With Mayor Blake Inscore pointing out that it's not as exciting as pump tracks but still necessary, Crescent City Councilors gave staff the green light to proceed with a sewer rate study.

The Council’s unanimous vote on Monday to approve a $21,930 professional services agreement with Willdan Financial Services comes about seven years after a referendum halted the city’s last attempt at imposing a sewer rate increase. However, an effort to overturn a new rate increase likely won’t occur due to a 2020 California Supreme Court ruling in Wilde v. The City of Dunsmuir, according to City Attorney Martha Rice.

“The California Supreme Court has ruled that sewer and water utility rate increases done by ordinance are not subject to referendum,” she said. “So, really, we just need to pass the Prop 218 process.”

There will be additional expenses since the contract with Willdan includes helping the city draft and distribute Proposition 218 notices to ratepayers, Rice said. That price will be based on the number of households that will receive those notices, she said.

Under Proposition 218, property owners subject to any proposed rate increases will have an opportunity to protest the new rate. If 50 percent-plus-1 of those property owners submit a valid protest, the rate increase would die, according to Zachary Van Dinther, an economist at Robert D. Niehaus, a Santa Barbara-based economic consulting firm that conducted a sewer rate study for Del Norte County.

Crescent City last conducted a sewer rate study in 2015 and approved an ordinance to increase sewer rates, Rice said Monday.

In 2016 voters sided with petitioners seeking to overturn that ordinance by defeating Measure Q.

The last time sewer rates increased was in 2014, according to Rice’s staff report.

In a presentation shortly before Crescent City Councilors approved the 2023-24 budget in June 2023, Finance Director Linda Leaver said ongoing revenues in the sewer fund were not sufficient to meet ongoing expenses. The fund’s projected working capital was expected to dwindle to $1.7 million at the end of the 2023-24 fiscal year, according to Leaver.

The city had been working to stabilize the sewer fund, Leaver said. Efforts included restructuring the loan that led to the $40 million retrofit of its wastewater treatment plant in 2007, contracting with Jacobs Engineering to operate the plant and deferring capital improvement and maintenance, she said.

The proposed 2023-24 budget for the city’s sewer fund in June 2023 included revenues of $5.2 million, a decrease from the 2022-23 estimated budget of $5.3 million, according to Leaver’s presentation.

Operating expenses for 2023-24 were expected to be about $4.5 million when the city approved the budget in June. The total budget for capital improvement projects for 2023-24 was about $1 million and the city’s debt service is about $1.6 million.

On Monday, Mayor Blake Inscore noted that he and his colleagues had moved ahead on some exciting things in the last year with Beachfront Park and the Front Street reconstruction project. The rate study will be work, he said.

“Because we are in the process of looking at what we need to adjust when it comes to water rates and sewer rates are going to come right after that,” Inscore said. “It’s all the more reason why it has been so important that we have been so transparent with everything we’ve done, with Measure S, and we have built a strong relationship with our community and the people we serve. But we need to be honest. This is a heavy lift and it’s going to take all of us working together.”

The sewer rate study is expected to be finished in late spring. After the city goes through the Proposition 218 process, new rates would go into effect in the summer or fall of next year, according to Rice’s staff report.

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