Solvang is exploring whether private companies are willing to buy, lease or operate the city’s water and sewer systems.
The City Council is searching for ways to lower utility bills for Solvang residents, who pay some of the highest water rates in the county, according to Utility Director Jose Acosta.
“This is a multi-step process. It’s not going to happen overnight,” City Manager Randy Murphy said of the item discussed by the council Monday night.
Acosta said issuing a request for expression of interest is strictly to gather information and would not commit the city to any sale or future endeavor of privatizing the city’s utility operations.
A request for expression of interest is a non-binding document that is used as a market-research tool to see if any suppliers or contractors are interested in taking over a project.
Council members instructed staff to bring all market findings back for council review before any formal request for proposals is issued.
Councilwoman Elizabeth Orona noted that the primary objective must remain relieving costs for residents.
“I would just say let’s be careful with how much staff time and energy we spend if we can’t qualify that this is really going to save our ratepayers some money,” Orona said. “That should be the north star for us on this whole exercise.”
The announcement led to questioning from residents, such as Kathryn Rohrer, who raised concerns on whether the privatization proposal had been sent to the Los Olivos Community Services District. That agency is considering sending its wastewater to the Solvang treatment plant rather than building its own.
Acosta offered reassurance that any private operator would be legally bound to all interagency agreements.
“The [request for expression of interest] does mention that they would be obligated to take over any agreements, interagency agreements that we have,” Acosta said. “So they would assume those and honor those contracts and have to put that into the contract if we did.”
Solvang is simultaneously pursuing a utility rate study through 2027 plus a proposed tourist transient occupancy tax utility measure to address its 10-year capital improvement program. The capital improvement program totals nearly $68 million — $39 million for water, $5.3 million for sewer collections and $23.3 million for wastewater plant upgrades.
Ultimately, any proposed utility sale or lease would require public hearings, regulatory approval, including the California Public Utilities Commission, and a majority approval from Solvang residents during an election.
The request for expression of interest will be posted on PlanetBids for 30 to 45 days, and staff will review responses in early 2027.
