Santa Fe Irrigation approves rate increases, protest level not reached

The Santa Fe Irrigation Water District offices.
(Karen Billing)

The Santa Fe Irrigation District approved three percent water rate increases for the next three years at a Jan. 16 hearing. The first bills will go out to customers on April 1 using a new five-tier residential rate structure that differentiates between meter sizes in higher tiers.

The rate increases aim to help meet the district’s objectives to ensure equity across customer classes, encourage conservation and maintain financial stability as it faces challenges such as the rising costs of imported water. The board’s vote was 4-1 with SFID Director Marlene King voting in opposition.

In accordance with Prop 218, notices about the proposed rate structure were sent out on Nov. 27, 2019 giving customers an opportunity to protest the rate increases. By the end of the Jan. 16 hearing, the district had received 637 written protests—a majority protest would have been 3,250 customers.

SFID Board President Michael Hogan said he believed the new rate structure was the fair result of a long process. In December 2018, after a nine-month cost of service study process, the board voted not to adopt a proposal for a two-tier rate plan. That year the district received 1,254 protests to the rate increases.

Hogan said the board took a step back and re-educated themselves through a modified nine-month, independent cost of service study process in 2019 that he said was more inclusive with ratepayer participation and input, including public workshops and presentations at the Rancho Santa Fe Association and Solana Beach City Council.

Under the new rate structure, SFID customers’ bi-monthly bills will reflect a fixed charge and a volumetric rate depending on their 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.

SFID Vice President Ken Dunford, who voted against the last rate plan, believes that the new plan spreads the lower-cost local water out further which helps the district’s larger landowners.

“I think we’ve done everything we can to make this as equitable a rate structure as we can make it,” said SFID Director David Petree, who also voted against the 2018 proposal and still prefers a three-tiered structure to the five tiers. “Even though I wish it was a little different, I think this is a good, fair compromise on both issues I was concerned about which were rate structure and cost.”

“Less than 10 percent of the residents protested this, that means 90 percent is OK with it so I’m OK with it,” said SFID Director Andy Menshek.

SFID Director King, who represents Rancho Santa Fe, spoke at length about why she opposed the rate structure including the large overhead costs that are paid by larger properties in the higher tiers.

King said as it is designed, a third of all single family residences have their indoor and outdoor irrigation needs met by local water assets.

“Those customers pay a significantly smaller percentage of district overhead costs because their properties are regular-sized city lots. I do not agree that customers with regularly-sized city lots should pay a significantly smaller percentage of district overhead simply because the properties in the rural, hotter eastern service area are larger,” King said. “The issue is whether both property owners are using water efficiently.”

King was also troubled by the agriculture/irrigation rate, an increase of 16 percent over the current rate. She noted that the RSF Golf Course has reduced its water use by 30 percent in the past 11 years and Lomas Santa Fe Country Club by 27 percent

“Our two largest customers have clearly invested additional dollars to significantly reduce their water usage yet this district proposes to increase their rates 16 percent this year,” King said. “The more I study SFID’s proposed ag/irrigation rate, the more I am unable to get the word ‘punitive’ off my mind.”

At the hearing, public comment took the form of Rancho Santa Fe vs. Solana Beach with many Rancho Santa Fe residents accusing the board’s “coastal directors” of not representing their interests, some even proposing the district change its name to remove the “Santa Fe” from its name and replace it with “Solana.”

Customers told stories of their efforts to conserve not being rewarded by the proposed rates.

“The board has encouraged or cajoled us to change the amount of water we use, this decreased the revenue and then you up the charges,” Rancho Santa Fe resident Laurence McKinley said. “The water district bill is the biggest curse of living in this area.”

Rancho Santa Fe resident Frank Creede said since 2015 he has removed over 10,000 square feet of turf on his three-acre property and replaced it with drought-tolerant plants and drip irrigation at a cost of $60,000.

“Today my property uses half of my prior consumption and unfortunately my bill has stayed roughly the same,” Creede said. “The new tiered rates will help but certainly doesn’t bring equity. The proposed rate structure continues to subsidy the predominantly smaller lots in Solana Beach at the expense of Rancho Santa Fe…the costs should be spread out throughout the customer base.”

Bill Weber spoke on behalf of the Rancho Santa Fe Golf Club as the “particularly unfair” 16 percent rate increase amounts to a $95,000 increase in the bill if they get as much rain as they did last year. With less rain, Weber said the bill could be up to $200,000 increase or more.

A few speakers from Solana Beach spoke in favor of the tiered rate as it discourages “frivolous” water consumption” and promotes conservation by charging higher rates for greater water usage.

“Residents using large amounts of water for non-essential uses such as irrigating expansive landscaping should incur higher rates than lighter users regardless of the size of their meters,” said Solana Beach City Council member Kelly Harless.

“We’re not begrudging people that have larger lots but when you have a larger lot or have a golf course you understand that you’re going to have to pay more,” said Kristi Becker, a Solana Beach City Council member and member of the Climate Action Commission. “In all fairness, this multi-tiered rate is trying to do the right thing. We need to conserve…we’ve got to stop throwing away a precious resource. I don’t think we want to be known as the water district that uses the highest daily household water use per person in California.”

Harless encouraged the board not to be pressured by the threat of lawsuits.

The Rancho Santa Fe Association has been an active voice protesting the water rate increases—in December 2018 the Association filed a lawsuit alleging that the district’s current rate plan does not comply with state law and that the rate structure unfairly penalizes Covenant members with higher water rates because their larger properties require more water for irrigation. At the Jan. 16 hearing, the Association again made its opposition known for the new rate structure.

“We’re just looking for a rate that is fair, equitable and legal,” said RSF Association Manager Christy Whalen.

Greg Gruzdowich, a former SFID board member who is on the RSF Association’s water committee, said the hearing was just a “biased political decision controlled by the majority of coastal SFID board members that’s masquerading as a factual argument,” citing what he believed to be a flawed cost of service study.

After going through the process for two years, Hogan said the most “disturbing” thing has been the division that has formed between Solana Beach and Rancho Santa Fe.

“I view this as one district. I’m trying to find the balance because of the characteristics and the profile of the district,” Hogan said. “You may not agree with that decision ultimately with regards to the rate but I assure you, it’s done with the best interest of everyone in the district.”

At the hearing, Director King also expressed her concerns about the transparency of the Prop 218 notice. King had wanted to add current rates to the rate charts which staff did not do—she said the notices that went out to ratepayers did not include the dates, times and locations for public workshops, instead asking customers to check the website for future meetings, “As if our customers have nothing better to do.” One meeting had two people in attendance, another had just four.

“SFID must strive to do better. We need to ‘walk the talk,’” King said, urging that future notices provide an easy to understand discussion of current and proposed rates and rationales for increases.