Another rate hike coming for Santa Fe Irrigation District customers

Customers of the Santa Fe Irrigation District - which provides water to residents of Solana Beach, Rancho Santa Fe and Fairbanks Ranch - will see their water bills rise on Jan. 1, the second rate hike to hit them in seven months.

In May, the district approved a three-year rate plan that called for higher customer rates, designed to increase district revenue by 9 percent per year for each of the three years.  The first of the three increases took effect June 1.

The second rate hike will take effect Jan. 1, while the third increase is slated to take effect Jan. 1, 2018, unless the district's board of directors votes to reject or modify it next year.

The impact of the new rate plan on individual customers varies by the size of their water meter and the amount of water they use.  The district bills its customers every other month.

Only one member of the public addressed the board at its meeting on Thursday, Nov. 17, when the board voted against putting off the second installment of the three-year rate plan.

"I don't know what was more shocking - the results of the presidential election or opening my water bill this month," said Richard Sapp, a member of the Rancho Santa Fe Association board who emphasized that he was speaking as a private citizen.

Sapp, who owns a 2.2-acre property in Rancho Santa Fe, told the board that people who own large parcels are being unfairly penalized under the district's tiered-rate structure, because those who use more water each month are billed at a higher rate.

District officials have argued that under its system, all customers benefit from lower rates charged for lower tiers of water use, and that the charges escalate as customers use more water because the district must purchase more expensive imported water to meet demand.

Sapp's comments are in line with a position held by Santa Fe board member Greg Gruzdowich, who contends that larger water users are in effect subsidizing those who use less water under the district's rate structure.

Gruzdowich, who will step down from the board after Thursday's meeting because he opted not to seek a new four-year term, proposed suspending the planned Jan. 1 rate increase until additional analysis of the district's rate structure can be conducted.  He and director Marlene King voted to delay any rate increase, while a three-member majority of board President Michael Hogan and directors Alan Smerican and Augie Daddi voted against the measure, allowing the rate increase to go forward.

District customers, in addition to Santa Fe's rate increase, will on Jan. 1 face a "pass-through" of cost increases by the district's wholesale water suppliers.  According to figures provided by the district, customers with a 3/4-inch meter who use 24 units of water every two months will see their bills go up by 8.3 percent on Jan. 1, while those who use 50 units every two months will be hit with a 9.9 percent increase.  Customers with 1-inch meters, who use 200 units of water every two months will face an 11.8 percent rate increase.

Thursday's 3-2 vote was the latest in a series of split decisions on  rates that has seen Gruzdowich and King on the losing side.

Even at his last meeting, Gruzdowich continued to press his case against further rate increases, telling the board that he hoped to change the mind of just one of his colleagues and thus alter the outcome.

"We owe it to the community to put the brakes on," regarding further rate increases, Gruzdowich said.

But members of the board majority said Gruzdowich has repeatedly made his case over the past several months, and was offering no new information.

"We've had this discussion many times.  I'm not sure what else there is to discuss," said Hogan.

"You bring this up again to create some turmoil on the board," said Daddi.

Before the board approved the three-year rate plan in May, Gruzdowich and King took the unusual step of encouraging district customers to file written protests to block the rate plan.  While the threshold of more than 50 percent of customers was not achieved, the district did receive protests from about 20 percent of its customers, a record.

Previous to June 1, the district had not raised rates since 2013.  However, rates were raised every year between 2004 and 2013.

In a report, district staff said the Jan. 1 rate increase is needed to cover operating and capital costs, maintain proper reserves and meet its obligations to creditors under its debt service agreement.

At its meeting on Thursday, district officials recognized the contributions of Gruzdowich and Smerican, who will both be stepping down from the board, and welcomed two new board members who were elected Nov. 8, Ken Dunford and David Petree.

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