Frequently Asked Questions
Ventura County Waterworks District (District) No. 19 (Somis)
The District was formed on November 4, 1980 when it assumed responsibility for the Rancho Las Posas Mutual Water Company. The District provides water to the community of Somis. Water is imported from the State Water Project, delivered through the Metropolitan Water District of Southern California, and Calleguas Municipal Water District, as well as groundwater from three local wells. Approximately 20% of water is delivered from imported water sources and 80% of the water is from local groundwater, which is pumped from deep aquifers beneath the Las Posas Valley.
As with other agencies, the District faces significant challenges, including aging infrastructure, regulatory compliance, environmental sustainability, and higher costs of water.
Q: Why are rate adjustments required?
A: The last time rates were adjusted was January 2018. Costs have increased by $600k cumulatively over the past two years. Revenues have decreased by $600k, for a net deficit of $1.2M over the past two years. Additional costs the District will experience from fiscal year 2019 to fiscal year 2020:
- Increases in the cost of power of approximately $107k annually;
- Increases in the cost of labor, including salaries and benefits of approximately $326k annually;
- Las Posas Basin groundwater adjudication attorney fees of approximately $66k; and
- $1.2M Loan for Well 2 Iron and Manganese Filtration Project estimated $60k annually for 30 years.
Q: Why does the District need a loan for the Well 2 Iron and Manganese Project when it received $2.65M in State grant funding?
A: The total cost to complete the Well 2 project is approximately $3.85M and unfortunately, exceeds the amount of State funding available. This total includes the cost to award the construction contract, construction inspection and contract oversight provided by County staff, construction oversight by the Designer of Record, and a 10% construction contingency. A $1.2M loan is required for the County to award the contract and to cover the rise in construction management costs. This loan is estimated to cost rate payers $60k per year over the next 30 years.
Q: Why can’t the District fund the $1.2M required for Well 2 from its cash reserves?
A: The District revenue has not kept up with inflationary pressures over the past two years and we are projecting a net operating loss of almost $500,000 for fiscal year 2020. This operating loss will be funded from the District’s cash reserves, leaving insufficient capital to fund the $1.2M required to award the Well 2 Treatment Facility.
Q: I heard the District had a loan from the United States Department of Agriculture (USDA) that could have been used for the Well 2 Treatment Facility. What happened with this money and why didn’t the District use this funding?
A. The District received a $5 million loan at an interest rate of 3.375% from the USDA in 2013. In 2014, the District utilized $3M of the USDA loan for pipeline replacement projects, the Well 4 Blending Station, and pump station replacement. The District is currently paying $160,900 per year on the principal and interest.
Facts about the Discontinued Use of the USDA Loan:
- USDA loans are designed for very small water agencies with no in-house engineering capabilities.
- County Counsel review determined the USDA-mandated contract documents were incompatible with County procurement and regulations.
- USDA dictated sole sourcing of treatment equipment for the Well 2 Project, which is an anti-competitive process inconsistent with County Public Works best business practices.
- Not using USDA financing, allowed the District to secure a $2.65M grant from the State
- The State grant saves the District approximately $150,000 per year in principal and interest.
- USDA loan would have required payments for the same amount.
Q: Can the District increase its revenue without raising the rates? What happens if we don’t raise rates?
A: The only other way to increase revenue would be through a two-thirds voter-approved property tax special assessment for each parcel served by the District.
The impacts of insufficient revenue are:
- Potential to go cash negative;
- Inability to acquire bond debt required to award Well 2 Treatment Facility Project may:
- Result in State Division of Drinking Water shutting Wells 2 and 3 down
- Result in an increase in purchasing more expensive imported water
- Loss of Wells 2 and 3 could result in a 50% increase in water rates
- Future rate adjustments will be steeper;
- Inability to acquire bond debt for future pipe replacement projects and Well 3 Treatment Facility; and
- The District may have to defer maintenance and repairs, which will exacerbate existing infrastructure problems due to old age.
Q: The District is always talking about needing to replace old pipes and reservoirs. What is the plan and how will these projects be funded?
A: The District has a long-term capital replacement plan that includes projects to replace old water main pipes and replace aging reservoirs.
- Replacement projects typically cost between $3M and $5M depending on the scope.
- The District will continue to seek out State and Federal Grant funding but will likely be required to take out additional Debt to fund these projects.
- With adequate revenue, the District can execute approximately $2-3M in debt-funded projects per year over the next 10 to 15 years.
Q: How can you guarantee that I am not subsidizing other rate payers?
A: In 2017, the District completed a re-structuring of its rates in order to ensure compliance with Proposition 218.
- Proposition 218 was enacted in 1996 to ensure that rates and fees are reasonable and proportional to the cost of providing service.
- District rate structure established in 2017 is consistent with Proposition 218
- District rate structure is set to not exceed the proportionate cost of providing water services.
Q: Since Agricultural Water Service makes up 60% to 70% of the water the District provides, why can’t the District reduce the Agricultural Water Service rate?
A: Agricultural Water Service customers have the single largest demand on the District’s water system. The water system must be designed to meet peak demands.
- There are additional costs associated with designing, constructing, operating, and maintaining facilities to meet peak demands.
- These peak demand costs need to be allocated to those imposing costs on the utility.
- Different customer classes impose different peak demands on the water system.
- The 2017 Rate re-structuring ensured that the costs of water rates and charges are recovered from each class of customer in proportion to the cost of serving those customers.
- Reducing the cost of the Agricultural Water Service rate would create inequity amongst rate payers
- Any savings to Agricultural customers would need to be subsidized by the District’s residential, commercial, industrial, and institutional customers and would violate the requirements of Proposition 218.
Q: Is the construction of a separate water distribution system to supply non-potable water to farms and irrigation feasible?
A: Yes, although it would be cost prohibitive, it is technically feasible to construct a separate water distribution system to supply non-potable water for irrigation.
- The District has 46 miles of pipeline and it would cost approximately $1 million per mile of installed pipeline to build a parallel agricultural system.
- New non-potable storage reservoirs would need to be constructed at a cost of approximately $3 million to $5 million per new reservoir.
- Preliminary analysis by Water and Sanitation staff estimates that a separate system would cost at least $75 million to construct.
Q: How have the Public Safety Power Shut-Offs (PSPS) affected District 19 water operations?
A: The District has been able to successfully keep electrical power on during public safety shutoffs, using backup generators, topping off water tanks and maintaining system pressure.
Q: How do liens on Real Property work? Who is responsible for paying the amount owed in the water bill?
A: On October 15, 2019 the County of Ventura Board of Supervisors adopted Resolution 19-114.
- Resolution declares that the property owner is ultimately responsible for the water or sewer bill.
- Government Code sections 54354, 54354.4 and 54355 and Water Code section 55501 allow for the imposition of liens on delinquent accounts and/or for the collection of water or sewer charges through inclusion on the county tax roll.
- The addressee of the water bill shall be primarily responsible for payment, but if a customer who is not the property owner (e.g., a tenant) is delinquent in its water service payments, the property owner is ultimately liable for all the water service furnished to the premises subsequent to the to the owner’s date of purchase.