From: Rhea Varley
To: Beth Redfern
Subject: FW: Old Business a. Conduct a Public Hearing and Consider Resolution No. 256-52 Adopting Water and Wastewater Rate Adjustments for FY 2025-26 through 2029-30 Date: Wednesday, April 15, 2026 11:00:30 AM
From: Gregory Daggett < >
Sent: Wednesday, April 15, 2026 11:00 AM
To: Meredith Matthews <[email protected]>; Stacy Atkins-Salazar <[email protected]>; Alex Stillman <[email protected]>; Kimberley White <[email protected]>; Sarah Schaefer <[email protected]>; Tabatha Miller <[email protected]>; David Loya <[email protected]>; Rhea Varley <[email protected]>; Merritt Perry <[email protected]>; Engineering Dept <[email protected]>; Emily Sinkhorn <[email protected]>; Jennifer Dart <[email protected]>; Delo Freitas <[email protected]> Subject: Old Business a. Conduct a Public Hearing and Consider Resolution No. 256-52 Adopting Water and Wastewater Rate Adjustments for FY 2025-26 through 2029-30 CAUTION: This email originated from outside of the organization. Do not click links or open attachments unless you recognize the sender and know the content is safe.
Honorable Mayor and Council members,
I am writing regarding Resolution No. 256‑52, which proposes significant water and wastewater rate increases for FY 2025‑26 through FY 2029‑30. Given the scale of these increases, the public deserves a complete, transparent accounting of the City’s financial decisions, capital project planning, and cost‑of‑service allocations—especially as they relate to large institutional users and vulnerable ratepayers.
1. Wastewater Capital Improvement Program (CIP):
Missing Projects and Missing Costs
City documents state that $51.4 million is needed for “critical wastewater CIP projects” over the next five years. However, the public materials list only a subset of these projects.
Questions for the City
What specific projects make up the $51.4 million total? Please provide a complete list, including:
Project name
Scope and justification
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Estimated cost
Funding source (rate revenue, grants, loans, SRF, etc.) Expected year of expenditure
Which wastewater projects were not included in the public packet? The public cannot evaluate the necessity of rate increases without knowing the full CIP.
How much of the $51.4 million is for regulatory compliance vs. discretionary upgrades?
How much of the CIP cost is attributable to the City’s long‑term plan for the Arcata Marsh levee, culvert, and wastewater treatment plant expansion? These projects appear to be linked, but the public documents do not clearly explain the relationship.
2. Use of Water and Wastewater Funds for City
Pensions
The City has acknowledged that millions of dollars were transferred out of the Water and Wastewater enterprise funds to cover City pension obligations. These funds were collected from ratepayers for infrastructure, operations, and maintenance—not for general government liabilities.
Questions for the City
How much money was transferred from the Water Fund and Wastewater Fund to pay for pension costs over the last 10 years? Please provide a year‑by‑year breakdown.
Why were enterprise funds used for pension obligations instead of General Fund resources?
What is the City’s plan to restore these diverted funds? Ratepayers should not be asked to pay higher rates to backfill past financial decisions.
How did these transfers contribute to the Water Fund’s insolvency and the need for a $3.5 million loan from the Wastewater Fund?
The public deserves a clear explanation of how these decisions were made, who approved them, and how they will be corrected.
3. Loan From Wastewater Fund to Water Fund
The City states that the Water Fund required a $3.5 million loan from the Wastewater Fund to remain solvent.
Questions for the City
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What projects or maintenance were delayed because Wastewater Fund money was diverted to support the Water Fund?
What is the repayment schedule, interest rate, and total cost of the loan? How will this loan affect future wastewater rates?
Ratepayers should not be penalized twice—first through fund diversion, and now through rate increases.
4. Cal Poly Humboldt: Cost Allocation, Classification,
and Cost Shifting
Cal Poly Humboldt (CPH) is one of the largest water and wastewater users in the City.
Ratepayers deserve clarity on how CPH is classified and how much of the system’s cost burden they carry.
Questions for the City
How is Cal Poly Humboldt classified in the cost‑of‑service analysis? Is CPH its own customer class?
Or is it grouped with other large commercial/institutional users? If grouped, why?
What share of total system demand does CPH represent? Please provide:
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Annual water volume
Peak demand contribution
Wastewater flow and strength characteristics
· How much will CPH pay under the proposed rate structure? Ratepayers need to see:
Total annual charges
Percentage increase
Comparison to residential increases
· Who will CPH’s cost increases be shifted to? If CPH is under‑allocated costs, residential and small commercial customers will bear the difference. · 5. New CPH Housing: Hinarr Hu Moulik (964 Beds)
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0 The new student housing complex, Hinarr Hu Moulik, adds nearly 1,000 beds and represents a major new source of water and wastewater demand.
Questions for the City
What is the projected annual water use and wastewater generation from Hinarr Hu Moulik?
How much revenue will the City collect from this facility for water and wastewater services?
Has the City modeled the long‑term system impacts of CPH’s rapid expansion?
Are ratepayers subsidizing infrastructure upgrades required to serve CPH’s new
6. Ratepayer Hardship and Local Demographics
The City must consider the economic reality of Arcata and Humboldt County:
Nationally, 5.8 million low‑income older adults are eligible for Medicare cost‑assistance programs but not enrolled.
The poverty rate for Americans 65+ rose to 15% in 2024, the only age group experiencing an increase.
In Humboldt County, 42% of the population is on Medi‑Cal, indicating widespread economic vulnerability.
Questions for the City
How will the City protect low‑income seniors, disabled residents, and working families from rate shock?
Will the City create or expand a low‑income rate assistance program? Has the City conducted an affordability analysis comparing proposed rates to local median income and poverty levels?
Rate increases of this magnitude must be evaluated through an equity lens.
7. Transparency and Public Trust
Given the scale of the proposed increases and the City’s past financial decisions, the public needs:
Full disclosure of all CIP projects
A complete accounting of fund transfers
A clear explanation of cost‑of‑service allocations
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Assurance that large institutional users are paying their fair share A plan to protect vulnerable residents
Without this information, the public cannot meaningfully evaluate Resolution No. 256‑52. ·Conclusion
I urge the Council to delay adoption of Resolution No. 256‑52 until the City provides:
A complete wastewater CIP list totaling $51.4 million
A full accounting of pension‑related fund transfers
A transparent explanation of the Water Fund insolvency
Detailed cost‑of‑service data for Cal Poly Humboldt
Revenue and demand projections for Hinarr Hu Moulik
An affordability analysis addressing the needs of low‑income seniors and Medi‑Cal‑eligible residents
Arcata residents deserve clarity, accountability, and a rate structure that is fair, equitable, and grounded in transparent financial planning.
Sincerely.
· Gregory Daggett
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