San José Rejects Tributary Agencies' Claims Regarding Regional Wastewater Facility

Feb. 29, 2016
Agencies alleged the city was not properly allocating costs

The city of San José formally rejected claims made by wastewater tributary agencies regarding the planning, implementation and costs for the long-term Capital Improvement Program (CIP) for the San José-Santa Clara Regional Wastewater Facility that serves 1.4 million people in Silicon Valley and protects the waters and environment of southern San Francisco Bay.

The tributary agencies represent about 20% of the population served by the facility located at the northernmost end of San José. The agencies recently filed claim against San José and Santa Clara, owners of the facility, that the city of San José says is inaccurate and misconstrues events.

Under their master agreements with San José and Santa Clara, and as required by state law, the tributary agencies must pay their proportionate share of operating and capital improvement costs, which are clearly defined. The tributaries, however, allege that San José is not allocating costs correctly.

San José rejects this allegation, noting that cost allocations are done in accordance with the master agreements and consistent with state guidelines.  

The tributary agencies claim that they do not have adequate information about the CIP, but “the tributary agencies’ elected representatives and their staffs have been directly engaged in improvement program discussions for the last eight years, and with the financing discussions for the last four years,” said Ashwini Kantak, assistant director for the San José Environmental Services Department that is responsible for the Regional Wastewater Facility.

The CIP is a 10-year, $1.4 billion program that is already rebuilding the 60-year-old wastewater facility.

The tributary agencies include the city of Milpitas, West Valley Sanitation District, Cupertino Sanitary District, County Sanitation District No. 2-3 of Santa Clara County and Burbank Sanitation District.

In their claim, the tributary agencies allege that their ratepayers are subsidizing San José and Santa Clara ratepayers for the cost of the project.

“Actually, the agreed-upon cost formula and independent analyses clearly show that San José and Santa Clara will pay for almost 80% of the costs of the capital improvement program, while we are currently only using about 56% of that capacity,” said Kantak.

“If the tributary agencies did not pay their share of the capacity, San José and Santa Clara ratepayers would effectively bear an even larger share of the costs to rehabilitate the facility. On behalf of the residents of our community, we know it is not right that low-income ratepayers in East San José subsidize high-income ratepayers in Cupertino and Saratoga.”

In addition, San José is in the process of securing a low-interest loan from the state that would benefit ratepayers from all affected cities and special districts. The tributary agencies were asked to execute an amendment to the Master Agreement that would provide assurance of repayment commitment; however, they have opted not to do so. 

“A simple amendment to the Master Agreement would allow these agencies, which need low-cost financing to help with rates, to participate in the state program now, without waiting for the completion of other unrelated negotiations,” said Kantak.

San José and Santa Clara have been planning for the rebuilding of the 60-year-old wastewater facility in order that it can continue to serve and protect the entire region without risk of failure. The Plant Master Plan process started in 2007, and the long-term CIP will achieve the plan’s goals to benefit South Bay residents and businesses by protecting public health, the environment and the Silicon Valley economy.

Source: City of San José

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