By Joe Tash
Along with the steep rise in the water bills of San Diego County residents over the past few years has come more talk about water agency consolidation.
While some say water district mergers can generate millions of dollars in savings through reduction of administrative overhead costs, others say they can also erode local control over precious water resources such as pipes, treatment plants and reservoirs.
The Santa Fe Irrigation District, which provides water to residents of Rancho Santa Fe, Fairbanks Ranch and Solana Beach, is no exception, either to increased rates or talk of consolidation. The district’s board of directors will discuss the pros and cons of merging with a neighboring agency at a workshop meeting, set for 8:30 a.m. on Sept. 12 at district headquarters, 5920 Linea Del Cielo, Rancho Santa Fe.
“All water agencies are under tremendous pressure to control costs,” said Santa Fe board President Michael Hogan. The district has reduced retirement benefits for new hires and eliminated positions, but, “I think the time is right to have a discussion of what are the other options, including consolidation.”
Over the past six years, the Santa Fe board has imposed 74 percent in rate hikes on its customers, which director Greg Gruzdowich said is equivalent to a doubling of rates when annual increases are compounded.
Water agency officials have long pointed to the increasing costs of “imported water” —which is sold to local agencies by wholesalers such as the Metropolitan Water District of Southern California — as the key driver of higher local water rates.
But Gruzdowich, who was elected in 2012 to the Santa Fe board, believes districts can also do more to keep their own costs in check and reduce upward pressure on water rates.
“This district has done a great job providing quality water to our residents, the issue is could we have done better? The answer is yes, we can do better, and lower the cost for same quality of water,” Gruzdowich said.
The most likely place to look for savings is to reduce administrative overhead, according to Gruzdowich. If two districts merge, he said, they can eliminate administrative positions by serving the combined territory with the equivalent of one administrative staff.
“If you can leverage administrative and support staff for two districts instead of one, that’s where the savings come from,” Gruzdowich said.
But Hogan and Santa Fe general manager Mike Bardin caution that consolidation is a complicated process that will require a thorough analysis.
“It’s very complex and it’s not something that can happen overnight,” Bardin said.
One potential complication is that Santa Fe is one of the relatively few water agencies in San Diego County with its own local water supply, a share of the water in Lake Hodges. That asset provides Santa Fe customers with more water reliability in the event of a drought or disaster, and is also a cheaper source of water when compared with imported water, Bardin said.
That local water supply is one reason why Santa Fe’s rates are in the lowest one-fourth of the two dozen water agencies in San Diego County, and a consolidation could “dilute that benefit,” Bardin said.