Commentary: Who is Really Paying for SAWS Rate Structure?

This commentary is an expanded version of the statement Dr. Meredith McGuire made to City Council, Citizens to Be Heard session on August 12, 2015. 

City Council is now considering San Antonio Water System‘s (SAWS) proposed new rate structure. It will determine how the many rate increases (to be proposed for each of the next five years) will affect San Antonio residents and businesses. City Council and the Mayor should reject the proposed rate plan. It is extremely unjust to current residents and it will promote environmentally unsustainable growth of suburban sprawl.

There are many injustices embedded in SAWS’ rates, but the greatest of these has been happening to San Antonio residents for several decades. The proposed rate structure magnifies that injustice and makes it permanent, unless the Vista Ridge deal is cancelled. Now is the time to end that injustice – and even to consider a rate structure with some restorative justice for those who have been harmed.

The key issue is: Who benefits from the new water that SAWS is seeking? And who pays?

Last year, when that deal was in early stages of negotiation, Robert Rivard wrote an article decrying the suburban sprawl between 2002 and 2014, resulting in the city’s drop from a fairly good ranking to being one of the nation’s worst metro areas (179 of 196).

He noted that the sprawl was related to the fact that San Antonio was one of the nation’s most income-segregated cities.

Rivard linked that suburban sprawl, together with its “lawn-watering addiction” to the reason SAWS was preparing to spend so much money to acquire additional water supplies. Noting that the 50,000 acre-feet of water per year from the Vista Ridge project is approximately the amount SAWS customers use for lawn irrigation. He wondered if a map would show the same socio-economic pattern.

The map above shows the distribution of the highest 1% of residential heavy water-users. Some of these households took over one million gallons per year – nearly all for outdoor use.

The next map highlights only those neighborhoods where the average per capita rate of water usage is more than 150 GPCD (gallons per person per day) – that’s three to five times as great as what a water-conserving household would use.

So what do these maps tell us about who benefits from SAWS’ expansion of water supplies – especially Vista Ridge water which will cost four times as much as our local supplies? Those who benefit are mainly:

• Relatively wealthy suburbanites who are not willing to install drought-tolerant native plant landscaping.
• Developers who install expensive lawn-irrigation systems which are standard (sometimes even required) in new subdivisions.
• People who buy the new homes – new residents (especially those that buy houses in recent and future phases of suburban sprawl).
• New businesses that are attracted to San Antonio because our water is priced much lower than other attractive cities.

And who pays the costs?

If SAWS’ proposed rate structure is adopted, it will force all residents to pay. The proposed rate structure increases fixed fees to residential monthly bills (but not to general class bills). So no matter how much water a family saves, they will be forced to pay.

Increasing residents’ fixed charges is unjust because they are regressive. They hurt low-income families far more than high income residents. And with each successive percentage increase in those fees, households whose incomes haven’t risen much will have to pay a larger and larger percent of their monthly income.

This chart shows the share of total income in Bexar County by quintiles. The top quintile (20%) gets nearly half of all income in the county and the top 5% get 20.8% of all income – about the same proportion as the entire bottom 50%.

Unless annual income for the lower quintiles increases dramatically more than the predicted annual SAWS rate increases over the next five years, the predicted average bill for SAWS customers in 2020 would take roughly 10% of the entire household income at the median of the bottom quintile, and about 3.5% of the entire (not just the disposable) income at the median of the next quintile. That same cost would be merely 0.6% or less for the top quintile.

Less than 15 months ago, Mayor Julián Castro and City Council were proud to have approved a major rate increase in impact fees that would be charged to developers to defray part of the cost for water supply to new subdivisions and multi-unit housing developments.

What do impact fees have to do with residents’ water bills? Lots, it turns out.

In 1990, local social justice activists of Communities Organized for Public Service (COPS)/ Metro Alliance finally persuaded SAWS (after almost two decades of effort) to adopt reasonable impact fees charged to developers. Immediately, the developers lobbied state legislators to pass a bill putting a cap on the amount that could be charged. So existing ratepayers are already paying far more than their fair share of the costs to provide additional water supplies for future growth. SAWS ratepayers are still heavily subsidizing new developments.

Although SAWS honored the agreement about impact fees, its council-nominated Capital Improvements Advisory Committee (CIAC) has been completely dominated by developers and others whose businesses profit from building new subdivisions, malls, etc. So they had set the impact fees at less than half of the state cap. In 2014, SAWS staff recommended that the impact fees be raised to the full amount allowed by the state. This chart shows that under the old impact fee, developers’ fees covered only about 9% of costs for new water supply, while the full allowable impact fees would cover 19% (the state cap).

Amy Hardberger, an associate professor of law at St. Mary’s University (appointed by Mayor Castro) was the sole dissenting voice on the CIAC last year. Her trenchant analysis shows that had the SAWS board and the City Council approved the lower fee recommended by the majority of the CIAC, and existing ratepayers would have been stuck paying an additional $155.6 million more – a 3% rate hike.

So, we should be glad that the impact fees to those who profit from new development are little bit fairer, but San Antonio’s growth is still happening at the expense of the vast majority of citizens in the bottom three quintiles.

What most people don’t realize is that those increased impact fees that developers have to pay in the future will never include the cost of water from the Vista Ridge deal, because of how that deal was structured. It is extraordinarily expensive water that SAWS expects current residents to pay for, even though most do not benefit at all.

Who benefits? Developers, of course, benefit because they would no longer have to pay to secure a source of water for new subdivisions. Some businesses, especially those whose profits depend upon being able to use lots of water – even during a serious drought. New businesses that are attracted by the city’s promise of low utility rates will benefit. Why else would a company like California-based Niagara (water) Bottling want to set up business here to take hundreds of millions of gallons of our drinking water annually and turn it into high-end bottled water to sell for a huge profit margin?

Who pays? If City Council approves SAWS’ proposed rate structure, it will force the same residents, who have already covered years of impact costs that should have been paid by developers, to subsidize the profits of developers, hotels, hospitals, refineries, and bottling companies.

Let those who benefit from so-called “growth” pay all the costs for it.

Say no to SAWS rate structure, and say no to Vista Ridge.

*Featured/top image: People from local organizations, guided by the Southwest Workers Union, protest SAWS’ proposed rate structure. Photo by Edmond Ortiz.

Related Stories:

SAWS Impact Fees Represent More than Meets the Eye

Committee Approves New SAWS Rate Structure

Proposed SAWS Rate Structure to Promote Conservation

Council Approves Two Year SAWS Rate Increase