City Hall Planning to Raid Your DWP Water System

LA WATCHDOG--Despite record tax revenues, Mayor Eric Garcetti and his budget team are planning to increase the Street Damage Restoration Fee by over eight times, from a budgeted amount of $8.3 million this year to $70 million for the fiscal year beginning July 1, 2018. 

  These funds will help finance the Bureau of Street Services, the reconstruction of some of our failed streets, and Vision Zero. 

This fee is designed to reimburse the City for the full cost of the damage done to our streets by utilities, including City agencies, when they fail to repair the streets they have cut and excavated. This would include the Department of Water and Power, the Bureau of Sanitation that is responsible for the sewers and storm drains, Southern California Gas, and any other utilities that tears up our streets. 

The main target of this fee is the Water System of our Department of Water and Power in an amount that is expected to be in the range of $50 million.  But this means that the Ratepayers will be paying for the double as DWP has a long standing policy to repair excavated streets.  And many say that DWP and its contractors do a much better job of repairing the streets than the Bureau of Street Services. 

The City’s budget whizzes justify this $50 million hit to our wallets by saying it is a drop in the bucket for the Water System that is expecting revenues of $1.4 billion.  And while $50 million represents a 3.6% increase in expenditures, this expense will be capitalized and amortized over 30 years.  This results in an annual rate increase of only $3 million, a miniscule increase in our water bill of only 0.25%. 

However, $50 million is a hefty 25% increase in the important infrastructure repair budget for distribution mains and truck lines of almost $200 million.  And after a few years, $50 million a year represents real money and a sizeable burden for Ratepayers.  

The imposition of the Street Damage Repair Fee is just another example of how Garcetti, Council President Herb Wesson, and Budget and Finance Chairman Paul Krekorian use the Ratepayers as an ATM.   We are already on the hook for the Power System Transfer Fee/Tax of $236 million as well as the IBEW Labor Premium, the Joint Training Safety and Training Institutes, numerous pet projects, an ever growing DWP bureaucracy, and billions in unfunded pension and other retirement liabilities. 

The City Administrative Officer has been asked to report back to the Budget and Finance Committee on “the uncertain revenues of the Street Damage Restoration Fee full cost recovery in light of the Gas Company Franchise Agreement and the potential impact on the Department of Water and Power rate case.”  This budget impact memo will be interesting reading and may require hip boots, especially since the Mayor’s office is putting pressure on DWP management not to oppose this raid on the Water System and the Ratepayers. 

The Street Damage Restoration Fee may be in the best interests of the City, but that does not mean DWP and the Ratepayers have to pay twice for the repair our streets.  

Back off. The Ratepayers are not the City’s ATM. 


(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee and is the Budget and DWP representative for the Greater Wilshire Neighborhood Council.  He is a Neighborhood Council Budget Advocate.  He can be reached at:  [email protected].)