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Sunday, January 20 , 2019, 12:14 pm | Fair 62º


Goleta Water District Continues to Weigh Options for Plugging Revenue Drain

With a decision looming on proposed rate hikes, general manager says 'there's no other way to raise revenues'

It was a sentiment repeated multiples times Thursday night, but consultant Grant Hoag most succinctly stated the Goleta Water District’s position: “Your backs are against the wall.”

Hoag was brought in to evaluate the district’s position and the potential rate increases for new development.

District leaders are contemplating a 73 percent rate hike for any application requiring an increase in commercial water use. Any amount greater than what’s been used on the property previously would be subject to the higher rate. And Hoag said those increases are desperately needed.

Despite the district’s policy to keep $13 million on hand, all of its reserves have been depleted, he said. That amounts to six months of operating costs for the district. Customer water usage and sales have dropped 12 percent in the past two years, and on top of that, he said, the district has $10 million in unfunded, but essential, infrastructure projects over the next five years.

Hoag insisted the rate increases wouldn’t have any implications for agricultural water.

No decisions were made Thursday, but the GWD board must decide at next week’s meeting on an approach to put before ratepayers. Staff then will notify ratepayers of the proposal and of the June 2 board meeting at which district leaders will make a decision.

Decision makers will make note of any protest letters they get. Under Proposition 218, if 50 percent plus one of the district’s ratepayers disagree with the increases, the board can’t move forward on them. Even if a large protest of less than a majority comes forward, the board may not act based on the message sent by ratepayers.

Any approved changes would take effect July 1.

Timing when to take on those projects, reducing the amount of cash reserves to $6 million from $13 million, and implementing the rate hikes were all in the mix of proposed solutions. Various combinations of those three elements were put before board members.

No matter which option is selected, a typical single-family bill that qualifies as new development would face an increase of at least $11 a month. That rate of at least $86 per month would put rates above those of Santa Barbara and Montecito, but well below Carpinteria, which boasts $106 per month. Goleta’s current rates for that type of home are $75 per month, the lowest on the South Coast.

Board member Bert Bertrando was skeptical of the study put forward by Hoag. He said he wanted staff to explore other revenue-generating scenarios, such as using groundwater, which is cheaper for the district.

But Hoag said that many of the district’s costs are fixed, such as what it pays for State Water and for water from Lake Cachuma.

Board member Lauren Hanson, who was elected in 2008, said it was clear even then that the district had structural issues that needed to be addressed.

“It did not seem like the time to be looking at rates,” she said, adding that in the meantime, costs have been cut and debt refinanced — but that more must be done.

During public comment, attorney Susan Petrovich, who was representing agricultural interests, urged the board to scrutinize Hoag’s data “as if you were the target of these rate increases.”

Kirsten Deshler, director of government relations at UCSB, said the university and its infrastructure represent about 5 percent of the district’s business.

“We think that’s pretty high,” she said, adding that UCSB was willing to help find a solution, but a 73 percent increase would dramatically affect the campus. “We could not absorb (that cost).”

Deshler said UCSB would be amenable to supporting the plans put forward that would maintain current rates.

“If we don’t recuperate revenues, we’re not going to be able to continue to function in a solvent manner,” said John McInnes, the district’s general manager. “We’re down to the point to where there are no more costs to be cut.”

The district is renegotiating costs with its union, SEIU 620, but all of the other costs “we’ve cut down to the bone,” he said. “There’s no other way to raise revenues. ... It’s a very difficult situation.”

McInnes said that when he began working at the district a year ago, the actual capital improvement needs amounted to 146 projects totaling more than $120 million.

“We examined very closely what projects were absolutely necessary ... or required by law,” he said. As a result, the district came up with $11 million of unfunded capital projects that have to be done in the next five years. “It’s not an option not to do them,” he said.

The Goleta Water District’s next board meeting is scheduled for Thursday.

Noozhawk staff writer Lara Cooper can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk or @NoozhawkNews. Become a fan of Noozhawk on Facebook.

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