San Diego County LAFCO approves MOU to handle all FPUD/Rainbow reorganization hearings

San Diego County’s Local Agency Formation approved a memorandum of understanding with Riverside County's LAFCO which will delegate entirely to San Diego LAFCO the potential reorganization in which the Fallbrook Public Utility District and the Rainbow Municipal Water District would detach from the San Diego County Water Authority and become part of the Eastern Municipal Water District.

The 8-0 LAFCO board vote, Oct. 7, also included direction to LAFCO staff to review the economic impacts not only for FPUD and Rainbow but also to the SDCWA and to the 22 other CWA member agencies.

“They’re all going to be affected,” county Supervisor Dianne Jacob said.

FPUD has been part of the San Diego County Water Authority since the CWA was formed in 1944. The Rainbow Municipal Water District was formed in 1953 and became a CWA member. The Metropolitan Water District of Southern California and the CWA began delivering water to San Diego County in 1947. MWD’s San Diego Aqueduct conveys water to a delivery point 6 miles south of the Riverside County line. That location allowed MWD and the CWA to provide equal contributions to connect from MWD's Colorado River Aqueduct to the San Vicente Reservoir in Lakeside. The CWA northern boundary is the county line. All but one of FPUD’s connections are from MWD pipelines rather than from CWA pipelines, and four of Rainbow’s eight connections are to the MWD portion of the pipeline.

The CWA’s supply rate is a melded rate which melds the cost of water delivered from MWD, water purchased from the Imperial Irrigation District under the Quantification Settlement Agreement, and water produced by the Claude “Bud” Lewis Carlsbad Desalination Plant in Carlsbad. The CWA also has transportation, storage and customer service charges along with fees and charges for fixed expenditures which are incurred even when water use is reduced. This creates the possibility that FPUD and Rainbow can reduce their cost of purchasing water – and thus their rates – by detaching from the CWA and becoming part of another MWD member agency.

The Eastern Municipal Water District is a member of MWD and purchases imported water directly from MWD. The Western Municipal Water District is also a member of MWD and provides retail water sales of MWD supply to the Elsinore Valley Municipal Water District as well as to the Rancho California Water District. If FPUD and Rainbow detach from the CWA and join Eastern their status would be similar to that of the two water districts which obtain MWD water from Western. The Eastern Municipal Water District currently covers 555 square miles and includes Hemet, Menifee, Murrieta, Perris, Romoland, San Jacinto, Temecula and Winchester. The district has more than 140,000 water customers.

Each county in California has a LAFCO which handles jurisdictional boundary changes including incorporations, annexations, consolidations and detachments within that county. FPUD, Rainbow and Eastern have been working on a memorandum of understanding which would detail service and expense obligations if FPUD and Rainbow detach from the CWA and join Eastern. FPUD and Rainbow would be responsible for all LAFCO fees. FPUD, Rainbow, and Eastern have also been working with San Diego County LAFCO and Riverside County LAFCO staff, and the staff of the two LAFCO agencies have also been working together.

The San Diego County LAFCO board consists of two county supervisors, currently Jacob and Jim Desmond; one city council representative from San Diego, currently Mark Kersey; two city council members from the county’s other 17 incorporated cites, currently Mary Salas of Chula Vista and Bill Wells of El Cajon; two members from special districts, currently Jo MacKenzie of the Vista Irrigation District, who is also this year’s LAFCO chair, and Barry Willis of the Alpine Fire Protection District, and one public member, currently Bonsall resident Andy Vanderlaan, who lives in the Rainbow Municipal Water District.

San Diego County LAFCO staff initially drafted a memorandum of understanding in which Riverside County LAFCO would take up the annexation to Eastern and San Diego LAFCO would then address the remaining actions. Because the CWA and the other 22 agencies could incur adverse financial impacts if FPUD and Rainbow left, the CWA requested that the process be conducted entirely within San Diego LAFCO.

“The Authority’s position is to ensure that there is rate neutrality throughout,” Claire Collins, the legal counsel for the CWA at the San Diego LAFCO meeting, said.

The Riverside County LAFCO board met Sept. 26 and unanimously approved delegating the entire process to San Diego County’s LAFCO staff and board.

“We were happy to consider that,” Nick Kanetis, Eastern Municipal Water District deputy general manager, said. “We have no objection to that.”

The San Diego LAFCO board and staff members prefer that FPUD and Rainbow work out financial terms to compensate the CWA and the 22 remaining agencies which would be affected by the reorganization.

“It really shouldn’t be up to us,” Desmond said. “We’re more about if they meet all the requirements of a boundary change.”

LAFCO executive officer Keene Simonds said that LAFCO would consider financial terms, if no agreement was reached.

“Ideally they come to terms on this,” Simonds said.

“The ideal would be that everybody comes together,” Jacob said.

A municipal service review and a sphere of influence update will be necessary before any jurisdictional change. A municipal service review evaluates services and anticipated needs, and a sphere of influence study determines the boundaries best served by a particular agency. San Diego County’s LAFCO will handle the municipal service review and sphere of influence update as well as the detachment and annexation.

“I think our staff is going to have a lot of questions,” MacKenzie said.

The Oct. 7 vote was on approving the Memorandum of Understanding for San Diego LAFCO to conduct the entire process, so the merits of the reorganization were not a factor in the unanimous vote.

“We have an MOU before us today,” Jacob said.

“It just lays out the process for us in terms of next steps if we decide to move forward,” Bebee said. “We can continue down the road.”

“We’re supportive of the commission's actions,” Rainbow general manager Tom Kennedy said.

“We’re supportive of the action that the LAFCO took to have any proposed reorganization for Fallbrook and Rainbow be conducted entirely through San Diego LAFCO,” Kanetis said.

Before LAFCO considers any aspect of the reorganization an application must be submitted. Bebee and Kennedy are working on draft applications which will require FPUD and Rainbow board approval before they can be submitted to LAFCO.

“The next step would be to bring the application to the boards,” Bebee said.