When Elk Grove residents Rich Lozano and Patricia Hagen get their monthly water bills, they have much different reactions.

Hagen, a 70-year-old retiree on a fixed income, is angry and suspicious because her bills have doubled in five years.

"I feel like I'm being held hostage," said Hagen, whose water bills were about $30 when she moved to Elk Grove in 1989. Her monthly bill now hovers at $90. "I think someone is just trying to make money."

Lozano, a police sergeant with the Elk Grove Unified School District, father and community volunteer, is happy to pay the fast-rising water rates, because it means his tap water doesn't have a stench.

"I moved here in 1999, and we had horrible water quality," Lozano recalled. "There were hard water deposits on our fixtures and brown rings in the toilets. I remember bathing our 2-year-old in the bathtub, and the water didn't smell right."

Like it or not, Elk Grove Water District rates have been on the rise, most dramatically after its owners approved a five-year plan in 2007 to stay on top of debt, expand, replace and upgrade crumbling infrastructure and convert to metered connections.

For roughly 12,000 homeowners in a large swath of Elk Grove east of Highway 99, the plan pushed the bill for a basic 1-inch connection from $41.89 a month in 2007 to $78.30 a month currently.

Hagen's bill is $87.24, because she has a slightly larger lot in a 1970s subdivision east of Highway 99.

"When it was $30 a month, I didn't really pay attention, but I retired in 1996, and money became tighter," she said.

The district is hoping to put off another scheduled 3 percent increase next month when it approves the 2011-2012 fiscal year budget. But after years of belt-tightening, district manager Mark Madison said he isn't sure if the district can avoid another rate increase.

"We understand this is a difficult time for everybody," Madison said. "We've tried streamlining and reducing costs. We've held off as long as possible to stave off a rate adjustment, but we're not sure if that can occur at this time."

For the Cosumnes Community Services District, which provides firefighting and park maintenance services to Elk Grove, water bills in the past five years have risen at least 60 percent and as much as 312 percent.

The cost increases forced "browning" of some irrigated landscape corridors, as the community services district struggled with rising water fees and property owners voted down higher assessments.

Fred Bremerman, a management analyst with CCSD, said 2011 water costs for parks and firefighting are projected to be $400,000, and he's bracing for another 5 percent increase next year.

Madison said the water district was formed more than a century ago to pump groundwater to the rural town. The district was privately owned until the Florin Resource Conservation District bought it for $16.5 million in 1999 and racked up bond debt totaling $59 million, including the purchase price and $12 million to build a new water treatment plant.

The water treatment plant was needed to reduce the levels of iron, manganese and arsenic, making them compliant with new state water regulations.

Other capital improvements included new wells, pumps, generators and water mains. Some of the system's infrastructure was more than 100 years old, while Elk Grove mushroomed from a farm community to one of the fastest-growing cities in the nation.

The state mandated metered water connections by 2025. The Elk Grove Water District has converted about half its connections and expects them all to be metered by 2015, said Barrie Lightfoot, president of the conservation district board. The district is now planning to comply with a state law requiring a 20 percent reduction in water use by 2020.

Lightfoot said his predecessors didn't know the cost of delivering water to its customers. When he came on board in 2006, the district ordered a rate study and crafted a fiscal plan that avoided more bond debt and adopted a pay-as-you-go budget.

"We didn't want to float any more bonds," Lightfoot said. "It doesn't show good planning."

Instead, the board approved cost increases for the next five years.

A jolting 39 percent increase in 2007 and a 20 percent hike in 2008 got the attention of water users. In 2009, rates went up a more manageable 12 percent, and last year, the scheduled rate increase was canceled, as residents struggled with the economic downturn.

Chris Brown, executive director of the California Urban Water Conservation Council, said water rates nationally are rising faster than other utilities, as water systems face infrastructure upgrades without financial reserves. He said water rates are not structured to collect infrastructure reinvestment funds.

"When pipes are 50 years old, they start to fail," Brown said. "We are faced with replacing these systems and we haven't saved money for it for the last five decades."

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