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Attempting to bridge the gap between the cost of providing water services and ratepayers’ revenue, the Hollister City Council took the first step Oct. 20 toward a rate increase that could end up doubling customers’ bills.
The council also approved a water supply contract with San Benito County Water District.
If approved, the new water rates would take effect as early as January. Monthly bills would range between $58.84 and $111.39, depending on the usage for single-family customers.
Currently, customers are charged between $33.57 and $65.87 monthly, at rates that have not changed since 2019.
The next steps are for the city to notify its water customers and host public hearings on the rate increase before adopting them.
Citing the financial impact to water customers, a majority of the council favored the lowest rate with an annual increase, instead of structuring rates whereby low-use customers would pay $71.64 and high-use customers $135.79.
“It may seem like a nominal increase for many families but for low income families, some senior families often are not able to afford even a nominal increase,” Hollister Mayor Roxanne Stephens said.
Councilmember Priscilla De Anda said she could not support the higher rate because of the financial challenges people are facing.
“People are already struggling as it is,” she said. “If this were another time, I would probably go for the alternative one but I just can’t in good conscience support it as much as I want to.”
Councilmember Dolores Morales voted against the lower rate and said she favored the higher rate because it allowed the city—which recently made cuts to its budget—to cover the cost of providing the services. She also noted that other Hollister residents who are served by the Sunnyslope Water District are already paying a higher rate.
The San Benito County Water District serves communities within Santa Valley Road, Memorial Drive, Southside Road and Fairview Road. The district boundary map is here.
“Where are we going to get this money if we continue to take from our general fund?” Morales said. “Eventually we’re not going to have general funds to do our basic function. The math, it will not add up.”
She suggested informing the community as to why the city is considering raising the rates for water and working with community organizations that can provide assistance to the residents such as low income families and disabled residents.
“I think we do it from an education and a compassionate perspective,” she said.
According to the presentation, the city’s water fund is operating at a deficit. Revenue resulting from the higher rate increase would allow Hollister to cover 60% of its capital water projects through fiscal year 2030. This projection assumes a $9 million loan to the city.
The lower rate increase projects the city completing 15% of its capital water projects through fiscal year 2027, then gradually increasing to 75% through fiscal year 2030. This alternative assumes a loan of $7 million.
Interim City Manager Jim Pia said it’s costing the city $5,600 a day to make up the difference between the ratepayer revenue and the cost of service.
Water supply contract
In a 4-1 vote, the council approved an agreement with San Benito County Water District for water supply and treatment.
The new agreement adds San Juan Bautista as a new customer as well as setting funding and cost recovery terms for the county water district’s Accelerated Drought Response Project. Sunnyslope Water District is also part of the agreement as a customer.
The $50 million Accelerated Drought Response Project includes expanding the West Hills Water Treatment Plant, constructing five aquifer storage and recovery wells and new pipelines.
The project is intended to allow the district to treat excess surface water during wet years and place it in underground storage. The water would be extracted during drought years.
It is intended to serve the water district’s existing customers.
Councilmember Rolan Resendiz opposed the agreement, saying the it favored future development.
“I don’t care if the language prohibits future development, we are going to increase the amount of water that we’re providing on the west side of Hollister,” he said. “And there has been a tremendous amount of pressure to build more houses there.”
He said future local and state legislation can require the city to build where there is existing infrastructure.
Picha and Morales said they failed to see how this agreement resulted in more growth. Morales said the project was about improving the quality of water and the ability to store water for use in drought years.
Stephens said though she shared Resendiz’s concerns about growth, she was also concerned about water costs during drought years.
“I’m going to support this because although I am concerned about the potential for growth, or encouraging growth, I do think that this is a way to be proactive on water issues,” she said.
Resendiz’s motion to reject the agreement failed because no one seconded it. Following the vote, Resendiz walked out of the chambers and did not return for the remainder of the meeting.
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