/7 hotel in a residential R3 zone that is trying to intensify and further commercialize a residential area.
· As recently as 2015, the Council determined that existing nonconforming operations should not be intensified. These CUPs and text amendment do exactly that. The staff report focuses on the restaurants staying at the same number of seats but the issue is the increase in occupancy and turnover of those seats. This increase in occupancy and turnover in the restaurant intensifies the commercialism in the neighborhood through more deliveries, more staff, more employee and customer parking in neighborhood (preferred parking only at night on Idaho with no preferred parking on Montana, Ocean (with Oceana taking half the block of Ocean with its valet parking zone) and 2nd Street. and increased use of the garage squeaky gates. The staff report continues to state the impact on the neighborhood will be insignificant with no data, no comparison to similar public restaurants and no admitting this 4-5 star hotel (room rates from $600 -$1,000) will price out most neighbors. Once the damage is done, there is no mitigation or return for the residents of the Wilmont neighborhood,
§ Let’s remember the 1996 CUP specifically based its conclusions on granting a license on findings such as “the license type ensure alcohol service will be limited to hotel guests and their visitors thereby minimizing any potential impact on surrounding uses”
· Neighbors and many residents have provided their feedback that the intensification of the Oceana Hotel will impact parking, noise and traffic. The residents of 850 2nd Street, the apartment building across the alley have outlined that deliveries start occurring at 6:30 am and late into the night, parking garage gates are noisy during 24/7, staff are talking and smoking in alley and there is no current process/recourse for these issues to be resolved or addressed. How would you like to live across the alley from this? There is currently no city process nor is there a planned process that helps these residents “manage potential impacts to the surrounding neighborhood” outlined in this staff report. Once again, the promise of enforcement of STOAs and CUPs are made but cannot be delivered on by the city. Code enforcement is understaffed, redeployed to help at the pier, is not staffed for nights or weekends and often cannot respond quickly enough when many of the issues occur.
· Finally, this kind of action serves as a precedent to other nonconforming users. If adopted what is to prevent other businesses to lobby for the enactment of similar exemptions, riddling the non-conforming ordinance with loopholes. The nonconforming ordinance as it exists is simple and clear. The application for the zone text amendment should be denied because there is no need to create an exemption that guts the clear purpose of the ordinance.
The LUCE’s first principle is “Preserve the Neighborhoods. Many ran on supporting and protecting residents’ neighborhoods. The Oceana Hotel has exceeded its right as a non-conforming hotel to ask for any intensification in the Wilmont neighborhood and this appeal should be denied.
Thank-you
Board of Directors
Wilshire Montana Neighborhood Coalition (Wilmont)
Mayor Himmelrich and Council Members,
The appeal of the Oceana Hotel should be denied for the following reasons:
· This is a classic example of spot zoning as described by three Planning Commissioners. It is a noncormforming 24/7 hotel in a residential R3 zone that is trying to intensify and further commercialize a residential area.
· As recently as 2015, the Council determined that existing nonconforming operations should not be intensified. These CUPs and text amendment do exactly that. The staff report focuses on the restaurants staying at the same number of seats but the issue is the increase in occupancy and turnover of those seats. This increase in occupancy and turnover in the restaurant intensifies the commercialism in the neighborhood through more deliveries, more staff, more employee and customer parking in neighborhood (preferred parking only at night on Idaho with no preferred parking on Montana, Ocean (with Oceana taking half the block of Ocean with its valet parking zone) and 2nd Street. and increased use of the garage squeaky gates. The staff report continues to state the impact on the neighborhood will be insignificant with no data, no comparison to similar public restaurants and no admitting this 4-5 star hotel (room rates from $600 -$1,000) will price out most neighbors. Once the damage is done, there is no mitigation or return for the residents of the Wilmont neighborhood,
§ Let’s remember the 1996 CUP specifically based its conclusions on granting a license on findings such as “the license type ensure alcohol service will be limited to hotel guests and their visitors thereby minimizing any potential impact on surrounding uses”
· Neighbors and many residents have provided their feedback that the intensification of the Oceana Hotel will impact parking, noise and traffic. The residents of 850 2nd Street, the apartment building across the alley have outlined that deliveries start occurring at 6:30 am and late into the night, parking garage gates are noisy during 24/7, staff are talking and smoking in alley and there is no current process/recourse for these issues to be resolved or addressed. How would you like to live across the alley from this? There is currently no city process nor is there a planned process that helps these residents “manage potential impacts to the surrounding neighborhood” outlined in this staff report. Once again, the promise of enforcement of STOAs and CUPs are made but cannot be delivered on by the city. Code enforcement is understaffed, redeployed to help at the pier, is not staffed for nights or weekends and often cannot respond quickly enough when many of the issues occur.
· Finally, this kind of action serves as a precedent to other nonconforming users. If adopted what is to prevent other businesses to lobby for the enactment of similar exemptions, riddling the non-conforming ordinance with loopholes. The nonconforming ordinance as it exists is simple and clear. The application for the zone text amendment should be denied because there is no need to create an exemption that guts the clear purpose of the ordinance.
The LUCE’s first principle is “Preserve the Neighborhoods. Many ran on supporting and protecting residents’ neighborhoods. The Oceana Hotel has exceeded its right as a non-conforming hotel to ask for any intensification in the Wilmont neighborhood and this appeal should be denied.
Thank-you
Board of Directors
Wilshire Montana Neighborhood Coalition (Wilmont)
Wilmont Board Letter to members about Council Budget Meeting 5/5/20
Wilmont Members, Residents and Friends:
This is a request of you. The approximate 40% reduction in the 2020-21 City budget will be discussed by Santa Monica City Councilors and acted upon on Tuesday, May 5th, beginning at 3PM and extending into the evening. If you can, please take the time to view this meeting.
We cannot overstate the momentous nature of the discussion, as these reductions will substantively if not drastically, affect WILMONT and all residents of Santa Monica. An informed citizenry is an effective citizenry and if we do not digest and react to the proposed budget changes we will simply have to live with them.
The link at the bottom of this email accesses the City Developed Restructure Plan for the FY 2020-21 City Budget and Staff Report for the your review ('A Plan For The Future').
How to Access City Council May 5th Meeting – STARTS at 3 PM
TV: Cable Channel 16 or Streaming at https://www.smgov.net/content.aspx?id=4292
Online: LIVE STREAM (Chrome Browser Recommended but not required): https://primetime.bluejeans.com/a2m/live-event/xzurkqeh
DIAL-IN NUMBER: 1 (415) 466-7000 (US), PIN 8072851 #
Services to residents have been significantly reduced. We are particularly concerned about these budget cuts:
To send comments to the City Council or to dial-in to be in a phone que to speak on Tuesday night follow these rules:
We hope you and your loved ones are well and enjoying our fine weather. Let's take care of each other.
Sincerely,
The WILMONT Board fo Directors
This is a request of you. The approximate 40% reduction in the 2020-21 City budget will be discussed by Santa Monica City Councilors and acted upon on Tuesday, May 5th, beginning at 3PM and extending into the evening. If you can, please take the time to view this meeting.
We cannot overstate the momentous nature of the discussion, as these reductions will substantively if not drastically, affect WILMONT and all residents of Santa Monica. An informed citizenry is an effective citizenry and if we do not digest and react to the proposed budget changes we will simply have to live with them.
The link at the bottom of this email accesses the City Developed Restructure Plan for the FY 2020-21 City Budget and Staff Report for the your review ('A Plan For The Future').
How to Access City Council May 5th Meeting – STARTS at 3 PM
TV: Cable Channel 16 or Streaming at https://www.smgov.net/content.aspx?id=4292
Online: LIVE STREAM (Chrome Browser Recommended but not required): https://primetime.bluejeans.com/a2m/live-event/xzurkqeh
DIAL-IN NUMBER: 1 (415) 466-7000 (US), PIN 8072851 #
Services to residents have been significantly reduced. We are particularly concerned about these budget cuts:
- Reduction of out-of-school time programming at school and park sites i.e., CREST (Childcare Recreation Enrichment Sports Together serves 3,600 K-8 students, the PAL (Police Activities League) and VAP (Virginia Avenue Park). These programs provide care and activities for children of working parents;
- Lack of future support for senior cash housing assistance via POD (Preserving Our Diversity);
- Montana Library will ONLY be open 12 noon- 8 PM on Monday and Wednesdays;
- Departments not related to residents’ services are largely untouched;
- Some budget cuts refer to unfilled positions or aspirational elements of previous FY 20-21 budget, i.e., monies that were budgeted but not spent are now labeled 'cuts':
- Priority is given to four large development sites, St. John’s, Miramar, Gehry (Santa Monica and Ocean) and 4th/5th and Arizona which will increase traffic, create more competition for existing hotels and increased costs for the City with their commercial space and housing.
To send comments to the City Council or to dial-in to be in a phone que to speak on Tuesday night follow these rules:
- The public is encouraged to submit written correspondence and written public comment on agenda items via email to councilmtgitems@smgov.net.
- Written public comment submitted before 2:00 pm on the day of the meeting will be available for online viewing.
- Additionally, effective May 5, 2020 and until COVID-19 restrictions are lifted, remote public comments can be made by phone at (310) 458-8423. Remarks from the public are limited to a total of 6 minutes per City Council meeting, with a maximum of 2 minutes per agenda item; under some circumstances, Council may change the maximum to 1 minute per agenda item.
We hope you and your loved ones are well and enjoying our fine weather. Let's take care of each other.
Sincerely,
The WILMONT Board fo Directors
Wilmont Board Letter on pending City Cuts, Layoffs - for May 5, Council Meeting
THE VIRUS: CHALLENGE AND OPPORTUNITY
A Template to Address the Covid-19 Santa Monica Budget Impacts
Proposed by Neighborhood Association Residents
CURRENT CHALLENGE
The City’s cash flow has taken a massive hit from the Covid-19 pandemic as 8 million annual tourists and 250,000 daily workers are gone, and it is not clear when they will return. Ongoing costs collide with plummeting revenue from Transit Occupancy Tax (TOT), sales taxes, parking, fees & charges and Utility Users Tax (UUT), exacerbated by higher CalPERS contributions due to market losses. Projected General Fund deficit impacts are estimated by the City of Santa Monica’s Finance Department to be $298M FYS 2020/22.
Risk analysis should also include the possibility that actual revenues will be lower than projected; therefore, a 10% contingency ($30M) ought to be added to increase the anticipated shortfall to $328M over FYS 2020/22. The City identification of $106 M in one-time resource savings (funds recalled, capital projects reduced, and reserves utilized) leaving a General Fund budget deficit of $222M for FYS 2021/22.
RECOMMENDATIONS
As Santa Monica residents and taxpayers, we recommend the template below to address the City’s pandemic response for priorities and funding of services that will provide the broadest public use. In addition, all fiscal restructuring recommendations must be available for public comment, including the City plans to eliminate $106M for FYS 2020/21 through the one-time resources.
Our recommendations are based on cutting expenses. Steps to increase revenue have unknown timeframes: budget cuts may be implemented quickly and impact future budgets.
General Fund Services Residents Require[1]
City Fiscal Practices
City’s Financial Framework
Salaries, wages and benefits account for 69% of the General Fund’s operating expenses, significant reductions must be considered. These criteria should apply:
A Template to Address the Covid-19 Santa Monica Budget Impacts
Proposed by Neighborhood Association Residents
CURRENT CHALLENGE
The City’s cash flow has taken a massive hit from the Covid-19 pandemic as 8 million annual tourists and 250,000 daily workers are gone, and it is not clear when they will return. Ongoing costs collide with plummeting revenue from Transit Occupancy Tax (TOT), sales taxes, parking, fees & charges and Utility Users Tax (UUT), exacerbated by higher CalPERS contributions due to market losses. Projected General Fund deficit impacts are estimated by the City of Santa Monica’s Finance Department to be $298M FYS 2020/22.
Risk analysis should also include the possibility that actual revenues will be lower than projected; therefore, a 10% contingency ($30M) ought to be added to increase the anticipated shortfall to $328M over FYS 2020/22. The City identification of $106 M in one-time resource savings (funds recalled, capital projects reduced, and reserves utilized) leaving a General Fund budget deficit of $222M for FYS 2021/22.
RECOMMENDATIONS
As Santa Monica residents and taxpayers, we recommend the template below to address the City’s pandemic response for priorities and funding of services that will provide the broadest public use. In addition, all fiscal restructuring recommendations must be available for public comment, including the City plans to eliminate $106M for FYS 2020/21 through the one-time resources.
Our recommendations are based on cutting expenses. Steps to increase revenue have unknown timeframes: budget cuts may be implemented quickly and impact future budgets.
General Fund Services Residents Require[1]
- Fire Department (SMFD)
- Police Department (SMPD)
- Sanitation Services not directly fee driven including sewer, storm drains and public refuse receptacles
- City Supported Before/After School Youth Programs
- Consolidate youth serving programs (such as CREST, PAL and others) under one entity to provide services to the 3,600 K-8 students
- Ensure that these programs continue to be geographically disbursed throughout the City
- Street and Alley Maintenance
- These have been underfunded; failure to maintain infrastructure will only increase future capital costs.
- Public Libraries
- Baseline services of current hours and locations; continue supporting resident focused programming
- Maintain public transportation (Big Blue Bus and MODE) for residents, students, and workers who don't or can't drive.
- Housing Authority
- Continue to fund Santa Monica residents’ senior housing support including Preserving Our Diversity (POD).
- City Parks
- City parks within our 8.3 square mile maintained to ensure safety, sanitation and value for residents
- Maintain recreation buildings and community gardens as well
- Maintain commitments to Santa Monica-Malibu Unified School District (SMMUSD) including the Joint Facilities Use Agreement and tax revenues from voter-approved ballot measures Y & YY and GS & GSH.
- Support the Reduce Homelessness Framework, including the Homeless Multidisciplinary Street Team (HMST), the C3 (City + County + Community) homeless engagement team, the Library Services Officer, the as-needed social worker and maintain the Homeless Court.
- Restructure Office of Emergency Management to include Mayor.
City Fiscal Practices
- Given water rate increases for the next five years (avg.16% a year) and wastewater rate increases (avg. 8.6% a year), no new resident water/wastewater fees to increase during this period.
City’s Financial Framework
Salaries, wages and benefits account for 69% of the General Fund’s operating expenses, significant reductions must be considered. These criteria should apply:
- The restructuring effort must set clear financial objectives to meet regulatory and financial requirements to budget for FY 2021 and plan for FY 2022. We recommend leveraging the 2018 Internal Audit report on City Staffing and Compensation as a basis for benchmarking staff that must be reduced.
- Ensure implementation of all FY 2019/20 and FY 2020/21 budget efficiencies/eliminations identified in the City’s Internal Audit Reports.
- Notwithstanding employees necessary to secure essential services above, a permanent 15% labor cost spread across full-time employees (FTE), weighted to higher paid redundant management through retirement, e.g. Voluntary Early Separation Incentive Program (VESIP); and,
- Permanent severance or layoff of employees, determined by the difference between retiring employees and the 15% total labor cost reduction target, with one-year continuation of employee health insurance at the HMO level.
- Analysis of a tiered permanent annual salary reduction across all departments, e.g. >$300K@-30%; $200-300K@-20%; $100-200K@-10%; <$100K@-5%;
- Restructure future pension burdens by changing level of health benefits paid by city to HMO only (employee may choose to pay difference between city funded and higher health plans).
- Retain executive personnel and appropriate level of support to focus on public safety, operations and financial management.
- Keep sufficient resources for regulatory, governance, legal, finance, human resources, information systems, administrative and maintenance functions.
- Centralize city procurement
- Negotiate aggressive margin cuts with vendors commensurate with the crisis.
- All third-party City contracts and financial transactions (including Santa Monica College, SMMUSD and developers) must be competitive, based on market rates.
- One example that does not represent a third-party financial transaction was the rental of Civic Center publicly-owned land to Santa Monica College for $1/year for the Early Childhood Lab School (ECLS), more than $6 million from the General fund for the construction and $2.9 million from the City’s Child Care Linkage fund. The ECLS is owned by Santa Monica College and will service primarily Santa Monica City, Santa Monica College, and the children of RAND Corporation (which donated $500,000) while only having a 30% goal of the attendees being children of Santa Monica residents. No priority will be given to young children of Santa Monica High School students.
- Suspend hiring and evaluate sunsetting all project-based outside consultants
- Retain city staff sufficiently skilled to determine and provide project expertise.
- Determine city services that can be outsourced at comparable value at lower expense and implement competitive outsourcing procurement.
- No municipal bond issuance, tax increases or sale of public land to supplement revenue for the next three years:
- Three-year suspension of General Fund expenses for capital and discretionary projects unless already budgeted and funded
- Abide by Appeals Court decision on the districting lawsuit and spend no additional City revenue on appealing the case.
- General Fund will reduce subsidy to Enterprise funds (Airport, Cemetery, Community Broadband, Parking Authority, Pier, Resource Recovery and Recycling, Stormwater Management, Wastewater, and Water).
- General Fund will reduce subsidy to Special Revenue funds (Beach Recreation, Citizens’ Option for Public Safety (COPS), Community Development Block Grant (CDBG), Gas Tax, Housing Authority, Local Return, Low and Moderate Income Housing Asset, Parks and Recreation, SoCal Air Quality Management District (SCAQMD), Special Revenue Source, and TORCA).
- These recommendations will affect all city residents and employees but the crisis is an opportunity to address fiscal spending patterns that residents have long believed burdensome and excessive for a municipality our size. In our present circumstances, city government must meet regulatory budget requirements and develop a new culture of municipal frugality to prepare us for future fiscal shocks from natural, national, or global events beyond our control.
Letters Sent by Wilmont Board / Executive Committee - January 28, 2020
Mayor McKeown, City Council Members and Senior Staff,
The Wilshire Montana Neighborhood Coalition Executive Committee (Wilmont) objects to the Resolutions Revising Water and Waste Water Rates and Services Charges as outlined in the SMDP, January 21, 2020. It was not until the publication of these resolutions in the SMDP that we understood the magnitude of the proposed increases recommended by City staff. In doing the math on an annual bill for water of $100 and an annual waste water bill of $100, the increases for water is 109% and waste water is greater 51%.
Illustrative Example of rate increases for a property with an annual water bill of $100 and annual waste water bill of $100.
Annual Water Bill Example
Annual Water Estimated Bill (based on proposed rates)*
Annual Waste Water Bill Example
Annual Waste Water Estimated Bill (based on proposed rates)*
Year 2019 – Annual Bill
$100
Year 2019 – Annual Bill
$100
Year 2020 - % increase (20%)
$120
Year 2020 - % increase (10%)
$110
Year 2021 - % increase (18%)
$141.60
Year 2021 - % increase (10%)
$121
Year 2022 - % increase (14%)
$161.42
Year 2022 - % increase (10%)
$133.10
Year 2023 - % increase (14%)
$184.02
Year 2023 - % increase (10%)
$146.41
Year 2024 - % increase (14%)
$209.78
Year 2024 - % increase (3%)
$150.80
Overall % increase
109%
Overall % increase
50.8%
* Annual rate increases for water and waste water rates per Notice for Proposed Water Rate Increase, SMDP, January 21, 2020.
As well, additional charges that residents will incur include: two new fixed-rate charges (water, wastewater) which will go up with the proposed percentage increases and the total of these increases will be subject to a 10% UUT (utility user tax).
As noted in NOMA’s letter to the City Council, Residents have taken the lead in water conservation, having sharply decreased their water usage, to an extent much greater than the City predicted (Water Report p4). The City, on the other hand, has failed to establish a record over the last 5 years that leads to confidence among residents that is has a workable plan, that is has set out goals it can realistically achieve and that is has a full grasp on the current situation. The City’s performance is marked by sudden unmet sustainability targets coupled with rapidly escalating rates for residents.
From the Wilmont’s Executive Board, we agree with NOMA’s Board’s comments and raise the following issues and questions:
1. Outreach to Wilmont and Transparency of Financial Impact and Reasons for Rate Increases
Water representatives attended Wilmont’s November 5, 2020 meeting at the Montana Library to present the water and waste water rates update. We never saw any presentation elements regarding the total financial impact of the rate increases, only that there were increases. When the presenters were asked why the rates were going up if we are going to be water self-sufficient by 2023 and therefore not paying for MWD water, their reply was they were engineers, not financial staff. This is not adequate outreach and is not comprehensive communication regarding the financial impact of the rates or what specific projects/expenses that the increased rates would be needed for and the impact on customers. The lack of clarity and explanation about the impact of the rate increase to customers in a straight forward manner is a complete lack of transparency and limited accountability from the City’s water department.
2. Why are Rates Going Up if in 2023 We Will be Self-Sustainable with No Need to Pay Significant MWD Water Costs?
In the Staff Report we saw no delineation of specific revenue and existing costs laid out over a time line to show what revenues would be, what exact projects/expenditures/low-income assistance support they would support and when MWD expenditures would be eliminated.
3. Financing Structure of Operating Revenue Being Used for Capital Projects
The neighborhoods continue to be concerned that the City has not brought the necessary ratios into line to bond water capital improvements. It has been assured this would be remedied but we continue to see drastically increased water rates for capital assets that should be funded by bonds, not operating revenue.
4. $ 122.7 Million or 33% of Water Mediation Settlement Funds (including interest) have Been Appropriated or Anticipated for Future Allocation to Non-Water Related Projects
The use of Water Mediation Settlements (between 2003 and 2012, the City reached four major settlement agreements with various companies related to the contamination and remediation of City water supplies) which totaled $368.4 million (including interest). Based on the analysis in this Information Item (Settlement Fund Sources and Uses) the following monies from these settlements have been used or appropriated for the following non-water related projects.
Settlement Source: From Use of Water Mediation Settlement Funds (12/18/2017), City Council Information Item
Non-Water Related Projects
$ Amount
(M = million)
Charnock (2003/2006 Settlements) with interest
Approved in FY 2016-18 CIP Budget for the City Yards Modernization Project
$42 M
City Services Building Committed Funds ( appropriation mechanism unknown)
$7 M
Approved in FY 16-18 CIP budget for the City Yards Modernization Project
$7.4 M
Gillette Settlement (2009)
Unrestricted – General Fund assignment
$26.8 M
Boeing Settlement (2012)
Unrestricted – General Fund assignment
$24.8 M
Not yet received – Unrestricted – General Fund assignment
$14.7 M
Total Non-Water Related Projects Appropriated-to-date
$56.4 M
Total Non-Water Related Projects – Unrestricted
$66.3 M*
Total Non-Water Related Projects/ Unrestricted Funds from Water Mediation Settlements
$122.7 M
* 12/18/2017 Information Item states that $64 M of Unrestricted Funds are anticipated for future allocation for City Yards Modernization.
While Council has directed staff to allocate the unrestricted funds to these non-water projects, we would request that consideration be given to reevaluation of use of these water-related monies to balance extreme rate increases anticipated with these resolutions.
The Wilmont Executive Committee requests that the City Council reject the current proposed resolutions and assess what can be done for a reasonable rate structure that clearly lays out a long-term strategy with reasonable rates and long-term financing capabilities.
The Wilshire Montana Neighborhood Coalition Executive Committee (Wilmont) objects to the Resolutions Revising Water and Waste Water Rates and Services Charges as outlined in the SMDP, January 21, 2020. It was not until the publication of these resolutions in the SMDP that we understood the magnitude of the proposed increases recommended by City staff. In doing the math on an annual bill for water of $100 and an annual waste water bill of $100, the increases for water is 109% and waste water is greater 51%.
Illustrative Example of rate increases for a property with an annual water bill of $100 and annual waste water bill of $100.
Annual Water Bill Example
Annual Water Estimated Bill (based on proposed rates)*
Annual Waste Water Bill Example
Annual Waste Water Estimated Bill (based on proposed rates)*
Year 2019 – Annual Bill
$100
Year 2019 – Annual Bill
$100
Year 2020 - % increase (20%)
$120
Year 2020 - % increase (10%)
$110
Year 2021 - % increase (18%)
$141.60
Year 2021 - % increase (10%)
$121
Year 2022 - % increase (14%)
$161.42
Year 2022 - % increase (10%)
$133.10
Year 2023 - % increase (14%)
$184.02
Year 2023 - % increase (10%)
$146.41
Year 2024 - % increase (14%)
$209.78
Year 2024 - % increase (3%)
$150.80
Overall % increase
109%
Overall % increase
50.8%
* Annual rate increases for water and waste water rates per Notice for Proposed Water Rate Increase, SMDP, January 21, 2020.
As well, additional charges that residents will incur include: two new fixed-rate charges (water, wastewater) which will go up with the proposed percentage increases and the total of these increases will be subject to a 10% UUT (utility user tax).
As noted in NOMA’s letter to the City Council, Residents have taken the lead in water conservation, having sharply decreased their water usage, to an extent much greater than the City predicted (Water Report p4). The City, on the other hand, has failed to establish a record over the last 5 years that leads to confidence among residents that is has a workable plan, that is has set out goals it can realistically achieve and that is has a full grasp on the current situation. The City’s performance is marked by sudden unmet sustainability targets coupled with rapidly escalating rates for residents.
From the Wilmont’s Executive Board, we agree with NOMA’s Board’s comments and raise the following issues and questions:
1. Outreach to Wilmont and Transparency of Financial Impact and Reasons for Rate Increases
Water representatives attended Wilmont’s November 5, 2020 meeting at the Montana Library to present the water and waste water rates update. We never saw any presentation elements regarding the total financial impact of the rate increases, only that there were increases. When the presenters were asked why the rates were going up if we are going to be water self-sufficient by 2023 and therefore not paying for MWD water, their reply was they were engineers, not financial staff. This is not adequate outreach and is not comprehensive communication regarding the financial impact of the rates or what specific projects/expenses that the increased rates would be needed for and the impact on customers. The lack of clarity and explanation about the impact of the rate increase to customers in a straight forward manner is a complete lack of transparency and limited accountability from the City’s water department.
2. Why are Rates Going Up if in 2023 We Will be Self-Sustainable with No Need to Pay Significant MWD Water Costs?
In the Staff Report we saw no delineation of specific revenue and existing costs laid out over a time line to show what revenues would be, what exact projects/expenditures/low-income assistance support they would support and when MWD expenditures would be eliminated.
3. Financing Structure of Operating Revenue Being Used for Capital Projects
The neighborhoods continue to be concerned that the City has not brought the necessary ratios into line to bond water capital improvements. It has been assured this would be remedied but we continue to see drastically increased water rates for capital assets that should be funded by bonds, not operating revenue.
4. $ 122.7 Million or 33% of Water Mediation Settlement Funds (including interest) have Been Appropriated or Anticipated for Future Allocation to Non-Water Related Projects
The use of Water Mediation Settlements (between 2003 and 2012, the City reached four major settlement agreements with various companies related to the contamination and remediation of City water supplies) which totaled $368.4 million (including interest). Based on the analysis in this Information Item (Settlement Fund Sources and Uses) the following monies from these settlements have been used or appropriated for the following non-water related projects.
Settlement Source: From Use of Water Mediation Settlement Funds (12/18/2017), City Council Information Item
Non-Water Related Projects
$ Amount
(M = million)
Charnock (2003/2006 Settlements) with interest
Approved in FY 2016-18 CIP Budget for the City Yards Modernization Project
$42 M
City Services Building Committed Funds ( appropriation mechanism unknown)
$7 M
Approved in FY 16-18 CIP budget for the City Yards Modernization Project
$7.4 M
Gillette Settlement (2009)
Unrestricted – General Fund assignment
$26.8 M
Boeing Settlement (2012)
Unrestricted – General Fund assignment
$24.8 M
Not yet received – Unrestricted – General Fund assignment
$14.7 M
Total Non-Water Related Projects Appropriated-to-date
$56.4 M
Total Non-Water Related Projects – Unrestricted
$66.3 M*
Total Non-Water Related Projects/ Unrestricted Funds from Water Mediation Settlements
$122.7 M
* 12/18/2017 Information Item states that $64 M of Unrestricted Funds are anticipated for future allocation for City Yards Modernization.
While Council has directed staff to allocate the unrestricted funds to these non-water projects, we would request that consideration be given to reevaluation of use of these water-related monies to balance extreme rate increases anticipated with these resolutions.
The Wilmont Executive Committee requests that the City Council reject the current proposed resolutions and assess what can be done for a reasonable rate structure that clearly lays out a long-term strategy with reasonable rates and long-term financing capabilities.