The San Juan Bautista City Council approved a contract with a
company Tuesday to look at the possibility of raising water rates
to secure $4 million in funding that could enable the city to cut
ties with the county water district and forge ahead alone regarding
a multi-million dollar infrastructure project.
San Juan Bautista – The San Juan Bautista City Council approved a contract with a company Tuesday to look at the possibility of raising water rates to secure $4 million in funding that could enable the city to cut ties with the county water district and forge ahead alone regarding a multi-million dollar infrastructure project.
The project, which would completely revamp the Mission City’s dilapidated water and sewer system, has been a front-burner issue since San Juan and the San Benito County Water District jointly received a $3.8 million grant from the federal Economic Development Administration earlier this year.
As part of the grant agreement, the water district agreed to give $3.1 million in grants and loans to supplement the project – the total cost of which will come to nearly $8 million.
City and water district officials spent months hammering out an agreement concerning the details of the project, however problems arose over control of city services and how the money would be spent.
The EDA suspended the grant in August after the water district informed the federal government that San Juan was failing to abide by the terms of the grant agreement. Since then the city has been batting around the idea of securing funding on its own instead of entering into an agreement with the water district.
Newly elected San Juan Bautista Mayor Dan Reed said the city approved a contract with Berkeley-based Bartle Wells Associates during the city council meeting Tuesday as a way to look at all the options surrounding the grant, and whether it would be financially possible for the city to cut ties with the water district.
The city will pay Bartle Wells $13,000 to conduct a water rate study and possibly research ways to secure an approximate $4 million loan that the city would pay back over 20 years, according to city officials.
Reed said the city is not trying to move ahead on its own at this time, but is paying Bartle Wells to determine whether the city could afford to raise water rates that would in turn help the city pay back a $4 million loan.
“I just want to make sure we have all the options in front of us to look at,” Reed said. “We want to continue working with the water district, but at the same time start moving on the project. We need to know what we’re going to do, what it’s going to cost our citizens as we go along here. That’s the reason for the water rate study – to identify what funding is available and what it could cost our citizens to pay this back to get that. That’s all we’re looking at. We’re trying to get things moving.”
But Councilman Charles Geiger does not support obtaining loans from an outside source and believes the city should work something out with the water district. The city council voted to raise water rates in June, and Geiger said the average monthly rate is between $40 to $50. Another rate to cover a large loan could result in a $20 to $30 additional increase – something some residents could have serious trouble affording, he said.
“I support a deal with the water district,” Geiger said. “It will be very difficult to explain to the citizens that … there could be an increase (in water rates to pay back the loan). People are already complaining about how high their water bill is. What needs to happen is we need to have a drop dead date. We need to know from the EDA, ‘If you don’t come up with an agreement by a certain date it’s over.’ Both sides are just playing the game.”
Geiger estimated that, with interest, the city would have to shell out nearly $8 million over the 20 years just to pay back the $4 million loan – which he said the taxpayers would bear the brunt of through increased water and sewer rates.
He also wondered who would loan the cash-strapped city such a large loan.
“We don’t have much money,” he said. “It’s not going to fly. The only way it could possibly fly is if the water district gets on board and they work with us.”
Water district and city officials met last month in an attempt to reopen the lines of communication and possibly create a new agreement that would enable the two agencies to work together in financing the project. Water district officials have voiced concerns that the grant cannot be issued just to one agency because both organizations received the grant, and wonder if San Juan will lose the grant entirely if it attempts to go it alone.
San Juan officials – except for Geiger – believe the city will still be able to receive the $3.8 million from the federal government without the water district’s participation.
EDA spokesman Brian Borlick did not return phone calls regarding the grant’s current status Thursday. But Paul Weldon, project manager for the public works division of the EDA, has said the city can’t receive the money without the water district’s involvement because the city and the water district are co-grantees.
Water district board President John Tobias said Thursday he was not aware of the city’s approval of a contract with Bartle Wells, but said the water district is in the process of evaluating the city’s concerns with the water district’s proposed contract.
“I don’t know all the particulars of the loan or the people they’re working with, so I can’t comment on what they’re doing,” Tobias said. “We’re still trying to work with them and put a management agreement together.”
Erin Musgrave covers public safety for the Free Lance. Reach her at 637-5566, ext. 336 or [email protected]
