Politics Report: Big Water Week

Tuesday, the San Diego City Council will once again take up the multi-year increase to water rates after they punted on it last month.

It doesn’t appear anything has changed in the meantime. There’s no big compromise. There’s no lower rate proposal. Whatever political physics led them to not approve a rate increase last month have not changed.

I heard the mayor is confident they have the five votes needed to pass the rate increases. But I’m having trouble counting them.

I called Councilmember Kent Lee, who surprised some of us last time when he said he was not going to pass it and blamed the mayor for the erosion of trust he had overseen. He basically said the mayor had lost the room and he couldn’t support the rate increase.

And nothing has really changed, he said.

“I’m still concerned about a cost of living increase on residents and, to the best of my knowledge, there have been no substantive changes since the first hearing,” he said.

If that’s the case, then where are the votes? Where Lee was kind of unsure, Councilmember Stephen Whitburn was surprisingly resolute: Under no circumstances was he going to raise the water rates as much as the staff was proposing.

“The rates will not go up another 62 percent. This is a non-starter. This is dead on arrival,” Whitburn said last month. “Let’s go back and get this number down. I want to see the absolute lowest possible number that protects our workers and our residents.”  

Reminder what’s at stake: I actually don’t know. I don’t know what happens if they don’t pass these rate increases. Maybe I’m being melodramatic but the costs are all sunk. The rates at the San Diego County Water Authority are going up because of all the investments and commitments they’ve made. The city’s budget anticipates and depends on the rate increase. They could decide to do a shorter time period, rather than four years of rate increases and vote again and again over the next few years, maybe hoping something changes in the meantime (something good that is) but I don’t know.

If they aren’t willing to pay these bills, it feels like we enter insolvency discussions. And maybe that’s good? Or at least that should be the theory if they trigger it.

The war of Voice of San Diego Op-Eds: Last time, right before the item came to Council, some City Hall folks were upset to read that one of their representatives on the County Water Authority Board of Directors, Jim Madaffer, had written an op-ed for us.

He was calling on the city to “pause” planning on Phase 2 of the Pure Water project. He pointed out that the city’s own studies show Pure Water, the wastewater recycling project, is going to produce very expensive water in a very expensive water market already. The city has to do Phase 1 but maybe before doubling down it should put the brakes on.

After all, he wrote, the Water Authority has so much water right now, it is trying to sell it to other regions.

“Against this backdrop, launching Pure Water Phase 2 without a clear affordability plan risks overburdening families and businesses,” Madaffer wrote.

This was kind of a shock: This was a city representative to the Water Authority arguing the city should halt its cornerstone plan on water reliability.

And it got a response this week: Marco Gonzalez, the environmental attorney who helped lead the coalition that put Pure Water in motion many years ago, wrote that Madaffer’s piece was “shocking and deeply disappointing.”

Gonzalez accused Madaffer of undermining the city’s negotiating position in the regional discussions.

“The city of San Diego’s commitment to water independence is more than a policy choice; it is a moral and environmental imperative. With climate change intensifying drought cycles and threatening imported water supplies, local reuse and recycling are not luxuries — they are survival strategies.”

Related: “A grim reality of high water costs might persist for residents and businesses in much of the region if the (San Diego County Water Authority) doesn’t find new buyers for its water, according to a draft of the water authority’s long-term financial plan,” the U-T reported Friday.

Opponent Own Goal on Vacation Rentals

This week, San Diego City Councilmember Sean Elo-Rivera got his colleagues to advance his proposal to put a tax on the June (!) ballot that could potentially raise a $5,000-per-bedroom annual tax on second homes and vacation rentals in San Diego.

The Chamber of Commerce, Wednesday, sent out a mass text message applauding Councilmember Raul Campillo for opposing it. “Campillo voted against the City Council’s latest plan which would hurt San Diego families and small businesses. Thank you Councilmember Campillo,” the ad said.

But Campillo didn’t just oppose it, he lambasted it in a long speech. He offered an economics dissertation of how counterproductive it would be and how the projections Elo-Rivera’s staff made were off base.  

But he may have given proponents their best talking point yet.

Here’s how it went: Campillo said that that raising taxes so much on vacation rentals would cause their prices to rise and it would cause hotel room prices to rise. Thus, fewer guests would come to San Diego. Then he said this:

“This negative supply shock will be a double gut punch to short-term vacation rental hosts and it will lead to herd behavior with a major sell off of short-term vacation rental homes and a resulting drop in the tax revenue collected by the city,” he said.

“A major sell off of short-term vacation rental homes” … Don’t get me too hot, Councilmember. I don’t think Elo-Rivera or any proponent could hope for a better immediate impact than that.

I don’t know exactly what a “major sell off” is but let’s say there are 10,000 second homes and vacation rentals affected by the tax. Let’s say owners sell off even just one-tenth of them after this tax.

I imagine that the city suddenly pushing 1,000 vacation rentals in desirable coastal neighborhoods to the market allowing wealthy families to buy them would be received as huge, positive news by the “neighborhoods are for neighbors” crowd and most everyone else.

As for the tax: Yes, the city would lose the hotel-room tax it collects on the vacation rentals but many of them are likely at a very low property tax valuation and selling them off would make for a major increase in property taxes. The city doesn’t get the bulk of that but all in all, hardly a good argument against doing it.

If you have any ideas or feedback for the Politics Report, send them to scott.lewis@voiceofsandiego.org.

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