Bell Gardens Has Yet to Address Water Rates

By Nancy Martinez, EGP Staff Writer

It will not stop the bleeding, but a new service contract approved Monday by the Bell Gardens City Council is expected to improve operation of the city-owned water system while reducing costs at the chronically deficit-plagued system by $10,000 a year.

The savings are a small step forward considering the council has for years avoided making any long-term adjustments or decisions to reduce the water utility’s $400,000 annual operating deficit, forcing the city to cover the shortfall with revenue from its General Fund that would otherwise go toward other city services and expenses.

Thirty percent of Bell Gardens’ residents buy their water from the city; the other 70% get their water from Golden State Water, which is privately owned.

Staff from Park Water Company check water quality at a water system facility. (Park Water Company)

Staff from Park Water Company check water quality at a water system facility. (Park Water Company)

For the last year and a half, staff has repeatedly told the council that the deficit is unsustainable and the aging system is in need of costly repairs. Staff has advised the council to raise water rates, which have not seen an increase for 20 years, or to consider selling-off the system to an outside entity.

However, fearing that approving either of the recommended remedies would result in higher rates that low-income residents would be hard-pressed to pay, the council voted to hold off on selling the utility and has failed to raise rates.

In the meantime, “We have to continue to maintain the system” to avoid a major catastrophe City Manager Phil Wagner told the council during its first meeting of the year.

The city will pay Park Water Company $230,198 a year to manage the utility, but none of the funds will be used for long overdue infrastructure repairs, or to cover costs if “something major” happens, such as water main leaks or breaks or damage to piping, according to Wagner.

While the council’s approval of new service provider will save some money, raising water rates “is a whole other discussion,” Wagner said.

Customers of the city’s other water provider, who have seen their rates increase multiple times throughout the years, are subsidizing the rates being paid by the city’s 1,650 water utility customers.

According to city documents, selling the water system would generate enough money to pay off the city’s outstanding bond debt, recover the city’s investment and potentially repay a portion of the amount subsidized by the general fund.

Since purchasing the water system in 1991, Bell Gardens has been paying nearly $20,000 a month to maintain the system and over half a million dollars annually to pay off a $5.2 million bond to fund past system improvements.

For now, however, it seems the council is not ready for that level of change, even though the system’s operating deficit continues to threaten the city’s financial stability and has in the past contributed to a deficit in the general fund.

This week’s board’s approval will have minimal impact on those costs, but will allow the city to switch from its long-term billing, customer service and meter reading provider to a contractor that will provide “better service” at a lower cost, said Wagner.

“By lowering the [service provider] contract [cost], we are relying a little less on the general fund,” said Public Works Director Chau L. Vu about the small change in direction.

The city will also pay the new contractor a onetime fee of $25,837 to exercise the valves and map out the water system to prevent valves from getting rusty and breaking, said Vu.

The transition is expected to be complete by the end of the month.

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January 15, 2015  Copyright © 2012 Eastern Group Publications, Inc.


One Response to “Bell Gardens Has Yet to Address Water Rates”

  1. Bell Gardens Aún Tiene que Abordar las Tarifas de Agua : Eastern Group Publications/EGPNews on January 15th, 2015 2:00 pm

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