LAFCO detachment review committee holds first meeting

A committee to review issues regarding the proposed detachment of the Fallbrook Public Utility District and the Rainbow Municipal Water District from the San Diego County Water Authority held its first meeting July 6.

Because of the coronavirus quarantine the Advisory Committee on the Fallbrook/Rainbow Detachment meeting was by teleconference. San Diego County's Local Agency Formation Commission created the committee to address issues associated with the application of FPUD and Rainbow to detach from the CWA and annex to the Eastern Municipal Water District.

"For the most part I think we stuck to the agenda," said LAFCO executive officer Keene Simonds.

The committee consists of FPUD general manager Jack Bebee, Rainbow general manager Tom Kennedy, SDCWA general manager Sandra Kerl, CWA vice chair Gary Croucher, CWA Imported Water Committee vice chair David Cherashore, Eastern Municipal Water District deputy general manager Nick Kanetis, LAFCO Special Districts Advisory Council chair and Olivenhain Municipal Water District general manager Kimberly Thorner, City of Lemon Grove general manager and LAFCO Cities Advisory Committee member Lydia Romero, San Diego Association of Governments regional models analyst Rachel Cortes and San Diego County Department of Parks and Recreation Director Brian Albright.

Three LAFCO staff members participated in the July 6 meeting: Simonds, chief policy analyst Robert Barry and legal counsel Holly Whatley.

"It was a good initial productive meeting setting the stage for moving the process forward," Bebee said. "A lot of it was just outlining the LAFCO process. They provided some initial indication on how they plan to process it."

The May 4 LAFCO board meeting included an 8-0 vote to confirm any LAFCO board support for the detachment with a public election, although which agencies will be included in that public vote are still to be determined. The motion also included the creation of a technical advisory committee. Simonds drafted proposed tasks for the committee and four proposed membership composition options.

An 8-0 LAFCO board vote June 1 approved the composition of the committee, although with Simonds subsequently appointing the specific members and the list of tasks for the committee.

The July 6 meeting lasted approximately 90 minutes. "It was an orientation, kind of set the stage," Simonds said. "It's priming us for more substantive decisions."

"It was really just LAFCO's initial assessment," Bebee said.

FPUD and Rainbow can reduce their cost of purchasing water – and thus their rates – by detaching from the CWA and becoming part of another Metropolitan Water District of Southern California member agency.

The two districts anticipate a combined savings of between $8 million and $10 million annually by purchasing water from Eastern rather than from the CWA. Due to fixed costs, the CWA and the other 22 CWA agencies could incur adverse financial impacts if FPUD and Rainbow left; a preliminary CWA analysis estimated an annual impact of $13 million in 2018 dollars.

The October 2019 San Diego LAFCO board meeting approved a memorandum of understanding with Riverside County LAFCO for the entire process be conducted by San Diego LAFCO. The CWA requested that any reorganization have rate neutrality, and the 8-0 LAFCO board vote which approved the MOU also gave direction to LAFCO staff to review the economic impacts not only for FPUD and Rainbow but also to the CWA and the other member agencies.

The LAFCO board and staff members prefer that FPUD and Rainbow work out financial terms to compensate the CWA and the 22 remaining agencies, although LAFCO would consider financial terms if no agreement is reached.

The CWA has also expressed concern about member agency reliability. MWD supply is obtained either through the State Water Project, which transports water from Northern California including through the Bay-Delta, or from the Colorado River Aqueduct which runs from Parker to Lake Mathews, and the CWA's concerns also include impacts to the Bay-Delta.

Both the CWA and MWD have a weighted vote for board action items which is based on cumulative historical financial contributions, and the CWA is also concerned that the loss of the two member agencies would adversely impact the CWA's weighted vote at MWD meetings.

The first third of the July 6 meeting involved a description of the process, which was followed by an update on the status of the process, the expectations and how to proceed.

"They talked about what would be the key items to discuss at the next meeting," Bebee said.

The LAFCO board does not meet in July but usually meets on the first Monday of each month. LAFCO's Aug. 3 board meeting is expected to have routine items only other than a report about the advisory committee meeting (the separation of the San Diego County Regional Fire Authority from the San Diego County Regional Communications System is expected to be heard by LAFCO in September), so the next advisory committee meeting may occur Aug. 3 in the late morning although the specific date for the next meeting was not scheduled July 6.

The August meeting will provide an update on the process and will also discuss whether outreach to the other 22 CWA agencies should be conducted by LAFCO or by the CWA, LAFCO's California Environmental Quality Act responsibility, and a potential exit fee FPUD and Rainbow would pay to the CWA.

"The next meeting will focus on those four particular topics," Simonds said.

Whatley spoke briefly about California Environmental Quality Act requirements at the July 6 meeting. FPUD and Rainbow believe that the detachment process should be exempt from CEQA review while the CWA believes that the potential impacts to the Bay-Delta merit environmental studies.

"There is a difference of opinion right now," Simonds said.

When the LAFCO board makes a decision on the reorganization the board will determine whether CEQA review should be conducted or whether the reorganization is exempt.

Other than the CEQA process none of the issues in dispute were specifically addressed July 6. "The only thing that came up in discussion was that," Bebee said.

LAFCO can condition approval of a reorganization, so an exit fee might be warranted. "The next meeting will be an opportunity for Holly to make those distinctions," Simonds said.

The committee's tasks include setting timelines and revising the timelines if necessary. No timelines were set July 6. Simonds noted that if he felt that the committee would not be able to make further progress, he would recommend that it be abolished.

"I don't think it's spinning wheels right now," Simonds said. "It seems to be working."

The committee will conduct a scale and scope review including key assumptions, documenting the differences in proposals, identifying key stakeholders, topics and firms for LAFCO consultants, and legal topics.

The committee will review stakeholder comments, provide input on the consultant analysis, consider statutory standard jurisdictional change factors, identify and consider local factors, and discuss appropriate quantitative items. Potential terms including compensation, infrastructure improvements, special taxes or other assessments, and an expanded vote will also be identified and considered, and the committee will also identify and consider alternative options. The committee will continue to mediate remaining differences.

The committee will provide input to LAFCO staff but will not take any formal votes. The committee meetings will be open to the public (although some may be by teleconference until the coronavirus emergency restrictions are lifted), and committee minutes will be provided to all LAFCO board members.