Rainbow approves additional LAFCO deposit

Joe Naiman

Village News Reporter

San Diego County’s Local Agency Formation Commission requires a deposit to process applications to LAFCO for jurisdictional changes, and the Rainbow Municipal Water District approved an additional deposit amount during the Tuesday, Feb. 28, Rainbow board meeting.

The board’s 5-0 vote approved the additional payment of $32,648.91, bringing the total Rainbow payment to $245,932.10. Rainbow and the Fallbrook Public Utility District are sharing the processing costs.

“We’re a little disappointed it’s taken so long and the costs keep coming, but we’re committed to seeing it through to the end,” Rainbow general manager Tom Kennedy said.

The San Diego County Water Authority’s supply rate is a melded rate which melds the cost of water delivered from the Metropolitan Water District of Southern California, 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 SDCWA 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. It 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 and 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 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 CWA has also expressed concern about member agency reliability, impacts to the Bay-Delta and the CWA’s weighted vote at MWD meetings.

LAFCO created a technical advisory committee to identify issues and attempt to resolve differences. The August 2020 meeting of the committee included discussion about consultants to analyze water supply reliability, the proposed reorganization’s impact on the CWA and the 22 other member agencies and whether an “exit fee” would be warranted.

In February 2019, LAFCO’s board approved an update of the processing fees for applications submitted to LAFCO. Before the change the fees for annexations, detachments and latent powers expansions were based on the affected territory's acreage. The new fees are based on staff time costs, and the revisions to the structure also include estimates of staff time along with hourly salary, benefit and overhead costs for staff members involved. The staff costs are new to LAFCO for proposals.

The jurisdictional boundary change fees are non-refundable but may be augmented by one or more deposits if additional staff time is needed while the deposits to cover staff time for formations, consolidations and incorporations are refundable if the actual staff time is less than the estimate. The number of hours for each type of proposal is based on LAFCO’s experience with such proposals, although LAFCO has not previously processed a proposal for an agency to detach from the CWA and annex to another agency.

FPUD and Rainbow each initially provided a $24,563 deposit which covered 191 staff hours. In August 2020, LAFCO executive officer Keene Simonds sent an electronic mail message to Kennedy and FPUD general manager Jack Bebee noting that LAFCO had expended 170 staff hours as of that date and that Simonds expected the processing to be approximately 25% complete. Each district provided an additional $62,220 deposit to LAFCO.

The August 2020 advisory committee meeting included discussion on the use of consultants to address issues on which parties differ. A list of consultants for each task was provided to FPUD, Rainbow, the CWA and Eastern with each of those agencies having the right to veto a specific consultant. Michael Hanemann was chosen as the consultant.

Hanemann submitted his report at the end of 2021. An additional $50,000 deposit from Rainbow along with $50,000 from FPUD was made in 2021 to cover Hanemann’s cost. In July 2021, Simonds requested an additional $60,000 apiece from Rainbow and FPUD. An additional $16,500 from each agency was billed in March 2022.

The SDCWA opposition has included CWA correspondence with LAFCO, and FPUD and Rainbow are being billed for that staff time. On Jan. 20, Simonds sent an email request to Kennedy and Bebee for an additional $32,648.91 from each agency.

Simonds noted that LAFCO staff would continue to process the proposals in expectation of receiving the requested deposits through the end of January but would suspend further activities if the payments were not received by Feb. 6. The Rainbow board meetings are normally on the fourth Tuesday of each month and FPUD meets on the fourth Monday each month, so Simonds’ email was sent too late to be on FPUD’s Jan. 23 agenda or Rainbow’s Jan. 24 agenda.

According to Simonds the LAFCO administrative reviews are approximately 85% complete. LAFCO’s Special Districts Advisory Committee is expected to review the detachment proposals March 17, and Kennedy expects the June 5 LAFCO meeting to include a hearing on the detachment.

Joe Naiman can be reached by email at [email protected].