When it comes to water rates, the Santa Fe Irrigation District (SFID) has not kicked the proverbial can down the road, more like they’ve launched a keg across the thoroughfare.
By now you should have received the 10-page Prop 218 Notice from SFID explaining why your water rates need to be raised. If you are persuaded by SFID’s explanation that “…factors out of the District’s control now require that the District increase its rates,” you may have no interest in the following: Submitting a Prop. 218 Protest Form, and/or creating a list of questions to ask SFID staff members at community meetings on proposed rates. Their common response to such questions is to attempt to make their case for “exceptional governance and fiscal/operational management.” My signed, written protest form is in the mail, and I’ve made my list of queries.
Lower Rates for Some Not Others
The Prop. 218 Notice states loss of Lake Hodges local water costs $3.1 million annually. The Solana Beach Board majority voted 3-2 (Dir. Sandy Johnson and former Dir. Ken Westphal against) to subsidize rates, that, while applying to all customers, significantly provides price supports for owners of small, city-sized lots in Solana Beach. The majority voted on three price supports: (1) shifting property tax revenue to subsidize rates, when property tax income previously was dedicated to CIP spend; (2) using the last $2.5 million check resulting from the San Diego County Water Authority (SDCWA) litigation against Metropolitan Water District to subsidize rates; and (3) stretching out Capital Improvement Plan (CIP) spend on projects to repair/replace aging infrastructure. This third “lever” of stretching out CIP spend is particularly troublesome.
SFID’s “Water System and Capital Improvement Program Master Plan Update” was last completed in September 2021. Scroll down to pages 41-44 to see the consultant’s 10 Year CIP Spend table, and pay close attention to page 44, “Hodges Dam,” for the consultant’s estimation of SFID’s share of Lake Hodges Dam repair/replacement costs.
I attended all the 2016 SFID Cost of Service Study (COSS) community outreach meetings where General Manager Michael Bardin placed great emphasis on CIP reserves needing to be increased to address needed infrastructure projects. As we were in the midst of a four-year drought pattern, not only did SFID not increase CIP reserves, it depleted them by around $5 million due to a period of exceedingly low rainfall. The current 2020 COSS required 3% increases to “…prevent further significant declines in end of year fund balances.” And now the 2023 COSS proposes to spend modest amounts on infrastructure to avoid being required to increase rates to achieve infrastructure repair/renovation set out in the Master Plan. It’s clear a majority of Directors have prioritized low rates — for essentially Solana Beach customers — above all other concerns.
The following bar graphs illustrate this issue: Figure 2 illustrates stretching out the CIP spend by significantly cutting back infrastructure work in the three years of this COSS. Figure 6 illustrates what the future portends.
I’ve listened to all Board of Directors meetings regarding COSS, and heard the G.M. and the majority-vote Directors say they are okay with delaying infrastructure repair of high priority projects; they say the risk is acceptable and that delayed projects are not on a “critical path.” Such remarks reminded me of recent infrastructure repairs to the San Dieguito Reservoir. SFID spent millions over several years to repair/reinforce the 100-year-old reservoir, but not one SFID engineer raised the obvious issue about the condition of Lake Hodges, which was built at the same time with similar construction as the reservoir, and that SFID is contractually obligated to pay for approximately 25% of the dam’s repairs.
Imported Water Costs
SDCWA studiously projects imported water price increases far into the future; the only unknown was to what degree SDCWA might/would temporarily reduce planned increases due to Covid. Back in November 2019 when I was still on the SFID Board, Directors voted 4-1 (I opposed) to forgo passing through SDCWA increases, and, instead, use local water fund monies received from charging SFID customers imported water prices while supplying them local water in a high-rainfall year. It was the SFID staff’s recommendation to use local water funds to pay the pass-throughs, rather than to actually reimburse those customers charged imported prices for supplied local water, a more labor-intensive task.
SFID Board and staff did discuss that using local water fund monies to subsidize pass-throughs would create a problem when the subsidy ran out: the next increase would be unusually high (the reason why I voted against spending these funds). For all the Board talk about wanting customer increases to be of a more steady, smooth progression, once it was “determined to absorb impacts of SDCWA rate increases” it deliberately set in motion what would have been a problem regardless of the condition of Lake Hodges. This chicken has now come home to roost.
Balancing Budgets
SFID staff writes long, detailed memos to accompany new budgets and mid-year reviews. Review for yourself. Budgets rarely reveal cost reductions, to say nothing of cost containment. Depending on your financial/philosophical bent, maybe you consider pushing vehicle purchases to the beginning of the next budget year, or not filling staff positions until the next budget year, or delaying projects until the next budget year, or counting on the City of San Diego to allow SFID to spread out its payments for current repairs costs to the next fiscal year to be “exceptional governance and fiscal/operational management.” I do not.
The following are questions/comments to consider posing at community rate meetings:
- The Prop. 218 Notice states, “Higher rates are imposed per unit of water in each inclining tier as the level of consumption increases to account for the incremental costs to the District in providing higher amounts of water.” Since SDCWA essentially charges the same cost for every acre foot of imported water, explain how it costs SFID more to provide a Tier 3 hundred cubic feet (HCF) vs. a Tier 4 HCF (Each HCF equals 748.05 gallons).
- Fixed charge components explanations make no mention of pension costs. Since not one more employee is required to meet summer water demand, specifically show what percentage of pension costs are paid, per HCF, by Tier 1 Single-Family Residential (SFR) customers with ¾” meters.
- As noted by former Dir. Westphal, spreading out CIP spend places a higher financial burden on customers in the future to compensate for lack of contributions to CIP Reserves in the next two one-half years. How is that fair and equitable?
- In the 2021 Master Plan, the “Government Road (Solana Beach) Pipeline Relocation Project” was rated #11 out of 26 projects in terms of prioritization. Please explain why a project near the middle of the pack is given priority in a period of limited CIP spend?
- Current Tier 1 is 0-10 HCF, which aligns with indoor use and California’s Department of Water Resources’ (DWR) current target for indoor use. A reasonable person could accept a price subsidy for 0-10 HCF bi-monthly. However, SFID insists on providing a subsidy for 0-32 HCF, which disproportionately subsidizes customers with city-sized lots, predominately in Solana Beach. What prevented SFID from limiting the price support to 0-10 HCF, thereby not depleting CIP spend?
Another CIP Spend Stretch?
I’ve listened to hours and hours of meetings where the Solana Beach majority brushes aside prior infrastructure prioritization, where the majority-vote Directors ask Counsel if they can spend the property tax revenue as they see fit, where reserve fund balances are shifted to accommodate rate subsidies when Staff and the Board know there is no guarantee that local water will be available by the end of this COSS period. If local water is not available, nor available at reduced yield, where to kick the can/keg then when there’s no $2.5 million settlement check at SFID’s disposal? Is the Solana Beach Board majority going to do yet another CIP spend stretch?
Dir. Johnson and former Dir. Westphal expressed concern about delaying CIP spend and using property tax revenue to subsidize rates. Mr. Westphal urged, to no avail, line-item voting for the “levers,” but the Solana Beach majority ignored the suggestion. I just can’t relate. I don’t see a clear path to maintain this insistence that rates, for customers with city-sized lots, must only rise at a slow rate — no matter what. (Of course, the same majority never seemed to give a fig if the rates of customers with large lots had increases that were not low and slow. I know thousands of 92067 customers can testify to that fact!)
Don’t Give a Fig
I’ve been thinking for many months that the District might consider adding a moment of meditation or silent prayer to the agenda after the Pledge of Allegiance. The Board majority is hoping unattended infrastructure keeps holding together. The Board majority is hoping that California’s Division of Safety of Dams (DSOD) gives the go-ahead to raise Hodges’s levels. The Board majority is hoping that we don’t encounter a long period of drought, like we experienced a decade ago. Does the Solana Beach majority reassure itself it can always figure out some reason to charge 92067 customers more for their water? Is that its back-up plan?
Consider protesting the Prop. 218 Notice. We know we can’t get a majority of customers to protest and block the Board majority action. I’m okay with that. By turning in a written protest form I’m standing up for my rights. Submitting a written protest form also supports the rights of 92067 neighbors and Solana Beach friends and neighbors with larger properties. If you believe the SFID rates you pay aren’t fair and equitable, take action.
Ms. King has been a Fairbanks Ranch owner since 1988, and was an SFID Director, Div. 3, from 2014 to 2020.
