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Rancho Santa Fe water district talks to neighbors about consolidation

By Joe Tash

One neighboring water district has no interest in merging with the Santa Fe Irrigation District, while another is open to the possibility.

The issue came to the fore earlier this year, when the Santa Fe board held a workshop meeting to discuss the possibility of consolidation with its neighbors to save money.  Santa Fe directors decided at their September workshop to reach out to two nearby water districts to gauge their interest.

Now, the first response is back, following a Nov. 5 meeting between representatives of Santa Fe and the San Dieguito Municipal Water District, and a second meeting is set for next month.

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Santa Fe board president Michael Hogan reported on the discussions at the Santa Fe board’s monthly meeting on Thursday, Nov. 21.

The gist of the position taken by two San Dieguito board members was that they are not interested in a full merger at this time, but would consider proposals for additional collaborations or partnerships between the two districts, said Hogan.

“The emphasis was to build on small successes,” Hogan said.  “I think the outcome of the meeting was very productive.”

San Dieguito is a subsidiary of the city of Encinitas, and provides water to the western half of the city.  San Dieguito and Santa Fe currently share joint ownership and operation of a water treatment plant.  According to Bill O’Donnell, San Dieguito’s assistant general manager, his district relies on city staff for such functions as payroll, finance and risk management.

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“We’d love to hear specific proposals from Santa Fe Irrigation District and we’d definitely consider those proposals for further collaboration,” said O’Donnell.

Mark Muir, who sits on both the Encinitas City Council and the San Dieguito board along with his council colleagues, said his district is looking at opportunities for “functional consolidation,” meaning partnerships for certain common functions of the two districts, rather than a merger.

If the two districts continue to work together successfully and their relationship progresses, he said, “We could have that conversation” regarding shared governance.

For now, he said, he would favor meeting with both Santa Fe and the Olivenhain Municipal Water District jointly to “explore the opportunities” for collaboration.

Hogan and director John Ingalls were appointed by the Santa Fe board to an ad hoc committee charged with meeting with neighboring water districts to talk about consolidation.  They are scheduled to meet with Olivenhain representatives on Dec. 18.

Olivenhain is open to the full range of potential collaboration, from a merger to partnerships on specific projects, said Kimberly Thorner, the district’s general manager.

“I think it’s great, I think my board is excited about the opportunities. My agency is all about partnering and sharing on every different level.  When Santa Fe called, it was like, of course we’ll meet.  I see this as very positive,” she said.

While Olivenhain officials are eager to hear what Santa Fe has to say, they are not going into the meeting with preconceived ideas, said Thorner.

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“I believe from listening to my board, they are open to all opportunities, the full spectrum, so long as there is an end result that is good for our ratepayers at the end of the day,” Thorner said.

The Olivenhain district covers a territory of 48 square miles, including parts of Carlsbad and Encinitas, and extending east as far as 4S Ranch, along with unincorporated communities such as Elfin Forest.  Santa Fe provides water to residents of Rancho Santa Fe, Fairbanks Ranch and Solana Beach.

Geographically, the Olivenhain district wraps around Santa Fe’s territory on three sides.

“We hug them,” said Thorner.  The two districts already work together on training and other areas, she said.

Driving the talk of mergers is the upward pressure on water rates that have seen increases of 74 percent imposed by Santa Fe over the past six years.  Director Greg Gruzdowich, a proponent of exploring consolidation, said rates have effectively doubled when compounded annually.

Gruzdowich has argued that Santa Fe can save money and keep rates down by merging with another district and sharing administrative overhead costs.  His board colleagues have said they support the idea to varying degrees if savings can be demonstrated.

In May, Brian Brady, who runs both the Fallbrook and Rainbow water districts under a joint powers agency, gave a presentation to the Santa Fe board.  Brady said the two districts are on course to save $600,000 to $700,000 this year by consolidating management positions.  He said savings are expected to increase in the future.


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