The Goleta Water District’s fiscal situation and an ongoing cost-of-service study were the focus of discussion at a public workshop held Tuesday night.

The meeting was designed to educate interested parties on the financial status of the county’s largest special district and the factors that may go into a potential change of rates for customers.

“Quite frankly, we’re in a challenging financial position,” GWD General Manager John McInnes said.

He said three consecutive years of dwindling revenues combined with multimillion-dollar requirements for capital improvements, a decrease in demand and major investment losses have resulted in a projected shortfall of about $7.7 million per year for the next five years. The district has no cash reserves, he said.

No rate changes, if any, have been suggested, because the cost-of-service study to be performed by an outside consultant has yet to be completed. The study will take into account the district’s costs associated in delivering the water, which comes from several sources and in potable or nonpotable forms.

Customer demand is also measured, taking into account certain categories based on usage habit. The result of the two factors creates a cost allocation that is subject to adjustments over time. The district’s revenue comes solely from its customers and as a public agency is allowed to collect only fees proportional to its cost of service.

The economic threat to local farmers was a major concern at Tuesday’s meeting, as rising agricultural rates could mean the end of their livelihood.

“We’re playing with a major tool of their income,” local resident Ann Crosby said.

Currently, agricultural users enjoy the lowest water rates, at $1 per hundred cubic feet, while urban users get their potable water at $3.71 for the same amount. Of particular concern were the agricultural ratepayers who share their water source with the urban users, and thus get agriculture rates for potable water. Some feared rates might go up on them.

Other public concerns included the ever present issue of transparency, as many complained that their correspondence seems to have gone unacknowledged by the district. Others suggested comments from meetings, particularly ones about the ongoing effort being posted on the district’s Web site.

Any change in rates, according to Proposition 218, would require the approval of a majority of the district’s customers.

Much of the discussion Tuesday evening also centered on the procedure for protests, one that has yet to be decided. There were suggestions for a potential postcard sent to ratepayers for them to fill out and return via mail. According to the district’s consulting attorney, while it takes the objection of half of the ratepayers to stop a rate change, it typically takes far less than that for water districts to reconsider their strategy.

Tuesday’s meeting looked to be one in a series on the topic. In February, the board may be dealing with guidelines regarding protest procedures and a potential form to be sent to ratepayers. In March, the results of the cost-of-service study will be discussed as well as any updated rates.

Noozhawk staff writer Sonia Fernandez can be reached at Follow Noozhawk on Twitter: @noozhawk or @NoozhawkNews.