Santa Fe Irrigation selects multi-tiered structure for water rate increases

The Santa Fe Irrigation District board recommended moving forward with a new five-tier rate structure for its proposed three percent water rate increase. The vote was 4-1 with Director Marlene King opposed.

The Santa Fe Irrigation District (SFID) board is expected to make a final decision on the rates by January 2020 to ensure the financial stability of the district and meet its objectives of equity across customer classes and encouraging conservation.

At a Sept. 19 workshop, the board considered five options for the new rate structure including a universal option in which all customers would pay the same rate for every unit of water. Currently the district has a four-tiered rate structure for single-family residential and the option they selected differentiates between meter sizes in the higher tiers.

Director Andy Menshek said the five-tier option was “the most functional and the most fair alternative.”

Last December, the board voted not to adopt a proposal for a two-tier rate plan, forcing the district to reset. In March, the 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.

SFID board President Mike Hogan said at this point the board has been studying this issue for 18 months and, for now, he believes the recommended rate structure addresses a lot of the concerns.

“Over the next three years we’re going to find out a lot more about what the direction is going to be for this agency with regard to how we use water in the future and that may drive us to a different decision than we are considering here today with regards to how we allocate and budget our water,” Hogan said, in reference to the state’s water use efficiency targets that go beyond the 20 percent reduction in urban per capita water use by 2020 mandated by Assembly Bill 1668.

Under the proposed rate structure, SFID customers’ bi-monthly bills will reflect a fixed charge and a volumetric rate depending on their usage. Carollo recommended a decrease in the fixed charge to offset some of the bill impacts related to water usage. The fixed charge per bill is escalated to larger meters.

While the rate revenues include a 3 percent increase, not all customers will see their bill increase by three percent, said Jennifer Ivey of Carollo. “After year one, most should see a three percent increase,” she said.

Under the new rate structure, Tier 1 is for those who use 10 units of water or less for a two-month billing period (one unit equals 100 cubic feet of water or 748 gallons), based on a high probability of local water availability. Under the previous structure, the tier began at 15 units.

Tier 2 went from 16-37 units in the current rate structure to 11-32 units. The proposed Tiers 3-5 allotments vary based on meter size, recognizing different characteristics of the meter equivalent units—same as the fixed meter charge.

According to General Manager Al Lau, 55 percent of the district has the three-quarter size water meter. In the first year, the majority of customers with three-quarter meters will see an increase of one to three percent—there will be a seven percent for four percent of the three-quarter meter customers and a seven percent increase for 13 percent of the customers.

Director David Petree, who voted against the last rate plan, said he really liked the proposed structure as he believes it addresses the discrepancy between small and large properties.

“I think this idea of adjusting the tier ranges based on meter size is a really good approach to adjust for what Marlene is really concerned about, which is the different size properties,” Petree said. “I’m not sure there’s an exact way to do it…but I really like this approach…it represents a fair way to me to try and look at this.”

The Rancho Santa Fe Association filed a lawsuit against SFID in December alleging that the district’s current rate plan does not comply with state law and that the current rate structure unfairly penalizes Covenant members with higher water rates because their larger properties require more water for irrigation.

At the Sept. 19 hearing, the Association’s attorney Ben Benumof said the district seems to be making positive progress.

“It does appear that this meter overlay model does correct some deficiencies of the current rate structure,” Benumof said. “It is a step in the right direction.”

Director King said when she was reading through the five-tier structure with the meter overlay, it seemed attractive to her at first.

“Every time I kept going to the customer impacts, it kept driving me back to the uniform rate. I’ve said all along, I’m all for having a Tier 1 to protect the customers that use very little and I appreciate the concept behind the meter overlay but when I look through the customer impact it never seemed satisfactory. I just hoped it would be better for our users,” King said. “I feel more strongly that uniform rate is the one I will go for.”

King said in her opinion, the proposed structure does not successfully address the two very different land use profiles that exist in the district, the smaller properties versus larger properties— “the usage from the large lots has always helped the small lots because they use averages.”

During public comment, Kristi Becker, a Solana Beach City Councilmember speaking as a private citizen, said she supported a multi-tiered water rate schedule because it rewards water conservation. A uniform rate structure, she argued, would mean smaller properties with low water use would subsidize irrigating “large, lush properties.”

“We should not encourage use of water above our basic water needs of human consumption, health, fire protection and reasonable outdoor irrigation,” Becker said. “I was appalled to learn that SFID has the highest daily household water use per person in California.”

Solana Beach City Councilmember Kelly Harless, also advocated for the multi-tiered rates as it provides incentives to reduce water use and the most equity.

“The folks in Rancho Santa Fe want to continue consuming large amounts of an increasingly limited natural resource and pay the same rate as residents in Solana Beach who consume much less per capita of this very precious commodity. I’m baffled by this position,” said Harless.

“Surely there’s a difference in the value of water used to sustain ourselves compared to the value use to maintain cosmetic landscaping. Should Solana Beach residents have to forgo showers or skip flushing toilets so that Rancho Santa Fe residents can water their tropical Shangri-La? Not all water consumption is created equal and it’s not fair to ask Solana Beach residents to subsidize the cost of Rancho Santa Fe’s landscaping and irrigation choices.”

At the end of the meeting, Director King wanted to publicly address statements made in a letter sent by Director Menshek to the Solana Beach City Council. The letter referenced the upcoming Sept. 19 workshop and stated that the Association was working toward SFID establishing a uniform rate or a two-tier rate applied to all customers without regards to water conservation.

“A uniform or two-tier rate would encourage wasteful and excessive water use for outdoor landscaping. In addition, Solana Beach residents would see their rates double or triple to subsidize RSFA residents’ excessive, non-essential outdoor water use,” the letter read. “RSFA is spending a huge amount of money in an attempt to obtain a board majority to implement a uniform or two-tier rate which would be subsidized by smaller properties and low water users.”

King argued that back when the current rate schedule was set in 2016, Rancho Santa Fe residents had asked multiple times for the SFID board to explore more than one rate proposal but were shut down.

“The fact that a big group of our customers had to spend whatever it is they had to spend, to say nothing of their time with their showing up over and over again, just to ask for alternatives…it’s a shame that they had to go to such an effort,” King said.

King said she disagreed with the idea that any SFID board vote could be bought as well as the statement that Solana Beach residents would see their rates double and triple with a uniform rate—the Carollo report showed at most a 36 percent increase.

“It was a false comparison and I think it’s unfortunate that it was sent to elected officials responsible for the largest segment of the district,” King said. “What’s the old saying? You can have your own opinion but you can’t have your own facts. This was disappointing to me.”

When given the opportunity, all of the other directors opted not to comment on the letter.