Additional Information on the Agenda From David Smernoff, 11/24/06:

I was asked to provide additional information on agenda item #7  (Approval of modified cost-offset formula) for the Dec. 7th, 2006 meeting. I hope the following provides sufficient background for interested individuals. Your input at the meeting will be considered by the Board prior to making decisions on this program.

At the December 7th, 2006 meeting the Board will discuss changes to the water cost offset program.

The current program structure has no upper limit on expenses due to variation in residents water use. Therefore the Board agreed to establish a cap as a means to accurately budget the expense of the program. Further the Board committed to establishing a cap during the LAFCo MSR process.

The overall goals of the program are to offset water costs for District residents, encourage maximum water use efficiency, and honor the commitment made to District residents during the sale to CalWater, while keeping the total expenditures to 55% of the Water District's available funds.  This budgeted amount was based on the results from the survey distributed to the members of the District earlier this year.

The program currently provides for a $12 fixed offset and a $1.00 per unit variable offset with no cap on the amount of water eligible for the program. The Board will discuss changes in the following areas.

1. Establish the value of the fixed rate.

2. Establish either an annual or monthly cap per household.

3. Establish the amount of the cap (units per household)

4. Establish a start date for the cap to take effect.

5. Establish the value of variable rate

6. Define process to implement changes through CalWater (Board liaison, timing, software issues, costs)

Please note that setting a cap will only redistribute the funds amongst District residents and will not affect the total amount of expenditures dedicated to the cost offset program.

Regards,

David Smernoff

Board President

Comments From Richard Swan (written as a resident), 11/26/06:

Water Board President, David Smernoff has given the broad outlines of the cost offset formula adjustment topic that was scheduled for November but has been postponed to December 7th. As you can see this is a very complex topic with 4 numerical variables to be determined. It is also a very important topic for residents given the very strong support for the cost offset program expressed in the water survey earlier this year.

I understand that several different proposals will be made at the meeting. It is my strong belief that the community would be best served if the details of these proposals were publicly released and discussed well before any vote by the Water Board.

Failing detailed knowledge of planned proposals, I will attempt to clarify the impact of changing any of the variables listed by David:

1. Establish the value of the fixed rate.

 Currently $12 per month. This component is the majority of the cost offset for a little more than half the residents.

 If made larger, the Board would end up writing checks to some low users of water - probably not legal.

If made smaller, it would tend to more evenly balance the % of  rebate between low users and high users.  Currently (no cap) the lowest users gets 92% of there water bill rebated, while at the high end it is about 44%.

2. Establish either an annual or monthly cap per household.

Currently there is no cap. Most discussion of rebates earlier this year was based on having an annual cap.

Water usage varies dramatically based on the weather. Establishing a monthly cap would make it hard to estimate the total cost of the program, since it would depend on the number of dry, hot months. It would also tend to substantially disadvantage higher water users while not aiding lower volume users. Overall the effectiveness of the rebate program would be at the whim of the weather. A monthly cap could perversely encourage usage up to the limit each month.

Personally I think having an annual cap is by far the best path..

3. Establish the amount of the cap (units per household)

The intent of having a cap is to establish a cutoff so that there is no perceived incentive to consume water. Ideally the cutoff point would be above “reasonable” usage and below “excessive” usage. Who is to say what is reasonable? This can quickly become a sterile argument about life style. If I chose to have only a small portion of my property irrigated but choose a job that requires me to fly across the Atlantic once per month, and I play golf each weekend on heavily watered greens am I a “better” person or “better” environmenalist than a neighbor who chooses to put in a beautiful vineyard? Looking at the spread of water usage, I feel there is a reasonable break point at about 800 units. This is a real cap, in that there are users consuming 85% more water than this. Yet, choosing this limit level will only disadvantage a handful of residents.

4. Establish a start date for the cap to take effect.

This is dependent on both giving residents a reasonable chance to establish water conservation measures and the practical implementation of the software at Cal Water to enable the systems.

5. Establish the value of variable rate

This is currently $1 per unit.  Decreasing this value would reduce the benefit to residents. Increasing this value slightly may be possible within the available budget and with all other parameters the same. A substantial increase in this value and paying for it by a low usage cap, would tend to further benefit low end users who already can get up to a 92% rebate on water bills while disadvantaging higher water volume users who (with a 800 unit cap) gain an maximum rebate in the current system of 46%.

From my viewpoint the structure of the current rebate scheme has worked well, Lower rate water users get a substantial percentage rebate and higher water users get a worthwhile rebate. There is little reason to change anything other than to put on a cap as promised to LAFCO.

Within the scope for discussion detailed by the Board it would be possible to substantially subvert the rebate program. Personally speaking, I would see this as a breach of trust with the community particularly after heated debate and the survey by the Board which gained wide response. The Community spoke through the survey and numerous widely attended meetings.  However to ensure that this message is not lost, it would be beneficial to have broad attendance at the upcoming Water Board meeting on Dec 7th at 7:30 p.m. at the home of Perry and Joan Blackmon, 25 Joaquin. 

P.S.   The Water Board has commissioned a very interesting report on the Water District lands.

See http://www.vistaverdeca.org/ltcwd.html . Follow the link to the Thomas Reid report. Good information about local flora and fauna and the environmental and legal issues around any changes to the District lands.

From Curt Parkin 11/27/06:

Thanks for your comments about Water Board actions in your message below--good food for thought. Some further thoughts:

BE AWARE THAT COMING WATER BOARD ACTIONS MAY WELL RESULT IN REDUCTIONS IN OUR REBATES

 

In the Water Board survey completed last May, when asked what amount of the Water Board's budget we would like to see applied to water subsidies, the survey results showed that 18% selected "All of the budget" and 46% selected "The majority of the budget," totaling 64% or nearly 2/3 selecting either "All" or "The majority" of the budget. However, we've seen from David Smernoff's recent message (bottom message below) that the Board has decided that 55% of the budget will be allocated to water-cost rebates. Although David claims that the 55% is "based on the results from the survey," the case can easily be made that 55%--barely more than half--is hardly "All or the majority" expressed in the survey results (seems like 75% would be a better number). The result after holding rebates to 55% of budget and applying a "cap" to the rebates may well mean that many if not most of us will experience decreases in the rebates we're currently enjoying.

 

BEWARE USING ONLY PERCENTAGES AND NOT ACTUAL DOLLARS WHEN EXPRESSING RELATIVE BENEFITS FROM WATER REBATES

 

In your message below, you indicated that lowest users get 92% subsidies whereas high-end users get 44%. I'm not sure about the source of your data, but using numbers Mike Ward distributed in a previous Board meeting, a low-end user (using presumably 1 unit of water/month) now would get a $156/year (92%) subsidy whereas a high-end user (using well above 100 units/mo on average) would get a $1628/yr (44%) subsidy. I would say that in dollars, the 44% subsidy FAR exceeds the 92% subsidy, by as much as $1628 - 156 = $1472/year, so stating only percentages and not dollars can be misleading.

 

Richard, as you can see, I agree with you when you say that the Board may act to "substantially subvert the rebate program." It is important for our community to be kept aware of Board actions in progress, including latest considerations for future use of Water Board lands--the lake and property along lower Lake Road. These important topics will be discussed at the next Water Board meeting at 7:30 pm, Thursday, Dec. 7 at 25 Joaquin, where broad attendance by the community is strongly encouraged.