Orange City Council approves range of fee hikes

By Tina Richards

Orange residents will be paying more for city services following the city council’s June 13 approval of rate increases for sewers, trash removal and the Santiago Hills Landscape Maintenance District.

Effective Sept. 1, bimonthly sewer fees for single-family residences will be $23.58, and for condos, $15.33.  The city is also changing its sewer billing structure for residences, from one based on water usage, to a fixed rate based on average winter water use per dwelling class.  Commercial rates will continue to reflect water use.  Residential rates for trash service will increase 1.76 percent, to $13.18 per month.  Santiago Hills homeowners will see a two percent increase based on the Consumer Price Index.  

Sewer fees also include street tree maintenance, street sweeping and storm water management.  The jump in sewer rates (46 percent for single family; 57.1 percent for multi-family; and an estimated 87.7 percent for commercial) includes a $2 million per year capital account needed to replace aging pipes. To ease the rate sting, the city will remove street sweeping from ratepayer bills and pay for it out of the general fund.

The pipes are calling
A 2012 assessment of the city’s 312 miles of sewer pipelines revealed that 32 miles need to be improved or replaced. City pipes range from five to 110 years old.  Much of Old Towne is still serviced by decades-old six-inch pipes instead of the customary eight-inch pipes used today.  It costs roughly $1.8 million to replace a half a mile of piping. 

Sewer rates have not gone up since 2009, and it is currently costing more to maintain the system than the revenue generated from user fees.   Today’s rates do not include funding for capital improvements.

While recognizing that portions of the system must be replaced, and that a capital fund is needed, council members opposed the sudden leap in costs for residential and commercial customers. Mark Murphy asked if the increase could be made more palatable by introducing it more gradually, by reducing the capital investment or postponing it.

He was assured that it could, but the result would be an operating deficit of about $300,000 by 2020, and a capital improvement shortfall of $400,000 by 2019.  Reluctant to summarily approve the rate hike, the council debated the issue at great length, carefully weighing the pain of the increase against the need for it.  Mayor Tita Smith made a motion to approve it, then withdrew the motion in favor of postponing the vote until more options were identified. 

Not going away
The council was reminded that the system’s shortcomings were identified in 2012, but nothing was done about it.  “We’re an old city,” Smith conceded.  “Things stop working and need replacing.” She also admitted that, “we don’t want to be the city council that knew of a problem, did nothing, and were responsible for further deterioration.” Smith reinstated her withdrawn motion; the vote was three (Smith, Fred Whitaker, Kim Nichols) to approve, and two (Murphy, Mike Alvarez) opposed.

Just prior to the vote, it was noted that 37,572 notices were sent to residents advising them of the proposed increase. The city received just 14 written protests and a handful of phone calls.  “That tells me,” Smith said, “that residents are OK with it.”

Property owners in Santiago Hills will be paying for the sewer system at both ends.  Not only will they be contributing to the capital fund to repair and replace old pipes throughout the city, they’re still paying for the original 30-year-old sewer (and water) lines that service their community. The annual assessment appears on tax bills, and fluctuates between $19 and $29 annually. General obligation bonds for the infrastructure were issued in 1993, and will not be paid off until 2033.

One owner, one vote
Before there was Santiago Hills, there was a meadow owned by The Irvine Company.  Assessments cannot be levied on property without the approval of property owners.  In 1986, The Irvine Company, the sole property owner, “voted” to levy a 40-year assessment on the land to pay for sewer and water lines.  

The pipes were installed by the Irvine Ranch Water District (IRWD) that, at the time, believed it would be providing service to the area. The City of Orange subsequently chose to be the service provider, but it did not offer to pay for the infrastructure. IRWD remains the “payee” on that Santiago Hills assessment.

While Santiago Hills homeowners are getting hit twice for sewers, they’re also paying fees for landscape maintenance.  Thirty years ago a landscape assessment district was put in place by another solitary Irvine Company vote. In 2015, residents approved an overlay assessment to supplement the original levy.  

The new assessment added about $235 to the average single-family home tax bill.  Voters also approved annual cost-of-living increases.  The hike for this fiscal year amounts to about $4.79. 

Nothing to look at
The city council’s discussion of the landscape fee did not take place until four hours into the June 13 meeting.  By that time, all of the affected residents who had attended the meeting had left, save for one.  Morgan Nelson opposed the rate increase because she, and many of her neighbors, are unhappy with the results of the overlay assessment.  Part of the promise of the new fee was that the common areas would get refurbished with drought tolerant plants and new trees and bushes to replace those that had died.  

Nelson reported that an underground irrigation system being installed was too expensive and that spending $188,000 on “one small median and two corners at Trails End” was not a good use of community dollars. The meadow grass there “looks unmanicured and untended, and can’t be used by the community,” she said.  “I would ask that the Trails End landscaping and underground irrigation not be repeated.”  

The council approved the landscape increase and, lastly, a modest rate hike for trash removal.  When the city’s waste removal/recycling contractor CR&R came on board in 2010, Orange negotiated a price that kept it in the lower one-third of ratepayers countywide.  Since then, cost-of-living increases have raised fees about $1.53, or 1.7 percent per year.  CR&R has been granted an additional 1.7 percent increase, effective July 1.  Orange fees remain in the lower third of county cities with comparable waste removal services.