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Despite operating at a deficit forecasted to increase from $1.5 million currently to $1.8 million by July, the Hollister City Council unanimously opted to partially implement recommended water rate increases starting in April.
Amid concerns over the impact a larger increase would have on low income households, city officials on Feb. 17 settled on a 30% increase while staff conducts an in-house analysis of the cost of providing the service, to complement a water rate study recently filed by Raftelis financial consultants.
The council also directed staff to expand its 25% discount program for seniors to qualifying low-income households.
Hollister City Manager Ana Cortez said staff can come back to the City Council with the results of its in-house water costs analysis and recommendation for an additional rate increase within six months.
“This structural deficit requires careful examination of expenses, which is why we need time to scrutinize our expenses,” Cortez said.
Cortez said the 30% increase only covers the added costs from inflation over the last six years.
In October, city officials directed staff to move forward with an initial 83% rate increase intended to allow the city to catch up to the costs for providing the service to residents.
Hollister water rates have not been increased since 2019, according to the staff report in the agenda.
According to the Raftelis study, the city’s cost of providing water is forecasted to increase from $11.35 million in the current fiscal year to $13.5 million in fiscal year 2030, and the study provided two options to the City Council for rate increases.
The option the majority of the council supported forecast the city to cut the deficit in two years and build the recommended $4 million in reserves by the fourth year.
Both options increased water rates each year through 2030.
“It is time for us to make some changes to our rates,” councilmember Rudy Picha said. “It’s been a long time.”
The decision comes after the City Council delayed its decision on a rate increase in January despite the majority of the council supporting one.
In previous discussions councilmember Priscilla De Anda opposed the 83% increase, saying it should have been done by previous councils. Councilmember Rolan Resendiz said he opposed the increase because of the impact it would have on his constituents.
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