By Joe Tash
A sharply divided water board Nov. 17 approved a 6 percent rate increase as of Jan. 1 for customers in Rancho Santa Fe, Solana Beach and Fairbanks Ranch.
Before approving the rate hike on a 3-2 vote, the panel was twice unable to pass a motion increasing rates on customers next year. Some board members were concerned that a larger increase is needed to maintain district reserves and pay for capital improvement projects, while one board member wanted to avoid any increase.
In the end, directors Andy Menshek, Ken Dunford and Michael Hogan voted for the 6 percent increase, while directors Robert “Bud” Irvin and John Ingalls voted “no.”
The vote means 2012 is the fifth year in a row that the Santa Fe Irrigation District will have raised rates on its customers, by a total of 68 percent. District officials have said the main reason for the steadily increasing rates is a corresponding jump in the cost of water from the district’s suppliers, the Metropolitan Water District of Southern California and the San Diego County Water Authority.
Only two members of the public attended Thursday’s water board meeting, in contrast with a hearing last year — when the panel considered raising rates by up to 36 percent over three years — which was attended by dozens of customers, most of whom spoke against the proposal.
The district provides water for about 22,500 people. According to a staff report, the 6 percent increase starting in January will provide revenue of $19.5 million for the current fiscal year, which ends June 30.
District officials said the increase means that an average customer’s bi-monthly bill will rise to $288.82 from the current charge of $272.78.
Late last year, the board — also on a 3-2 vote — approved a three-year rate plan, including maximum increases of 12 percent each year. The first 12 percent increase took effect in February. During budget deliberations in June, however, the board voted to impose a 6 percent increase for 2012, instead of the maximum 12 percent hike.
A district staff report noted that reduced operating costs, coupled with lower-than-expected water rate increases from district suppliers, means that a 6 percent increase will provide enough revenue for the current fiscal year, and the projected increase for 2013 has been trimmed from 12 to 10 percent.
District general manager Michael Bardin said in an interview that the district has reduced its operating budget by $1.9 million this year. Slightly less than half of that amount came from reductions in staffing, professional services and other areas, while just over $1 million came from the district’s decision to use a larger portion of local water from Lake Hodges to meet customers’ needs, as opposed to more expensive imported water, Bardin said.
Directors Irvin and Dunford initially argued for an 8 percent increase for 2012.
“We’ve got to continue to pay into reserves to have a viable (capital improvement) program on a sustainable, long-term basis,” said Dunford.
“I think making an artificially low rate now is going to force us to have a higher rate in the future and I want to do what’s best for the district,” Irvin said.
But director Andy Menshek said ratepayers are already stung by the sluggish economy and don’t want rates to be raised any more than absolutely necessary.
“The ratepayers have spoken loud and clear — do the best you can with what you have and don’t raise my rates,” he said.
Hogan, the board president, said the board directed staff to build a 6 percent increase into this year’s budget, and the current budget is meeting the guidelines established by the board regarding reserves and this year’s capital projects.
“I don’t want to go below (6 percent) and I don’t want to go above,” Hogan said.
Director John Ingalls was the lone board member to argue for no rate increase in 2012. He said the district should work with partner agencies to issue bonds to pay for capital projects, rather than raising rates.
“I think it’s an opportune time for us to pull the trigger with our Triple A rating and do a bond issue,” he said.
While other board members agreed that borrowing money through bonds might be an option for the future, they said it would not be a solution for the current budget year.
After the board discussion, Dunford said he felt he had made his point about adequately funding reserves, and switched his vote to support the 6 percent increase.
The district plans to notify its customers of the rate increase through a mailer that will be sent out by Nov. 30.