Public Participation

Transcript (~25 min @ 0:52)

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▶ 0:52 Speaker 3: under god individual with liberty and justice for all

▶ 0:59 Speaker 1: as with all of our meetings this meeting is being broadcast by local cable television and will be rebroadcast for your viewing pleasure in accordance with the melrose open meeting law

▶ 1:12 Peter D. Mortimer: mr. president make a motion to open the floor for public participation second

▶ 1:16 Speaker 1: when Mortimer moves to commence public participation I didn't catch you made who seconded the motion second mr. president seconded by alderman Forbes on the motion all those in favor right anyone opposed motion passes this is the portion of our meeting where any member of the public who wishes to speak on any order that is on our agenda can come to the center of the room identify themselves and they will be heard sir my first time on tv my name is phil taymor and i live

▶ 1:47 Speaker 4: and own the residence at 44 larchmont road i attended and spoke at the water and sewer committee meeting earlier today i previously had sent members of that committee a letter containing a full discussion and 13 specific questions detailing my concerns about city water and and sewer rate matters. I will now relay these concerns to this committee as well in advance of tonight's presentation by the city's new financial rate consultants. As an introductory remark, the city's water and sewer enterprise funds, from my point of view, are best described as monopoly public utilities providing services to captive customers like me who can't go elsewhere. The enterprises are obligated to provide and economical services at a fair price to each and every customer the city's operations have not and continue to not meet their obligations in several important respects my 13 specific questions are spread across three general areas of concern I will now discuss the areas of concern my first area of concern the city's tiered rate structure top rates are among the very highest of MWRA district cities and cannot be supported by either analysis or rational explanation as actually required by MWRA regulation. Specifically, Melrose has the 13th highest top tier water rate of the 60 MWRA cities. Melrose's top tier water rate is 38% higher than the simple average of MWRA top tier rates. As you know, Melrose's top tier water rate is 49 percent higher than its own lowest tier and its sewer rate is similarly high MWRA rules state and this was provided to me by the city and I quote municipalities shall institute a water base rate for all users provided that such said base rate shall be increased at an increasing block rate to fairly reflect the resource demand and consumption of high-volume users and I I emphasize the words to fairly reflect the resource demand and consumption. Close quote. Even though Melrose has contended that tiered rates are mandatory, 13 MWRA cities obviously do not agree and indeed use flat rates instead. And importantly, it's a general law of economics that the unit cost of providing a service or manufacturing a product which is not in short supply, as is the case here, actually decrease at higher volumes and not increase as the city's top tier rates reflect. All high volume water and sewer users, including but not limited to multi-unit tenants trapped in commonly metered buildings, are being onerously penalized to unfairly subsidize other users. My second area of concern and what really brought me here tonight, Melrose Free Press reported earlier this year that the city also changed its method of billing the cost of its own internal department water and sewer consumption a few years ago. It used to charge the cost of that consumption to the city property tax funded budget. It changed to charge that consumption instead to the city water and sewer rate payer, thereby shifting hundreds of thousands of dollars annually from its property tax budget to rate payers. I find the city's decision to stop charging its own internal departments or users at complete odds with its decision to charge residents for their usage at dramatic tiered rates in order to encourage their attention to consumption and conservation. My third and final area of concern, I've heard city officials repeatedly blame NWRA charges for the city's water and sewer rate increases. In the face of essentially flat consumption, city combined water and sewer rates have increased an average of 7% a year over the past two years. MWRA charges have increased by only a much lower 4.5% a year, but city-controlled expenses have risen over twice as fast at over 10% per year, in fact, I believe, closer to 14% a year on average over the same two-year period. And this is before the incremental impact from the city's change to start billing rate payers for its internal consumption. The city-controlled spending increases have been spread across all of its spending areas personnel insurance allocations indirect cost allocations debt service and abatement and reserve expenses I've yet to see any savings from these ramped up expenditures I'll now read the 13 questions from that letter I sent verbatim one is the city's position still that tiered rates are mandatory and if so how does it justify its interpretation of MWRA regulations cited above 2. Does the City believe that the 13 MWRA cities which use flat rates are not complying with regulations? 3. How does the City explain and what calculations and data does it have supporting or demonstrating that the higher tiered rates meet the MWRA requirement to fairly reflect the resource demand and consumption of high volume uses of water? Four, even putting the regulations aside for a moment, how does the city justify its top-tier rates as fair, equitable, and supportable in any way? Five, will the city now either eliminate the tiered rate structure or alternatively dramatically narrow or collapse the rates? Six, does the city contend that it is mandatory to charge its internal water and sewer consumption to the water and sewer rate payer? And if so, what are the governing regulations? 7. How much water and sewer costs actually would have been charged to the property tax budget for 2015 had past practice been in place and then current rates been used? 8. Although as to the date of this yet letter, I have neither completed my discussions with the Mass. Department of Revenue nor completed my review of available data for many MWRA cities with enterprise funds. It does appear to me that the DOR allows cities to, and at least some of the cities indeed do, charge internal water and sewer consumption to their property tax-funded budgets. What do you believe the DOR allows, and how many cities do you believe have enterprise funds which charge thusly? Nine, if the current charging method, that is, charging the town's internal consumption to the ratepayer, was not the result of a mandatory change what compelled the city to make the change and upon reflection will the city now change back to its original method using the same tiered rate structure it imposes on its residents 10 did you use the spending freed up by eliminating water and sewer expenses from the city budget in that shift to fund other city expenses 11 how does the city justify its huge city controlled spending increase of the increases over the past two plus years and where is the savings payback 12 how much of the money's charged the enterprise funds are judgmental allocations and how much of those allocations increased over the years and includes overhead insurance shared services etc 13 why do city officials and various forums replete repeatedly blame the MWRA charges for overall water and sewer rate increases when rate increases have been driven more by city control spending rising at

▶ 9:38 Speaker 4: over twice the rate in conclusion it's time for the city to answer these questions clearly and correct its errors and now is the time to have a new rate consultant focus on those questions in areas specifically the city should one eliminate or greatly collapse it's unsupportable tiered rate structure to return to charging its own internal usage back to its departments and therefore its property tax funded budget and three critically review is city controlled spending especially that put in place over the past several years the opportunity to reduce this spending increase is at least as large as the city's new focus on water and sewer leakage and infiltration these issues have been under discussion for far too long and need resolution now and i would be more than glad

▶ 10:36 Speaker 4: to answer any questions that the committee would like to ask me i find it a little bit unproductive to make these comments one way and not have an iterative discussion that tries to draw these to conclusion i understand the robert's rules of order but if they can be suspended they have have a productive discussion of these issues and bring them to conclusion that would be a good thing thank you for your time

▶ 11:02 Speaker 1: thank you anybody else who wishes to speak

▶ 11:17 Speaker 5: hi i'm jerry morose it's not my first time on tv here all that he said i want to incorporate into my comments as well i probably should have stopped there but i won't you know we've had these issues for a long time and actually the last point that he made is that there is a large conversation to have about this and Mr. Taymor and myself both attended the water and sewer committee meeting today and the committee there doesn't have any opportunity for the public really to have an interaction with the committee to talk about the issues that the public might have sensitivities about that the committee doesn't seem to understand at some level so as I said to you two weeks ago I appeal to you you know perhaps some form of a round table discussion that we can have with the consultant with the public you know for those people that want to engage deeply in these issues you know please find a way for that i i think that would be very helpful for the city in terms of highlighting the underlying issues and of having people understand that there is a fair basis for coming to whatever decision you make if the decision is made without discussion people just react to the final thing and say this is no good and if they can see the process understand it understand why certain things need to be and why certain things are fair and other things aren't there if you could do that this year I know time is short right now you know we've been again last year I think I was here on the end of June and I said please let's start this process in July so we can get the philosophical the structural the political issues understood before we just deal with what the rates are and And, you know, it's too late for that this year, I'm going to state it now, you know, July 1st, can we start looking at this issue for real next year? Hopefully we'll have a real good model to work with that the consultant prepares. One key element underlying a lot of this here is what I believe is a misconception of what the state law requires around block rates for water and sewer. As he quoted, I'm going to quote it again, there shall be a base rate for all users provided that said base rate shall be, quote, increased at an increasing block rate to fairly reflect the resource demand in consumption of high volume uses of water. I want to point out first, high volume is not defined in that term. I don't believe there's any user of Melrose that's a high volume user of water. I'm familiar with chemical plants that use millions and millions and millions of gallons of water a day. They would be a high-volume user of water. Atlantic gelatin over in Woburn has been a high-volume user of water. There are plants all over that are high-volume. So that's number one. Nobody defined high-volume. You don't have to define it as 2,000 cubic feet per quarter. That's an arbitrary thing that's come up from here out of nowhere. The second element is the idea that there needs to be a, quote, conservation rate. We need to somehow force people to conserve well the truth is is that there is no additional cost to melrose no no in a short time frame it's hard to give all the qualifications behind a statement but melrose does not suffer at all when people use more and more water because number one what the mwra charges for us is essentially a flat rate based on last year's consumption. And it's a flat rate. The MWRA does not at all care to give us a conservation rate of water. Why would we choose arbitrarily to create one of our own and pass it on to people to say that we need to do something? The reality is that we are not in Nevada or California or Arizona. We don't have water supply issues that are structural here. We don't have a well that will run dry if people use too much water. The Quabbin Reservoir has been closed to capacity for a number of years now and if it wasn't the summer years we saw last summer we had huge increase in in summer use a water ban in the summer would easily solve any interim problem

▶ 15:32 Speaker 5: that might happen with a carbon reservoir our distribution system does not suffer because people use too much water even at the peak times a day we aren't reducing we don't have low pressure because too much water is being drawn through and the pipes can't handle it there is not a basis an a rational basis for what we call a conservation rate here the american waterworks association is looking nationally at these issues and so when people go and refer to their manuals and the manuals that chris woodcock has even right written he's one of the consultants with raftellis you know it's looking at a larger issue it's not looking at melrose and if the mwra doesn't care about it i think it's disingenuous for us to act like oh we're somehow more pure because we have have a conservation rate in our city here. The other issue in that statute, it says if you had an increasing block rate, it would use the word fairly, as Mr. Tamor pointed out, but it would fairly reflect the resource demand and consumption. Define that for me. I know you won't right now, and I know it's hard to do, but what does that really mean? The resource demand, it doesn't harm it doesn't hurt us it doesn't put any stress on our system for people to use a lot of water for their irrigation system it's not a resource demand that's harming us in any way i do want to challenge this issue that the statute requires an increasing block rate i would be glad to have a conversation or if need be a formal debate about that issue i'd be happy to do that because i think that if we tease out the underlying issues we're going to find that a flat rate pomelos works fairly well having said that let me go one step further we have a lot of fixed costs for our water system the only way we that we drive revenue toward those fixed costs right now let me restate that the only fixed charge we make on our customers right now that we get applied toward fixed costs are the 15 base water meter per quarter and the five dollar base sewer meter fee per quarter so we basically charge each customer 80 a year for fixed costs the consultant will have a spreadsheet that if you asked him could probably show what exactly is the fixed cost of our water system and how much of that is attributable to an individual user in melrose and i would guarantee that that number would shock you the marginal cost of the water if and let me say another in other terms if nobody in melrose used any water and it's a little bit complicated as a as an example because our rates are based on last year's consumption what we get billed by mwra but let's ignore all water costs from mwra they charge us nothing nobody uses any water we still have to pay to keep our infrastructure up we have to keep the pipes going we have to prepare the leaks we have to have the staff on hand we have to send out the bills we have all these different costs of service that are unrelated to use of water of the demand of the people in the system we want fire protection in our city if nobody uses water those are huge costs and right now those costs are being born not only by people who have high use of water but even more so because you're charging them a higher rate if you charge a flat rate across the city for water and sewer and you don't make the fixed charges any higher somebody who uses 400 cubic feet per quarter they're not paying anywhere near what their you know percent share of the system is in terms of by the number of meters even or by the number of people they are way under funding the fixed cost of the system the political reality is is that you don't believe that you can charge the actual true fixed cost of the system in a fixed per meter charge i mean i i'm going to make up a number here and please don't go with it but let's say that it was 300 a year for the fixed costs would you charge people 300 a year for fixed costs and then charge what the marginal operating costs are separately because our marginal operating costs are really not a whole lot more than what the mwra charges us and it might be about 2.45 right now per 100 cubic feet for water there are a lot of issues within this

▶ 20:11 Speaker 5: rate setting process that even in the water and sewer committee aren't coming becoming present there there are a lot of unstated premises even in you know mr woodcock who's one of the consultants again he's he i read a textbook article that he wrote a textbook chapter that he wrote and he talks about you know they can do a great analysis they can look very quantitatively at what every cost of service is in whether it's a fixed cost or an operating cost what class of user you can apply this cost to versus that cost to they can do a great analysis but in the end their analysis is premised on what the priorities are that they're given if they're given a priority saying oh we need to conserve water somehow they're going to come up with a the conservation rate for you. If they're given a priority that, oh, we can't charge the mom and pop store on Main Street that's using 400 cubic feet of water a quarter, you know, any more than we're charging a residential person using 400 cubic feet a quarter, they're going to come up with something that shows that. I would argue, as another premise that I'd like to put out here, that somebody who's making money off of water is not a sustenance use for water.

▶ 21:28 Speaker 5: The average thrown out today is 65 gallons per person per day of what people consider like an average sustenance use of water. And that would be people in a residence living at home that they need 65 gallons per day on average. Some people have issues that require them more. Some people can get away with far less, right? but a commercial use of water with somebody's making money in that water I don't believe that we have an obligation to provide that water at the same cost to them as we do to people for their basic living needs another premise that I want to get out there or you know the premise that underlies everything now is that oh we can't charge commercial more than residential well of course you can

▶ 22:14 Speaker 5: just comes to mind I want to get out there there's some talk about that we need a new ordinance to enter premises to change water meters and I don't believe we do you know this I in all my research I've come across you know Mass General Law chapter 165 section 11 D which basically gives any person who is a worker for a water utility with a identification badge the right to enter a premises to change a meter among other things so I don't think you need to construct a whole ordinance to do that in the state law basically already are already controls that um this issue about condominiums and apartment buildings a flat

▶ 23:09 Speaker 5: rate would make it all go away there is an issue that came up today at the meeting that i heard that you know when i talk about fixed costs of the system we basically you we apply fixed charges to people through this base meter rate and right now the residences from five days three quarters and one inch meters all pay the 15 water base rate as a fixed cost and the five dollar sewer base rate is a fixed cost there's a proposal to make you know anybody above that have to pay a lot higher and a significantly higher ultimately fixed rate which i would ask again the question what does it cost the city more because somebody has a larger meter we're billing them for all the water that's going through it and if you do if and why i bring this up and this is one of the issues that you know was apparent to me today was that these condo if you have a two inch meter why should the condo have to pay this huge amount for a two inch meter when they're already paying for all the water they're using um now obviously the two inch meter could be spread amongst the people but you know at some point the best rate is the simplest rate that allocates the costs in the best way that we can allocate them to make them proportionate to what our costs are and i say fixed as separate from operating in that way and i understand that there's a political reality that you're not going to be able to assess all the fixed costs to let's say this you know 10 000 users in melrose you're not going to take the fixed costs and divide them amongst 10 000 users i know politically you're not going to do that but moving toward that target is a fairer way to go than than just saying oh we can't charge people more money I'd

▶ 25:05 Speaker 5: like to just um again I guess I'll close by saying I have faith that these

▶ 25:14 Speaker 5: consultants are qualified what I what I'm concerned by though is that they They come here into this rate setting process with some preconceived ideas that aren't based on quantitative analysis or qualitative analysis of the rate structure itself, but based on what they think Melrose will accept or what Melrose can handle.

▶ 25:43 Speaker 5: And I would argue that it would be important for you to ask them to give you what would be a rate structure that would absolutely apportion all costs of service to the people who benefit from that service, number one, and amongst the different classes of users, and I would say commercial and residential, I don't think we have a high-volume user in Melrose, including the Melrose-Whitefield Hospital.

▶ 26:08 Speaker 1: Thank you. Thank you, sir.

▶ 26:11 Peter D. Mortimer: Motion to close public participation, Mr. Kressel.