LAFCO approves Fallbrook's Municipal Service Review

FALLBROOK – The San Diego Local Agency Formation Commission earlier this month approved the Fallbrook region’s Municipal Service Review, an independent and comprehensive evaluation of local government services, which will help LAFCO and other local jurisdictions implement regulatory and other planning activities.

LAFCO’s approval of the review, which occurred at its March 7 meeting, also sets in motion LAFCO’s further evaluation of two key requests from the Fallbrook Public Utility District. First, the activation of latent powers of parks and recreation, also known as the new Community Benefit Program. If the Community Benefit Program is approved, it will bring a variety of enhancements to Fallbrook and could include everything from new hiking trails to downtown beautification projects.

Secondly, the approval of the review advances Fallbrook’s application to switch water wholesalers from the San Diego County Water Authority to Eastern Municipal Water District to reduce the cost of water.

“The application to activate latent powers of parks and recreation, and form the Community Benefit Program, was largely funded by local nonprofit groups who approached us and saw an opportunity to use FPUD to help ensure they have the resources to continue improving our community and benefit all FPUD customers,” said Jack Bebee, general manager of the FPUD. “These community groups have asked LAFCO to activate our latent powers to create this type of program, and now that the Municipal Service Review is complete, LAFCO can take action on this request.”

Several Fallbrook community leaders testified virtually at the March LAFCO meeting in support of the Municipal Service Review and Community Benefit Program. They included: Roy Moosa, president of the Fallbrook Village Association; Lila McDonald, CEO of the Fallbrook Chamber of Commerce; Jennifer Jeffries, former Superintendent of the Fallbrook Union Elementary School District; and Jason Kendall, president of Kendall Farms.

LAFCO will be addressing how the program will be funded when they consider adoption. If the application is approved by LAFCO, then FPUD’s Board of Directors will establish a committee to oversee implementation and provide recommendations for use of the funds.

The committee will evaluate projects that beautify and benefit Fallbrook and then report on them to the FPUD board for consideration. They would all be projects that benefit the public, not private projects.

Separate from the Community Benefit Program, the MSR approved by LAFCO includes a variety of conclusions and recommendations on topics such as the need to preserve agricultural lands and addressing the impact of how high water costs have caused a loss of agricultural acreage.

At the same March meeting, the LAFCO board received an update on an effort by Fallbrook and the Rainbow Municipal Water District to change water suppliers. The update included discussion of a report conducted by Dr. Michael Hanemann, who reviewed three key areas: water reliability, financial impacts to the involved parties, and a potential exit fee.

Regarding water reliability, Hanemann’s report concluded that Eastern has the wherewithal to meet the water demands of Fallbrook and Rainbow even during times of shortages.

On the financial impacts, Hanemann’s report concluded that Fallbrook and Rainbow would save approximately $7.7 million a year by purchasing their water from Eastern instead of the Water Authority.

Hanemann also concluded that Fallbrook and Rainbow should pay an exit fee to the Water Authority totaling $13 million a year, but only for a defined period of time. However, both Fallbrook and Rainbow dispute Hanemann’s suggested exit fee.

“While we believe some level of compensation should be provided through ongoing property tax payments as described in the law that created the Water Authority, the report’s recommendation does not comply with that law,” said Tom Kennedy, general manager of the Rainbow water district. “This is a critical matter that should be thoroughly analyzed by LAFCO and their attorneys.”

LAFCO, which is governed by local appointed and elected officials and is responsible for overseeing the establishment, expansion and boundary changes of cities and special districts, is expected to decide later this year if the districts can change water suppliers. If approved, Fallbrook and Rainbow voters would have the final say in an election held in each of the two districts’ service areas.

Over the last decade, the Water Authority has raised water costs on local water districts an average of 8% per year with no sign of letting up. According to the Authority’s recently adopted Long-Range Financing Plan, water costs could jump another 50% over the next five years.

A study conducted last year by statista.com concluded that San Diego’s water rates are already among the highest in the nation. Further, a 2017 report by the American Water Works Association found that San Diego area households pay more than twice the national average for water.

Last fall, the Fallbrook Chamber of Commerce voted to support the switch. The group says the ongoing cost increases from the Water Authority have hurt local businesses, which are already struggling due to the pandemic.

Submitted by Fallbrook Public Utility District.