Santa Fe Irrigation District weighs options for water rate structures

The Santa Fe Irrigation District is considering rate increases.
(Karen Billing)

The Santa Fe Irrigation District continues to evaluate potential water rate increases, aiming to bring forward a proposal for its new rate structure by the end of the year.

Last December, the board voted not to adopt a proposal to raise rates by an average of 3 percent over the three years, sending the district back to work with its consultants to come up with a different plan that would be best for ratepayers.

The Santa Fe Irrigation (SFID) board is weighing its various options and looking at what revenues are needed to accomplish the district’s capital investments to ensure safe and sustainable local water supply while ensuring that the customer receives the best service possible.

“The water environment is a dynamic situation so we want to make sure our rate structure is the most fair and equitable across the district and provides enough revenue,” said Seth Gates, administrative services manager for SFID.

In March, the SFID board directed staff to work with independent rate consultant Carollo Engineers on proposing potential revisions to its independent cost of service study in a number of areas including local water supply and different tier structures for water rates.

Several cost of service workshops have been held since March—at a July 31 workshop, Carollo received feedback from the board on cost allocation and local water allocation. The cost allocation structure will form the basis for upcoming presentations by Carollo and SFID on other areas relating to cost of service.

“What the board wanted to see is more of an iterative process to build consensus, gather feedback and develop something that the board and public has a lot of input on and a plan that can be supported as a whole,” Gates said.

Currently the district has a four-tiered single family residential structure. The proposed plan in December was a move to a two-tier rate plan in which water users would have been charged in two tiers, based on their water use.

Gates said the district is reviewing several options such as different single family residential tiers, uniform rates and options for other customer classes, including irrigation.

Those rate structure alternatives are tentatively scheduled to be presented at a Sept. 19 workshop.

“Nothing has been determined yet,” Gates said.

According to Corollo’s presentation, in reviewing the rate designs SFID needs to consider meeting the key objective of equity across customer classes and consider conservation incentives, affordability at low usage, the financial stability of the district and compliance with Assembly Bill 1668, the water management planning bill that requires the state to achieve a 20 percent reduction in urban per capita water use by Dec. 31, 2020.

Gates said the SFID board must also consider the impacts of the tiered system and how to best address local water from Lake Hodges, as it is the cheapest, and how to allocate it to customers. Additionally, with the Cost of Service Report, SFID must address billing customers based on their consumption within the legal boundaries of Prop 218, which restricts local governments and agencies from imposing property-related fees.

The Rancho Santa Fe Association, which objected to the last proposed rate plan as well as the district’s current rate structure, filed a lawsuit against SFID in December. The Association’s lawsuit alleges the district’s current rate plan does not comply with state law and that the current rate structure unfairly penalizes Covenent members with higher water rates because their larger properties require more water for irrigation.

The RSF Association had a presence at the July 31 workshop—in attendance were Manager Christy Whalen, the Association’s water committee chair and former SFID board member Greg Gruzdowich and the Association’s attorney Ben Benumof.

“While most conversations have centered on residential rates, fairness with irrigation are equally as important,” said Whalen, who spoke at the meeting and submitted a letter to the board on behalf of the Association.

The letter provided input on one of Carollo’s proposals that would change the irrigation class of users from a uniform rate to a two-tier rate, with the same tier 1 local water allocation for irrigation customers as all residential properties.

“This is inherently inequitable given that there are major differences in reasonable water use for a golf course versus a much smaller residential parcel,” wrote Benumof in the letter.

Under the proposal Benumof argued that the golf club will pay for water as though 99.8 percent of its water is the more expensive imported water, even though during the year the water provided by SFID’s distribution system is approximately 30 percent local water.

“Clearly, Carollo’s proposal to eliminate the uniform rate for irrigation customers such as RSFGC that reasonably use large volumes of water and effectively charge those customers as though they are single family properties unreasonably using water cannot pass Proposition 218 scrutiny,” Benumof wrote.

The letter stated that the annual water bill for the golf club is $575,000 or $200,000 higher than the Lomas Santa Fe Golf Club in Solana Beach, which uses roughly the same amount of water. The main difference is that Lomas uses reclaimed water, which is unavailable to the RSF Golf Club or others in the Ranch, and pays lower rates for the “purple pipe” water.

“We would like to see an effort to get reclaimed water to at least part of the Ranch, including the golf club, and we would not like to be further punished by an increase in or tiering of irrigation rates,” Whalen said.

According to Gates, in the coming months SFID will continue to hold workshops on the options, take public input and craft a Cost of Service Report that will be reviewed by the board and distributed to the public per Prop 218 guidelines—the report will serve as the basis for the new proposed rate structure. Gates expects that the report could be completed in November, estimating that a decision on the new rates would occur in January 2020.

Under Prop 218, a public hearing must be held at least 45 calendar days after the mailing of the notice of the rate increase and any property-related fee may not be imposed or increased if a majority submits written protests.

During last year’s 45-day period, the district received 1,254 protests to the proposed increases. In order to block the rates, more than 3,200 residents would have had to submit written protests.