Bebee on ACWA conference panel discussing Prop. 218 hearings

The Association of California Water Agencies held its 2019 fall conference Dec. 3-6, in San Diego, and a Dec. 4 session titled: “Lessons Learned, How to Hold a Successful 218 Hearing” included Fallbrook Public Utility District general manager Jack Bebee as a panelist.

In November 1996, the state’s voters passed Proposition 218, which requires a public vote on benefit assessments. Proposition 218 exempts water agencies from raising rates if a cost of service study shows a relationship between the rates and the agency's cost to provide water. A rate setting policy can be in effect for up to five years and must include a rate design and public review. The Proposition 218 exemption process requires mailed notice of the new rates and includes a protest provision; if more than half of the district’s property owners or account holders submit a protest letter the planned rate increase is rescinded.

Raftelis Financial Consultants vice president Sanjay Gaur was the moderator at the panel, and Bebee was joined on the panel by Soquel Creek Water District of Santa Cruz County general manager Ron Duncan and Alameda County Water District general manager Bob Shaver. The focus was on how Proposition 218 hearings can best be held to reduce tension rather than on the technical aspects involving cost of service studies.

“Public hearings have been more and more challenging,” Gaur said.

A Proposition 218 hearing has three components: the staff presentation, the public comment and the board deliberation.

Gaur said that the three general managers represent districts in the southern, central, and northern parts of the state and represent small, medium, and large districts. Gaur said that FPUD is transitioning from fully professional agricultural customers to hobby farmers.

“It has been one of the most complicated rate structures I've dealt with,” Gaur said.

“Proposition 218 is an evolving landscape from my point of view,” Duncan said.

The Soquel Creek Water District was challenged on a rate increase and lost.

“That kind of shook us up a little bit,” Duncan said.

The challenge involved expenses for a capital project; a state grant was denied after state law changed.

Shaver has experienced three Proposition 218 hearings including one in which the Alameda County Water District proposed raising rates by 25% for the first year and by 5% in a subsequent year.

“We have a very engaged community activist,” he said. “It became politicized very quickly.”

The ACWD accepted electronic protests.

“We wanted to control it a little more,” Shaver said.

The district which has approximately 85,000 customers received approximately 6,200 protests. Approximately 250 members of the public attended the board hearing.

“Mine’s not quite as painful,” Bebee said.

FPUD has approximately 35,000 residents and 9,000 connections.

“We do have hobby farmers,” Bebee said.

FPUD also has larger agricultural operations.

“Water causes a big impact on those people. It puts them out of business potentially if those costs go up,” Bebee said.

Bebee is the eighth general manager of FPUD, which was founded in 1922.

“Back in those days they didn't do the best job of putting stuff in the ground,” he said.

Past FPUD practice also included deferring major repairs to minimize rate increases. The need to upgrade infrastructure led to an FPUD rate increase which exceeded the increased cost of water obtained from the San Diego County Water Authority. The need to repair the infrastructure was presented to the public including the Fallbrook farmers.

“They saw that and they were willing to step up,” Bebee said.

FPUD proposed a five-year Proposition 218 hearing.

“In the past we’d do one year. We sent a 218 notice out that nobody understood,” Bebee said. “This time we put a lot of effort into explaining to people. We had about 2,000 protests out of 9,000 customers.”

One citizen was collecting protest signatures outside local grocery stores.

“She actually had a well,” Bebee said.

The land use government for Fallbrook is the San Diego County Board of Supervisors, so FPUD is the most visible government in the Friendly Village.

“We’re a local government,” Bebee said. “It was a place to go to complain.”

The FPUD board members also patronize local businesses.

“They go to the grocery store and they're getting beat up,” Bebee said.

FPUD eventually approved an 8% increase over five years.

“At least we were straightforward and honest and educated them,” Bebee said. “We really did what we felt we needed to do as a district.”

Shaver said that ACWD customers can’t go to Pacific Gas and Electric or Comcast to complain about those utility rates.

“We have a very accessible board,” he said.

Shaver recommends avoiding long staff presentations.

“You have people who just want to yell at the board,” he said. “They’re not going to the public hearing to learn how awesome your district is.”

District staff interacting with the public has been a positive for Shaver’s district.

“It kind of provides a different image,” he said.

A focus on the need for the rate increase may assure some citizens who have legitimate concerns, and Bebee believes in the need for outreach before the public hearing.

“By the time you have that hearing it’s really too late,” he said.

An explanation of the expenditures associated with the rate increase can reduce opposition.

“People get less upset when you're paying for infrastructure,” Bebee said. “This is like a multi-year effort of really trying to educate the community. It’s just trying to get through those dynamics of blame.”

The Soquel Creek Water District headquarters was built in the 1960s, but the district now has 38 staff members including two dedicated to outreach. The district preceded one Proposition 218 hearing by creating an advisory committee.

“We brought in the people who we thought were our fiercest critics,” Duncan said.

Many of those residents who had been concerned supported the rate increase. Duncan also advocated emphasis on actual numbers rather than on the percentage of increase.

“What is very important is to show where your rates are in relationship to others,” he said.

Comparison with other districts is not the only numerical item which can counter concern about an increase in terms of percentage.

“Percentages can look big, but when you break it down it could be 50 cents to a dollar,” Duncan said.

FPUD has an annual calendar contest involving elementary school students, and one of FPUD’s meetings each year features the calendar contest and is attended by many students and parents. It was not intentional that FPUD held a Proposition 218 hearing at the same meeting as a calendar contest presentation, but that seemed to limit the tension of the ratepayers objecting to the rate increase.

“They were still angry, but they were a little less angry,” Bebee said.

Proposition 218 does not require that the board deliberation and vote be at the same meeting as the public hearing, which for FPUD has also decreased tension.

“You don’t want on a rate hearing to get on a back and forth,” Bebee said.

If the board doesn’t have discussion during a public hearing the board members’ focus can be on the members of the public.

“You just need to let them speak. You need to listen,” Bebee said.

Separate meetings also give the board members additional opportunities to review the public comment.

“We actually transcribe everything everyone said,” Bebee said.

The public comments were also placed on FPUD’s website before the actual vote.

“We still had a lot of people coming,” Bebee said.

The audience was calmer when FPUD approved the increase.

“I think we kind of fell into that,” Bebee said of the process.

“Formality and consistency is your friend in a public hearing,” Shaver said. “Many of these folks have never come to a government-run function before.”

Shaver tells citizens that the district will respond to the public comments but not during the hearing.

“There are people who actually come to a public hearing,” he said. “Staff responds to factual issues, but the board responds to policy issues.”

The ACWD hearings include breaks, and staff and board members interact with the public, especially speakers, during those breaks.

“People feel like they’re being heard,” Shaver said.

ACWD staff members attend other community meetings and discuss water service although not necessarily rates.

“Sometimes your best ambassador can be your staff,” Shaver said.

Bebee said that staff interaction with the public should be from a customer perspective and should not be limited to rate increase outreach.

“Any enemies you make in the community along the way will show up there,” he said.

“People are always suspicious of what your reasonings are,” Bebee said. “If you ignore them they’re not going to go away.”

“If you don’t connect with those people it doesn’t matter what comes after that,” Duncan said.

Bebee also said the importance of district staff working with board members.

“The first thing you need to get lined up is your board,” he said. “If your board asks questions then you’re going to have a hard time getting to the public.”

The FPUD website includes video of board meetings.

“There may be certain ones that people want to watch,” Bebee said.

Bebee stressed that any video must have a quality audio component.

“If the audio’s not good that will be the most uninteresting video ever produced,” he said.

The need for outreach must be balanced with citizen concern about expenses being paid for salaries. Noelle Denke is FPUD’s only staff member dedicated to outreach.

“We still have a fairly low outreach budget,” Bebee said.

The ACWD has 2 1/2 staff positions for outreach and a staff of 234.

Bebee added that FPUD has a high school intern program which can augment the district’s outreach activities.

“We’re having to figure out how do we do these things as a small district but not spend a lot of money on it,” he said.