Guest opinion: Sewer overcharge issue must be carefully vetted
There are three misconceptions gaining popular currency related to the sewer refunds. 1) I do not wish to issue refunds to those overcharged, 2) Refunds are due all utility ratepayers from March 1, 2005 to present, and 3) There was a billing error that caused the present controversy. Let me address these misconceptions.
If it is determined that Resolution 03-05, which purported to remove the 10,000 gallon/month cap on sewer charges, is defective for any reason whatsoever, then appropriate refunds should be made. This decision is entirely dependent on the validity of the Resolution. Period. If customer X was overcharged, customer X should be refunded that amount. It is the right thing to do.
The problem is that if a refund is due and not made, the city may be subject to legal action from those denied the refund. If a refund is made and it was not proper to do so, the city may be subject to suit from those whose rates were increased to pay for the refund.
The better course of action is to first determine if a refund is due. We do not have sufficient information at this time to guide us with that decision. Hence, I am advising caution.
As to who is eligible, only residential rate payers billed in excess of 10,000 gallons in any month since March 1, 2005 may receive a refund on their sewer charges. Refunds may be offset against any credits previously issued and any monies due the city for unpaid utility charges. This refund does not affect irrigation or potable water charges.
There was no billing error involved in this issue. Should it be determined a refund is due, then the cause is a legal error, and here is where it becomes complex.
Sewer charges are based upon water usage. Until March 2005, charges for sewer usage were capped at 10,000 gallons of water consumption per month. Section 19-100 of the Code of Ordinances states in part “The uniform schedule of charges (shall be) based on metered water consumption, not to exceed 10,000 gallons per month”
In April 2004, Section 19-100 was modified by Ordinance 45-04, adding the following underlined language: “City Council shall, after a duly noticed public hearing, establish and adopt by resolution a uniform schedule of charges. The uniform schedule of charges for residential dwellings shallnot exceed 10,000 gallons per month The City Council may modify the wastewater system rate schedule from time to time by resolution.”
It seems clear that in April 2004, the schedule of charges included the 10,000 gallon cap and changes could be made by resolution.
This is what was done on Feb. 14, 2005 with passage of Resolution 03-05. The billing department notified the rate payers that effective March 1, 2005, the new sewer rate had no cap.
Recently the argument has been advanced that A) Council lacked the requisite intent to remove the cap when Resolution 03-05 was passed, B) the wording in the Resolution was deficient to remove the cap, and C) a resolution cannot amend an ordinance, hence a refund is due. Let us look at these points.
There were several Council meetings where discussion was held concerning the removal of the sewer cap.
On Nov. 12, 2004, the Burton & Associates sufficiency analysis offered three alternatives. Alternative 1 was a 66.3 percent increase. Alternatives 2 and 3 both recommended less of an increase by eliminating the current cap on wastewater billing.
At a Committee of the Whole meeting on Nov. 8, 2004, Steven McDonald of Burton & Associates reviewed the analysis and during discussion specifically stated “We did make some changes like eliminating the sewer cap.” Finance Director Mark Mason also confirmed to Council during questioning about Alternative 2 that the sewer cap was being removed if this scenario was selected.
On Nov. 18, a copy of Burton’s final report was distributed to Council along with a copy of staff’s presentation for the Committee of the Whole meeting on Nov. 22.
At the Nov. 22 meeting, Burton also made another presentation. The Finance Director recommended Scenario #1 (Alternative 2).
On Nov. 29, Resolution 03-05 eliminating the cap was introduced at Council as an Administrative Discussion Item. Burton made another presentation on the different options and scenarios.
At the regular Council meeting on Feb. 7, 2005, Resolution 03-05 was passed with seven affirmative votes.
With all the prior discussion, it is clear that all in attendance knew the cap was to be removed.
So was the wording in the Resolution deficient to remove the cap? Resolution 15-04 said in part, “The monthly service charge for wastewater shall be based on the potable water usage for the site where wastewater is rendered.” Resolution 03-05 states, “Beginning March 1, 2005, the following rates shall be charged monthly for all wastewater based on the potable water usage for the site where wastewater service is rendered.”
Note the addition of the word all in Resolution 03-05, which did not appear in Resolution 15-04. What other meaning could one ascribe to all other than it means the whole amount. This wording was prepared by the City Attorney at the request of the Finance Department. If the addition of the word all is insufficient now to remove the cap, it must have been so in 2005 when it was drafted and approved.
As to the proposition that an ordinance cannot be amended by a resolution, Section 19-100 states in two places that City Council may from time to time modify the rate schedule by resolution. The legal questions surrounding this are: 1) Can an ordinance itself modify the rule that an ordinance cannot be changed by a resolution, and 2) Does the placement of the 10,000 gallon cap in the body of the ordinance rather than a rate schedule make it immune from modification by a resolution or is the cap so integral a part of the wastewater system rate schedule to make it susceptible to change by resolution? Nice legal questions, no? The City Attorney also approved the Resolution as enacted. Again, if it was sufficient in 2005 why is it infirm in 2010? Why during the entire process – the drafting, the numerous Council meetings and public hearings on Resolution 03-05 – was such a course of action countenanced if it was not thought to be correct?
Our City Council is looking at ways to reduce the monthly utility bill. Paying down the debt and deferring budgeted expenses are two ways. Challenging the assumptions used to project costs is another.
The rate schedule passed on May 18, 2009 forecasts a 92 percent increase and was based on the assumption that the 10,000 gallon cap was removed. Estimates are that the City may need as much as $4.1 million for potential sewer refunds. If Resolution 03-05 did not do that and we refund $4.1 million, it is very likely that the 92 percent increase will not be sufficient. This places the city in the unenviable position of giving refunds with one hand then with the other being forced to raise rates to keep the Utility Fund solvent and meet bond covenants.
It is because of these questions that Council must exercise caution before taking action on this issue.
– Cape Coral Councilmember Bill Deile represents District 3 on the city elected board.