Sean Janssen, The Union Democrat

Calaveras County Water District directors set the ceiling last week for impending rate hikes on water and sewer bills.

The board Thursday approved a notice to be mailed out to customers in about two weeks laying out a proposal to increase monthly water bills up to 25 percent in the coming year and a cumulative 71 percent by mid-2017. Sewer bills are slated to rise as much as 15 percent the first year and 62 percent by mid-2017.

The maximum limits of the proposal boost sewer rates Aug. 1 from $67.50 to $77.63, up to $86.16 in August 2014, $95.64 in 2015, $104.25 in 2016 and finally $109.46 from 2017 through 2018. The water rate could go from $39.50 to $49.38 on Sept. 1 or Oct. 1, up to $56.78 in 2014, $61.89 in 2015, $66.84 in 2016 and $66.84 in the final 2017-2018 year.

Directors and staff said the substantial increases are needed to launch a large-scale effort to upgrade crumbling infrastructure and have already been put off for too long.

CCWD Finance Director Jeffrey Meyer said about $100 million in improvements were identified in a 2008 master plan document and the proposed hikes are the district's first-ever attempt to develop a long-term funding program for such needs.

"We don't have a dedicated capital improvement reserve," Meyer said.

Past boards have been reluctant to create one through rate hikes for fear of public backlash from the sticker shock, Director Bob Dean said.

"The bottom line is it's time to pay the piper. We've passed on (completing projects) for several years now ... and it's time if we don't do it, systems fail," Dean said. "This board is finally showing the courage and putting their necks on the line. We have learned from this last economic downturn that you can't bet on the come. What hasn't been done in the past has to be done now, as painful as it is."

The last five-year increase program wrapped up last year, gradually bumping rates up 50 percent during its course. If the latest proposal is adopted, rates will have more than doubled in 11 years.

Meyer said the last set of increases, though significant, were tempered by projections of 400 new connections per year throughout its term. Just 200 materialized in the five-year period, he said.

Director Jeff Davidson said the district's finances took another unexpected hit when foreclosure rates spiked as the economy soured, resulting in the loss of hundreds of thousands of dollars in anticipated property tax revenue.

Audience member Joe Kelly said steep rate hikes could exacerbate that problem.

"People in this county are still in danger of losing their homes and this rate increase may be the cause ... if they're already underwater," Kelly said.

Former CCWD Director Bertha Underhill said lower-income residents will be hit too hard by the proposal.

"Now we're going to have an issue of what do I do? Pay my water bill or eat and take my medicine," Underhill said.

The board reminded that public state law prevents the district from offering low-income assistance programs like electricity and telephone companies give.

"Nobody's going to be satisfied with this rate increase," said Director Dennis Dooley, later adding, "it's frustrating to me that boards don't do what they need to do but when they do step up, they get criticized for it."

The district has identified replacements of sewer lift stations near Tulloch Reservoir, water line replacements in upcountry towns, and water tank replacements throughout the county among the first projects to be completed with the additional revenues.

"If you do a sewer spill into the lake, you're looking at hundreds of thousands of dollars in potential fines ... then you still have to fix it," Davidson said. "You can then end up with four or five additional lawsuits (from private groups) that you will have to deal with and settle."

The board voted 3-1, with directors Davidson, Dooley and Scott Ratterman in favor, to set the limits. Dean dissented and Director Don Stump was absent.

Dean voiced support for slightly higher rate hike caps that relied on funding the improvements without any borrowing.

Davidson said some limited borrowing on a seven-year payback schedule is prudent to launch some of the largest projects immediately and while conditions are favorable.

"Debt service is cheaper than it has been in a long time ... and probably will (rise) in the not-too-distant future" as will construction costs, he said.

Dooley and Dean each acknowledged the inherent political danger in approving a rate spike as evidenced by the turnover in four seats on the Tuolumne Utilities District board after an unpopular rate proposal last year. Four CCWD seats, all except for Davidson's, will be on the November 2014 ballot.

After notices are mailed to the public, the board must wait 45 days to hold a public hearing on the proposed increase. If a majority of the district's estimated 13,000 water customers or 4,800 sewer users protest, they cannot take effect. CCWD General Manager Mitch Dion said a sample protest letter that meets Proposition 218 guidelines will be provided at