BOARD AGENDA MEMORANDUM
SUBJECT:
Title
Adoption of Groundwater Production and Other Water Charges for District Fiscal Year 2019-2020.
End
RECOMMENDATION:
Recommendation
A. Adopt a Resolution DETERMINING GROUNDWATER PRODUCTION CHARGES FOR FISCAL YEAR 2019-2020; and
B. Adopt a Resolution DETERMINING SURFACE WATER, TREATED WATER, AND SOUTH COUNTY RECYCLED WATER CHARGES FOR FISCAL YEAR 2019-2020.
Body
SUMMARY:
The District annually considers adjusting water charges necessary to provide the revenue for the service of providing water supply to Santa Clara County. Pursuant to Section 26 (and its applicable subsection) of the District Act, an annual public hearing is held before the Board on or before the fourth Tuesday of April to consider whether or not to levy a groundwater charge. The rate setting process for surface water charges includes a formal protest procedure consistent with Board Resolution 12-10. If written protests are filed by a majority of surface water operators/property owners, the surface water charge, for that zone, will not be increased.
On April 9, 2019, the Board opened the public hearing on the groundwater production charges for fiscal year 2019-20. The public hearing was continued to the evening of April 11, 2019 in Morgan Hill and closed on the evening of April 23, 2019 in San Jose. Following the close of the public hearing, the process to validate and tabulate all protests received began. With the following parameters outlined in Resolution 12-10, the District’s Clerk of the Board has determined that a majority of surface water operators and/or parcel owners did not protest in either North County (Zone W-2) or South County (Zone W-5).
The counts of the protests were not available at the time this agenda memo was written. They will be provided in a supplemental agenda item.
Since the valid protests received for Zone W-2 and Zone W-5 from surface water operators, and respective parcel owners is less than a majority, there is no impediment to proceeding with the water charges that are at or below those recommended by staff.
Staff recommends that the Board adopt by resolution the following proposed Fiscal Year (FY) 2019-20 groundwater production and other water charges, outlined below and in the accompanying table:
1. In the North County (Zone W-2), staff proposes a 6.6% increase in the Municipal and Industrial (M&I) groundwater production charge to $1,374/Acre-Foot (AF). Staff recommends maintaining the treated water contract surcharge at $100/AF and maintaining the treated water non-contract surcharge at $50/AF, which will encourage retail customers to continue taking treated water at current levels as surface water supplies are projected to be adequate. The average household in Zone W-2 would experience an increase in their monthly bill of $2.93 or about 10 cents a day.
2. In the South County (Zone W-5), staff recommends a 6.9% increase in the M&I groundwater production charge to $481/AF. The average household in Zone W-5 would experience an increase in their monthly bill of $1.07 or about 4 cents per day.
3. The staff recommendation for agricultural groundwater production charges has been adjusted to conform with Board direction received on April 23, 2019 to maintain the Open Space Credit Policy as is for the next two years. Accordingly, for fiscal year 2019-20, staff recommends a 6.8% increase to the agricultural groundwater production charge to $28.86/AF in both zones, which would maintain the agricultural groundwater production charge at 6% of the South County Municipal and Industrial groundwater production charge. An agricultural water user who pumps 2 AF per acre per year would experience an increase of $0.31 per month per acre.
4. Staff recommends a 4.4% increase to the surface water master charge to $37.50/AF. This increase results in a 6.5% increase in the overall North County M&I surface water charge to $1,411.50/AF and 6.7% increase in the overall South County M&I surface water charge to $518.50/AF. The overall agricultural surface water charge in either zone would increase by 10.8% to $69.73/AF.
5. For recycled water supplied by the South County Regional Wastewater Authority Facility at Gilroy, staff recommends increasing the M&I charge by 7.2% to $461.00/AF. For agricultural recycled water, staff recommends a 9.6% increase to $59.62/AF. The increase maximizes cost recovery while concurrently providing an economic incentive to use recycled water. The pricing is consistent with the provisions of the “Wholesale-Retailer Agreement for Supply of Recycled Water Between Santa Clara Valley Water District and City of Gilroy.”
The attached resolutions would officially establish water charges for fiscal year 2019-20, which would become effective July 1, 2019. The proposed increases in water charges are necessary to pay for critical investments in water supply infrastructure rehabilitation and upgrades, and the development of future drought-proof supplies. Those investments include continued planning of the Pacheco Reservoir Expansion project, which would provide emergency water supply; the Rinconada Water Treatment Plant Upgrade, which will extend the plant’s service life for the next 50 years; the Anderson Dam Seismic Retrofit, which will help ensure public safety and bolster future water supply reliability, and a $650M investment for recycled and purified water expansion that would bring up to 24,000 AF of new water supply to the county each year.
Staff also recommends setting the State Water Project (SWP) tax at $18 million for FY 2019-20. The proposed $18 million SWP tax translates to a property tax bill for the average single family residence of roughly $27.00 per year. If the recommended FY 2019-20 SWP tax is not approved, the impact translates to $92/AF in terms of the M&I groundwater production charge in North County, $19/AF in South County, and $523,000 in terms of the open space credit to recoup lost tax revenue. Staff’s recommendation regarding the SWP tax is consistent with the District’s past practice and with the approach of other water districts and agencies that maintain State water supply contracts. The resolution to set the SWP tax is one of the resolutions included in the agenda item to adopt the FY 2019-20 Budget.
FINANCIAL IMPACT:
If the Board approves the recommended groundwater production and other water charges, the Water Utility should have sufficient funding for planned operations and capital improvement projects for fiscal year 2019-20.
CEQA:
The recommended action, establishment of groundwater production charges, is not a project under CEQA. CEQA Guidelines Section 15273(a) reads as follows: CEQA does not apply to establishment or modification of charges by public agencies which the public agency finds are for the purpose of meeting operating expenses; purchasing or leasing supplies, equipment and materials; meeting financial reserve needs/requirements; and obtaining funds for capital projects needed to maintain service within existing service areas.
ATTACHMENTS:
Attachment 1: Resolution, Groundwater Production Charges
Attachment 2: Resolution, Surface, Treated and Recycled Water
UNCLASSIFIED MANAGER:
Manager
Nina Hawk, 408-630-2736