The Goleta Water District’s proposed 73 percent rate increase for new commercial water users and other possible hikes were the focus of the Goleta Valley Chamber of Commerce’s Issue and Policy Roundtable on Wednesday at the Elephant Bar Restaurant in Goleta.
GWD board President Bill Rosen addressed small-business owners, large high-tech companies, developers, City of Goleta officials, housing providers and Chamber of Commerce board members. He told them that the GWD has made tangible progress since he joined in 2008 in maintaining transparency, expanding its online presence, restructuring long-term debt and hiring a special counsel for advice.
“We have made progress in almost every area of finance, but sadly this is not enough to avoid the increases that we see,” Rosen said.
He cited excess rain, increasing state water costs and a failure to incrementally adjust rates in explaining the district’s dire financial situation.
“While I think what we’ve done is good news, the bad news is really bad,” Rosen said. “We have no operating reserve, no significant capital reserves. … We are operating without a safety net. While we’re not bankrupt, we are potentially in great difficulty.”
The district’s policy is to maintain $13 million in reserves, but there are none; the district ran a $5 million deficit during the past three years.
GWD General Manager John McInnes explained the options the district will consider at a public hearing at 5:30 p.m. Thursday in the Goleta Union School District board room, 401 N. Fairview Ave.
The first rate option is to maintain the current reserve policy and the current water supply charge, McInnes said. If the board chooses not to increase rates for new developments, it could raise fees up to 19 percent for all users to compensate.
“A zero increase does not help the district survive nor benefit consumers,” Rosen said.
Another option included reducing its reserve policy to $6 million and enacting a one-time new water supply charge — a 73 percent rate hike. The other proposal includes a 19 percent increase across the board that would incrementally decrease over a five-year period to offset the deficit, McInnes said. Any additional water than what’s been used on the property previously would be subject to the higher rate.
The current cost for commercial users is $26,240 per acre foot, but that would increase to $45,361 per acre foot, allowing the district to cover its costs.
State water costs the district $8 million annually, about a third of the local agency’s budget, McInnes said, adding that the changes wouldn’t affect existing commercial rates. He said that even after the possible rate hike, rates are still comparable to the Santa Barbara district.
“The rates will still be below the community entities in Santa Barbara and Montecito,” he said.
One listener refuted the GWD’s transparency, saying he couldn’t locate the compensation of GWD’s top executives on the district’s Web site. He also noted that GWD officials said nothing regarding the cost of labor and benefits. The district spends $8 million on labor, $6 million on 58 current employees and $2 million funding 42 retired workers’ pensions, he said.
“How do we avoid mismanagement when you put the district in this position?” he said.
Rosen said he recognizes that pensions are “on the high side.”
“The salaries are fairly comparable while the benefits are richer than other agencies, we are addressing that,” McInnes said.
Goleta Valley Chamber of Commerce chairman Steve Fedde asked whether Goleta’s overall operating expenses are similar to other districts. McInnes replied that they are comparable.
Opponents to the new water supply charge argued that the hike would deter new businesses.
If a new water supply charge is enforced, it would take effective July 1, McInnes said. Customers would have 45 days to protest a possible change after they’re notified by April 15. The district’s budget hearing is scheduled for June 21.