Wastewater Problems.

•    Sewer Overflows. The city is reducing its sewage overflows, but still more work is needed to comply with an EPA ordered reduction.
-    365 spills, including 33 into public waters, in 2000
-    77 spills, including 8 into pubic waters, in 2007

•    Sewer Rate Scandal. The city overcharged residential users for sewer services while undercharging other customers until rates were revised in Oct. 2004.
-    $40 million settlement approved in 2007; the city must refund this amount to affected residential customers over the next four years 

Infrastructure Needs. $1.1 billion over four years from 2008 to 2011

•    $485.2 million for water; e.g., $154 million for main replacement, $30 million for long range water supply projects

•    $648 million for sewer; e.g., $277 million for pipelines, $197 million for trunk sewers

Pension Scandal. The city underfunded its pension program for a decade. It then hid $1.2 billion in unfunded pension liabilities.

•    Municipal Bond Rating Suspended. Because the city failed to properly disclose to investors the scope of its pension fund deficit and retiree health care obligations, Standard & Poor’s suspended San Diego’s rating in 2004. 
-    Unable to access the municipal bond market, the city had to resort to more expensive private financing to cover infrastructure projects.
-    The suspension ended in May 2008. Now the city is pushing to improve its rating

•    Water and Sewer Rate Hikes. The city had to raise water and sewer rates to pay for critical upgrades to its water systems and cover the higher price of private financing.
-    From 2002 to 2006, a typical water bill rose 24 percent and sewer bill 30 percent.
-    San Diegans pay more for water than Los Angeles, San Francisco and Sacramento
-    Businesses are leaving because of the hikes. E.g., a tenfold increase in industrial sewer rates in 2004 prompted a kelp processing business, Kelco, to move its plant to Scotland

Privatization Initiative. During his 2007 state of the city address, Mayor Sanders put out his proposal that could give the private sector control of the city’s water and sewer systems.

•    Prop. C. As a solution to the pension problem, the mayor supported this proposition that allows the city to privatize public operations, transfer workers to the private sector and effectively avoid having to pay full pensions to many workers who would come up for retirement in the coming years. Voters approved Prop C in 2006 because it was masked in terms of efficiency and “managed competition” 

•    Managed Competition. Essentially means privatization. After a review committee approves a public sector job for privatization, the city takes bids – both public and private parties are allowed to bid – on the operations.

•    Water and Sewer Privatization. Currently both the water and sewer departments are undergoing a re-engineering process. After this occurs, a review board will determine if the city can privatize these functions. If approved, they will go up for bid and could be privatized. If they are, residents should expect their water and sewer bills to skyrocket.