BOARD AGENDA MEMORANDUM
SUBJECT:
Title
Continue Public Hearing - Annual Report on the Protection and Augmentation of Water Supplies - February 2017 and Recommended Groundwater Production and Other Water Charges for Fiscal Year 2017-2018 (FY 2017-18) (Continued from April 13, 2017).
End
RECOMMENDATION:
Recommendation
A. Continue the public hearing pursuant to Section 26.6 of the District Act to consider the District FY 2017-18 Annual Report on the Protection and Augmentation of Water Supplies, and direct staff to review such report with, and solicit comments from the District’s advisory committees;
B. Hear public comments from groundwater producers and any interested persons regarding such report;
C. *Consider additional information provided by staff; and
D. Close the public hearing.
Body
SUMMARY:
Section 26.6 of the District Act requires a public hearing regarding the Protection and Augmentation of Water Supplies report be held on or before the fourth Tuesday of April. This public hearing is conducted to inform the community of the activities performed by the District to ensure reliable water supply and the recommended groundwater production and other water charges to pay for those activities. The hearing provides opportunity for any interested person to submit comments to the Board. This year’s rate setting process includes a formal protest procedure consistent with Board Resolutions 12-10 and 12-11 (See attachments 3 and 4). If written protests are filed by a majority of well owners or surface water operators, the groundwater production charge or surface water charge, respectively, cannot be increased.
The District’s Annual Report on the Protection and Augmentation of Water Supplies (PAWS), which can be found at www.valleywater.org <http://www.valleywater.org>, was published on February 24, 2017.
Staff proposes a 9.6% increase in the North County (Zone W-2) Municipal and Industrial groundwater production charge. Staff recommends maintaining the treated water surcharge at $100 per acre-foot and increasing the non-contract treated water surcharge to $100 per acre-foot. The average household in Zone W-2 would experience an increase in their monthly bill of $3.55 or about 12 cents a day.
In the South County (Zone W-5), staff recommends a 6.4% increase in the M&I groundwater production charge. The average household in Zone W-5 would experience an increase in their monthly bill of $0.86 or about 3 cents per day. The staff proposed increase to the agricultural groundwater production charge is 10.4% for both zones. An agricultural water user who pumps 2 acre-feet per acre per year would experience an increase of $0.25 per month per acre.
Staff recommends a 21.5% increase to the surface water master charge. This increase results in a 9.9% increase in the overall North County municipal and industrial surface water charge and 7.3% increase in the overall South County municipal and industrial surface water charge. The overall agricultural surface water charge in either zone would increase by 14.5%. Due to the continued severity of the drought, the water district suspended nearly all raw surface water deliveries in 2014. Many raw surface water users were forced to find an alternative source of water, primarily the groundwater basin. However, the district intends to reinstate untreated surface water users due to much improved water supply conditions.
For recycled water delivered in South County, staff recommends increasing the M&I charge by 6.7%. For agricultural recycled water, staff recommends a 3.2% increase. 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 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, most notably purified water. Additionally, we are projecting lower water usage than pre-drought averages, which results in lower revenue.
Staff recommends setting the State Water Project Tax at $26 million for FY 2017-18. This translates to a property tax bill for the average single family residence of roughly $44.00 per year. The recommended SWP tax is consistent with past practice. If the recommended FY 2017-18 State Water Project Tax is not approved, the M&I groundwater production charge would need to be increased by an additional $148/AF in North County and $31/AF in South County. The open space credit would increase by roughly $755,000.
The District’s Annual Report on the Protection and Augmentation of Water Supplies, among other information, contains a financial analysis of the District’s water utility system and additional details about the above recommendations. This report can be found at www.valleywater.org <http://www.valleywater.org>
FINANCIAL IMPACT:
There is no financial impact associated with holding the hearing. If at a subsequent meeting, the Board approves the recommended groundwater production and other water charges or obtains alternate funding mechanisms, the Water Utility should have sufficient funding for planned operations and capital improvement projects for fiscal year 2017-18.
CEQA:
The recommended action, the holding of a public hearing is not a project under CEQA. Further, 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: Staff Report (April 11, 2017)
Attachment 2: PowerPoint (April 11, 2017)
Attachment 3: SCVWD Resolution No. 12-10
Attachment 4: SCVWD Resolution No. 12-11
*Supplemental Agenda Memo
*Supplemental Attachment: PowerPoint
UNCLASSIFIED MANAGER:
Manager
Jim Fiedler, 408-630-2736