Back in January the ETA asked Mayor Dalager to speak with us, so that the ETA Board and members could ask him about the water rate increases and the relationship between the city and the water district. Dalager never responded.

An Encinitas resident recently forwarded us this response from Dalager. ETA comments are in italics:

People have been doing a good job of cutting back their water usage in response to the drought. It’s ironic, but as consumption of water goes down, fixed costs on everything from maintenance to debt service on the state system remains the same. Therefore, as usage declines, they charge us more per unit.

[Drought rates are going up ~20%, but so are non-drought rates (~13%/year). Mayor Dalager does not address this or the ETA’s main recommendations.]

I will not eat those costs and risk running this district into insolvency.

[We see no reason to think insolvency is an issue for the SDWD. The Council has already agreed to give raises this year and next year to SDWD staff and can afford to continue to issue generous pensions to its employees. More importantly, the water district has a rate stabilization fund, which should be used to keep rates from spiking. Times are tough and this is right time to use up the rate stabilization fund.]

Thank your lucky stars we and SFID (with whom we own Badger filtration plant) have water rights to Lake Hodges. The water from there costs us a fraction of state water. I have no intention of merging with some other district such as OMWD and having to share those rights.

[Because of this, we should wonder why OMWD water is cheaper than SDWD water. Merging with the OMWD would disadvantage SDWD customers. Dalager does not address the possibility of the SDWD merging with the SFID.]

Our district is run very efficiently and any cost savings would be more than offset by restricted access to our cheap local water.

[We do not know how Dalager measures efficiency and there is no reason to believe that if the council is not running the SDWD we would have to give up access to local water.]

Also, as much as I’ve looked at it, I have seen no upside to creating an extra level of bureaucracy that a second board would entail.

[The ETA has not suggested any new bureaucracy be created. However, it is correct that it would be necessary for the SDWD to hire its own legal counsel during negotiations with the City of Encinitas.]

We are in a very unique position; we have our own cheap, local supply. An increase in that is our real opportunity to get some rate relief. Pray for rain!

Dan Dalager
Mayor, City of Encinitas

[The increase in rates are not conditioned on water levels in Lake Hodges (our local supply). Perhaps, retail rates should be tied to Hodges water levels.]

From Jim Bond:

I do agree with you that we should reduce employees in the district and have done so with 2 employees retiring and no replacements for them.

[The city council did not discuss reduced staffing during the last budget adoption and it appears that at least one of those retirees is still working for the city as a contractor.]

As far as the cost of water goes, we have seen double digit increases for the last three years from our supplier, the San Diego County Water Authority who has not passed along the full increases to them from their supplier, the Metropolitan Water District of Southern California. SDWD too, has not passed along the level of rate increases we have received from SDCWA.

[The ETA agrees that the ratepayers should pay for those costs. The ETA is also skeptical that the there has been a vigorous effort to contain expenditures and overhead costs at the region water agencies. The SDWD is is a member of those agencies.]

I agree that we should be cost effective and believe we could be a bit more so by subsuming the Water District into the City to reduce administrative/overhead costs just as we have with the old Fire District and the two Sanitary Districts; Encinitas and Cardiff.

Warm Regards,
Jim

[The way in which the City has absorbed the SDWD, it would be interesting to know which costs could be reduced. Note, the fire district does not generate revenue and the sanitation districts have very high charges compared to the Leucadia Water District, which covers part of Encinitas but is not run by the City Council.]

We need to fill this box.

Rain fills the SDWD's reservoir, providing cheap water, but it keeps ETA fliers off the streets. There is little time to get the word out and rain stops us in our tracks. We are definitely going to need more help if it keeps raining. If you are willing to distribute fliers in your neighborhood, even if only on your block, send us an email at eta@encinitastaxpayers.org.

TS Eureka rejects water, sewer rate hikes

After several meetings and public outcry, the Eureka City Council voted unanimously to hold off on raising water and sewer rates and establish a citizen task force to help create new rates.

Although not enough protest letters were sent in to legally stop the hike, council members agreed that the rates were too high for people to handle at this time, the notification process was too confusing and senior citizens shouldn't be hit with such high rates.

If it had been approved, the rates would have increased by 66 percent for water and 87 percent for sewer in the next five years. The rates also included a method for calculating rates, which included Proposition 218 guidelines...

From the Gilroy Dispatch:
If more than half the well owners in South Santa Clara County protest next year's groundwater charges, then the fees will not be levied as they have in the past.

When the Santa Clara Valley Water District begins the annual process of setting groundwater extraction charges next week, one topic of discussion will be the "majority protest procedure" allowed under Proposition 218, a constitutional amendment that requires voter approval for taxes and property related fees.

... if a majority of well owners protest in writing to the charges, then the district cannot collect them, based on Proposition 218.

But allowing a majority protest is not enough to satisfy Proposition 218, according to Tim Guster, general counsel for San Jose-based Great Oaks Water Co. If a majority of well owners end up protesting next year's groundwater charges, that only means the water district cannot take a vote and there will be no imposition of the fees.

"If there is not a majority protest, a vote must still be taken," Guster said. Such a vote can be cast among either the well owners or the general electorate.

Note: The Encinitas City Council have already indicated that they do not intend on letting the public vote on water rate increases and, instead, they intend to vote for a rate increase without seeking the approval of the majority ratepayers. ETA members are divided on whether or not this is a reasonable way to proceed, but it does make all non-responses function as yes votes for any rate increase. The council cannot claim they have no other option, because they do.

When the city council purchased the Mossy Dealership for a public works yard the city told the public the site would be turnkey, and that justified the $9 million dollar purchase. It was not turnkey and the city has put in well over a million dollars in undisclosed needed upgrades. The purchase price of the property was highly suspect at the time and the public warned the council to review the appraisal. This warning was not heeded, and immediately after the purchase Deputy Mayor Houlihan admitted to not knowing about some basic facts about the appraisal. Assuming Houlihan was attentive during the closed-door meetings about the purchase, this is indicative that the council did not discuss the basics of the appraisal. Since that time, professional appraisers have publicly criticized the appraisal (and other city appraisals) and recommended simple policy changes to improve the land transaction process. The council has not discussed changes.

The appraisal can be found here.

The city paid a million over the fair market value in their own appraisal and that fair market estimate was at least a million dollars too high. The San Dieguito Water District ratepayers are paying for that mistake. The city moved the SDWD staff to the new PWY and charged the SDWD for part of the cost of the purchase. The cost allocation was never approved by people representing only the SDWD ratepayers.

Herb Patterson, who is a frequent Hoodlink contributor, reviewed the cost allocation report produced for the city staff. He concludes that, no rational person could examine the deal and believe the Council had done their fiduciary duty toward the ratepayers of the SDWD.

The City Manager responds by saying that by looking at the number of employees using the site, either SDWD or city staff, the SDWD could have been charged more than they were. The Manger goes on to say that all parties decided that would not be fair [It would have also increased scrutiny]. The City Manager does not mention that none of the parties involved had the unconflicted duty to watch out for the SDWD ratepayers.

Read, review, and comment on the report and exchange here.

If the SDWD customers got a fair deal in the Mossy deal it is not obvious that the ratepayers were safeguarded. The City Manger seems to make the point that they could have easily been charged more. Adding independently elected water district officials to negotiate for the water customers with the city could eliminate that vulnerability.

Encinitas Taxpayers Association to Oppose SDWD Rate Hike

Will Also Seek Board Seats for Non-councilmembers

ENCINITAS—In anticipation of a decision by the San Dieguito Water District (SDWD) to raise water rates, the Encinitas Taxpayers Association (ETA) is launching a grassroots campaign to defeat those rate hikes. As part of that effort, the ETA is also organizing an initiative to open up the SDWD board to non-councilmembers.

“It’s never a good time to increase water rates, but doing so in the midst of the worse economic downturn in at least a generation is particularly bad timing,” said Joe Sheffo, president of the ETA. “That aside, the rate hikes would be a bit more palatable if the body making that decision included independent ratepayers, not just councilmembers. We hope to address both issues through this effort.”

Earlier this month, SDWD announced that it would be raising water rates at least 13%. The action is said to be necessary because of the increased costs of water generally and the need for substantial upgrades to the district's treatment plant, which it jointly owns with Santa Fe Irrigation District. Under Prop 218, however, ratepayers can undo rate hikes if 50% of them disapprove.

Under current law, the district’s board consists of the five members of the Encinitas City Council. This is contrary to many water districts, which are made up of at least some independent members. The district serves Leucadia, Old Encinitas, Cardiff and parts of New Encinitas.

The ETA’s concerns about transparency at the SDWD stem from questionable financial transactions between it and the city that raise serious questions about the management practices of both. These transactions are believed to include various real estate deals, bond offerings, internal billing practices, and personnel assignments.

“The SDWD has operated in a budgetary black hole that makes transparency nearly impossible for a regular citizen,” said Kevin Cummins, vice president of the ETA. “Despite that opaqueness, we have been able to piece together many areas where the SDWD is vulnerable to misuse by the City. This is the right time to open up the district to independent oversight.”

Those living in parts of the city served by SDWD should expect visits from ETA members and others over the next few weeks. Ratepayers will be asked to complete and submit a postcard that will then be presented to the board at its Feb 24 meeting at City Hall.

Founded in 1986, the Encinitas Taxpayers Association is a grassroots organization dedicated to ensuring transparency and accountability from the city of Encinitas and its councilmembers,