Electric Customers Could Get Rebates As Council Eyes Economic Relief Options

In a move aimed at injecting desperately needed money into Pasadena’s local economy during the COVID-19 crisis, the City Council is expected to consider what City Manager Steve Mermell called “a very bold concept” that would rebate some $11.4 million to city electrical customers in the form of rebates taken from the city’s Underground Surtax Fund.

The plan is expected to be formally taken up at a subsequent meeting, perhaps as early as next week.

The Underground Surtax Fund was built on a 4 percent fee that customers pay monthly toward the construction and extension of underground electrical lines. Under the plan, fees would be waived for six months and customers would receive an additional two-year rebate of money they’ve already paid into the fund.

The city has about 66,500 electrical payers who would be eligible for the one-time rebates – which would range from about $103 for a typical residential user to about $3,200 for a medium-size restaurant to about $29,000 for heavy-use customers such as hotels.

The plan – proposed by city staff – was among the highlights to emerge from a 5 ½-hour marathon special session Monday that was conducted with all the members, as well as Mayor Terry Tornek, participating remotely in deference to social-distancing protocols during the coronavirus pandemic.

Only a handful of other city officials, including Mermell, City Attorney Michele Bagneris, City Clerk Mark Jomsky and Director of Human Services Brenda Harvey-Williams, gathered in the Council Chambers as members conducted their business remotely.

The council also heard an update from the city’s health officer, Dr. Ying-Ying Goh, on the spread of the virus; got a breakdown from Harvey-Williams on how a previous $150,000 allocation for meals is being spent; and heard some specific numbers from Mermell on how the pandemic is impacting the local economy.

(See separate story elsewhere on Pasadena Now for details on those items.)

The rebate plan was the biggest new development of the day.

“The current fund balance is well in excess of what our identified project needs are,’’ Mermell told the council as he introduced the plan.

“So, if you will, we have a lot of money in the fund for projects that are already funded and future projects, and we’ve identified that as essentially a surplus that we think is appropriate to return back to those that paid into it in the first place.

“So, I’m proposing that we suspend collection of the underground surtax for a period of six months during this difficult economic period and that we provide a two-year rebate to all electric customers.’’

Essentially, the rebates would be made up of a 4 percent reduction of electrical bills for six months, plus a rebate of two years’ worth of funds fees already paid. Checks would land in Pasadena mailboxes in one lump sum and, according to Mermell, could start going out within two weeks, depending on how swiftly the council moves on the matter.

Since the plan was not an action item on Monday’s agenda, it would have to be taken up at a subsequent meeting — and that is expected.

“I think there’s consensus that we’d like to see a specific proposal,’’ Tornek said.

“I think this is a great idea,’’ said Council Member Gene Masuda. “Our businesses and our residents really need some help right now.”

Added Council Member Margaret McAustin: “We over-collect in this fund every year. I think this is a very creative way to put this money to use.’’

As detailed by Mermell, the cash balance in the Underground Surtax Fund, as of last June 30, was more than $52 million. Subtracting some $6.3 million in appropriations for fiscal year 2020 – and adding in an estimated $4.2 million in fiscal 2020 revenues – the fund now sits at just under $50 million.

The $11.4 million that would be sent back to city electrical users would leave the fund with about $38.5 million by this coming June, for future projects. The fund would gradually diminish to about $7.3 million by fiscal year 2025, according to staff estimates.

“The city’s options are limited in terms of providing relief to people,’’ Mermell said. “Our general fund revenues are under some pressure, and our revenues support the provision of vital services (such as police and the fire department). We’re (also) threatened with increased debt service.’’

Mermell also said the proposed local relief would somewhat offset money that Pasadena figures not to receive from President Trump’s $2 trillion federal stimulus package, which is aimed largely at cities with populations over 250,000 or more.

“From a local government point of view, it’s really a mixed bag, or kind of light in the bag, in you will,” Mermell said of the federal stimulus.

Mermell said that, while relief generally comes from the state and federal governments in times of crisis, Pasadena is in a “unique” position.

“It owes to the fact we have our own utility and we have our Underground Fund,’’ he said.