Orange, California to evaluate water and sewer utilities amid budget shortfall

Orange, California to evaluate water and sewer utilities amid budget shortfallThe city council has directed staff to hire a utility consultant to assess the value of its water and wastewater systems, though some members remain staunchly opposed to a potential sale.

The city manager received direction to bring in a utility consultant to evaluate the water and sewer assets as part of a broader assessment of city properties.

The valuation is being considered alongside other revenue measures, such as a proposed 1-cent sales tax increase, to address the city's structural general fund deficit.

A potential sale would require a lengthy process including a public vote, with staff noting that the City of Bellflower's recent water utility sale took six years to finalize.

Councilmember Ana Gutierrez and public commenters strongly opposed selling the utilities, citing concerns over massive rate increases.

The discussion highlighted the city's aging infrastructure, with council members noting recent emergency water main repairs costing upwards of $500,000.

Facing ongoing structural general fund deficits and mounting infrastructure needs, the Orange City Council has directed staff to evaluate the city's water and sewer utilities. During a May 12 meeting discussing potential revenue measures for the November 2026 ballot, the council agreed to seek a valuation of its utility assets, though a potential privatization faces significant hurdles and early opposition. City Manager Jarad Hildenbrand confirmed he will bring in a utility consultant to assess the water department and sewer utility, separate from an appraisal of the city's real property. The valuation was proposed by Councilmember Kathy Tavoularis, who argued the city needs to understand its total worth as it grapples with an estimated $400 million in overall long-term debt and liabilities. Tavoularis noted that recent emergency water main breaks—including a sinkhole repair that cost roughly $500,000 and another recent $163,000 repair—highlight the pressing need for capital investment in the city's aging pipes. City staff outlined the lengthy process required to sell a municipal water or sewer system under California Public Utilities Code Section 10061. The process includes labor notifications, requests for proposals, public hearings, regulatory approvals from the Local Agency Formation Commission or the California Public Utilities Commission, and ultimately voter approval. Staff pointed to the City of Bellflower as an example, noting that voters approved the sale of its water utility in 2016, but the transfer was not finalized until 2022. While the valuation will move forward, the prospect of a sale was met with immediate resistance. Councilmember Ana Gutierrez stated she is "not interested in selling the city's water or sewer utility." During public comment, a resident called the idea a "hard no," warning that a sale would lead to doubled or quadrupled rates for residents without delivering the "mythical big check" the city might hope for. The valuation is part of a broader effort to address the city's financial challenges. During the meeting, the council advanced other revenue measures for potential inclusion on the November ballot, including a 1-cent sales tax increase. Additionally, the council approved nearly $2 million in water-related items on its consent calendar, including a $1.86 million budget transfer for a transmission water main project and $128,435 for emergency water main repairs.