HomeMy WebLinkAboutAGENDA REPORT 2017 0227 CCSA SPC ITEM 05A OTEM 5.A.
CITY OF 11,10ORPARK,CALIFORNIA
MOORPARK CITY COUNCIL City Council Weeting
AGENDA REPORT of o2-47-a0/7
ACTION:
TO: The Honorable City Council
FROM: Jeremy Laurentowski, Parks and RecreationaDir-
DATE: February 24, 2017 ( c.;a.t n9 412710
SUBJECT: Consider Waterworks District No. 1 Proposed Water Rate Increases
and Water Rate Protest
SUMMARY
On December 21, 2016 the City Council considered this matter and directed staff to
prepare a water rate protest letter for presentation to the Ventura County Board of
Supervisors on January 10, 2017. The January 10, 2017 hearing to consider the
proposed rate increases for Ventura County Waterworks District No. 1 (VCWWD) was
continued to February 28, 2017.
BACKGROUND / DISCUSSION
When the Council heard the presentation from VCWWD staff on December 7, 2016 and
considered this matter on December 21, 2016 VCWWD was proposing to give
agriculture customers a subsidy by crediting them (lowered rates) for use of
groundwater. This was proposed even though not all water used by agriculture
customers is from groundwater and not all agricultural customers have access to
groundwater. This proposal would have lowered agriculture rates by about 14% and
increased M & I rates between 2% and 4%. City staff did not believe this was in
compliance with Proposition 218. Apparently, County staff, came to the same
conclusion and abandoned this means of subsidizing agriculture customers.
On February 15, 2017, for the first time the City was informed that VCWWD had
prepared a new means of subsidizing agriculture rates at the expense of M & I
customers. While not proposing to increase M & I rates above the proposed rates
contained in the mandated Public Hearing Notice mailed to all customers on November
2016, the most recent scheme to subsidize agriculture rates would result in increased
M & I rates in future years by:
1. Using so called unrestricted revenues (non-rate payers income);
2. Reducing agriculture customer rates by the estimated cost of treating water.
Even though agricultural customers would still receive treated water, they will be
charged as if they are receiving untreated water; and
3. Reducing agriculture customer rates due to the fact that the water service
provided to agricultural customers is interruptible during an emergency, such as
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The Honorable City Council
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earthquake, or other natural catastrophe. VCWWD staff believes that
interrupting service will ultimately reduce the peaking costs associated with water
supply. Peaking costs are based on the overall impact to VCWWD's water
supply system. However, if there is a benefit to agricultural customers, this
benefit should be provided to all users that utilize water for irrigation purposes,
such as the College and School District, various HOA's and City operations to
name a few.
It is not clear from the County's Staff Report but the combined subsidy from these three
items appears to be $2,000,000 for the sixteen (16) month period of March 1, 2017 to
June 30, 2018.
There are numerous unanswered questions from the vague information contained in the
County's Staff Report (February 28, 2017 Board Letter). It appears that the unrestricted
revenue and the cost of treating water have been part of VC1NWD's operating budget in
prior years. Diverting use of these funds to subsidize agriculture rates will only cause
rates for M & I customers to increase in future years. This would be needed to offset
these re-directed revenues and costs so that Reserves can be kept at desired levels, as
well as to fund deferred maintenance and capital items.
This proposal has not been developed with community input and staff believes that this
new scheme to subsidize agricultural water rates violates Proposition 218 in similar
fashion to VCWWD's original proposal regarding well water. In fairness to all
customers, the Board should re-notice the Proposition 218 mandated Hearing and
inform all customers about the agriculture subsidy and the future effect on M & I rates.
FISCAL IMPACT
VCINWD's recommendation to the Board regarding M&I rates coincides with the rate
structure developed by Raftelis Financial Consultants, Inc. City staff believes that the
rate structure for M&I users s fair and equitable. However, the new proposal presented
by VCWWD will ultimately increase M&I water rates in future years, as the subsidy to
agricultural customers will draw down VCVVWD's reserves and will negatively impact
their operating budget.
STAFF RECOMMENDATION
Authorize staff to send protest letter to the Ventura County Board of Supervisors.
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