Solana Beach water district, other agencies protest proposed Metropolitan rate hikes

By Joe Tash

The Santa Fe Irrigation District has joined forces with other water agencies and civic groups in San Diego County to protest proposed rate increases by the Metropolitan Water District, Southern California’s water wholesaler.

The local groups have sent letters to Metropolitan, and a delegation also spoke against the proposed rate increases of 1.5 percent over each of the next two years, at a public hearing in Los Angeles on March 11.  The Metropolitan board is expected to consider the rate increases — as well as a decision to maintain its current property tax levy on Southern California residents — at its next meeting on April 8.

Opponents of the rate increase and property tax proposals contend Metropolitan has taken in $400 million above its own maximum budgeted reserves over the past two years, and simply doesn’t need the money.

“Any increase from Metropolitan would be passed down to the San Diego County Water Authority and in turn to the 24 water agencies in San Diego County.  It trickles down,” said Michael Hogan, president of the Santa Fe board, and also a member of the County Water Authority and Metropolitan boards.

San Diego officials are asking Metropolitan why it needs to raise water rates and maintain its current property tax levy (which averages about $10 per year on the property tax bills of Southern California residents) when it has generated surpluses of hundreds of millions of dollars over the past two years, Hogan said.

“They basically said we won the lottery, let’s figure out what to do with the money.  There’s no discussion of giving that back to the ratepayers,” said Hogan.

“Our argument is simply that it’s totally unnecessary.  They’re gouging us,” said Santa Fe director Alan Smerican, who testified against the rate increases and property tax proposal at the March 11 hearing in Los Angeles.

Officials from the city of Oceanside and other San Diego County water agencies also testified at the hearing, and agencies — including business groups such as the San Diego Chamber of Commerce — submitted letters, all in opposition to the proposed rate hikes.  Santa Fe general manager Michael Bardin wrote to Metropolitan in early March with his agency’s objections.

In response, Metropolitan assistant general manager Gary Breaux acknowledged in a letter that the agency has more revenues than planned due to increased water sales and unanticipated cost savings.

“Metropolitan’s Board of Directors is considering using these unanticipated revenues from increased sales and savings from budgeted costs that were lower than expected to buffer reserves, pay down debt, and acquire more water to replenish our reservoirs. These actions will ensure lower rates for all  Southern Californians in the future,” wrote Breaux.

Hogan said if Santa Fe had revenue above its maximum reserve levels, it would use the money to keep rates down.

This year, Santa Fe maintained the same rates as last year, avoiding a rate increase for the first time in more than a decade.  In order to avoid an increase, the district took $1.7 million from a rate stabilization reserve fund.

If Metropolitan raises its rates, Smerican said, “Everyone has to either raise their rates or eat the cost somehow.”

Santa Fe has not yet set its rates for 2015.

Along with its rate increase, Metropolitan is also considering maintaining the current level of a property tax levy on Southern California residents.  Hogan said the state Legislature intended for the levy to decrease over time and eventually go away as Metropolitan retired its debt.

As with the rate increase, San Diego County water officials are asking why the property tax rate should be maintained at the current level in the face of Metropolitan’s excess reserves.

“San Diego is the lone voice in the wilderness that’s asking these tough questions,” said Hogan.  “The silence in the board room with regard to directors’ response to this is surprising”

Santa Fe customers in Rancho Santa Fe, Solana Beach and Fairbanks Ranch can provide their opinions on the proposed rate increase and property tax level by emailing Metropolitan general manager Jeffrey Kightlinger at OfficeoftheGeneralManager2@mwdh2o.com.

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