MSR for CWA to include voting and rate structures, links between projects and needs

San Diego County’s Local Agency Formation Commission is in the process of developing a municipal service review for the San Diego County Water Authority, and a presentation at the Feb. 5 LAFCO meeting noted that the MSR would focus on the SDCWA voting and rate structures and alignment between CWA projects and actual needs.

The presentation was a non-voting item. The official action was to receive a verbal presentation from LAFCO staff including consultants, invite any comments from interested audience members, and discuss and provide general feedback. The presentation was given by LAFCO consultants Adam Wilson and Chris Cate and LAFCO staff member Carol Ieromnimon, whose title is Local Government Analyst II.

A municipal service review evaluates services and anticipated needs of a public agency. It is a prerequisite for a jurisdictional change other than annexation of land within the sphere of influence, which determines the boundaries best served by a particular agency, and LAFCO also periodically conducts municipal service review and sphere of influence updates for all cities and special districts.

Special districts include independent special districts, which have independently elected directors, and dependent special districts, whose members are the San Diego County Board of Supervisors or in some cases a city council. Independent special districts are usually initiated by the district’s residents and chartered under an appropriate section of a state code.

The CWA was created by state legislation and its board members are appointed by the CWA member agencies rather than being directly elected by the voters. The San Diego Unified Port District, the San Diego Association of Governments (SANDAG), San Diego Metropolitan Transit System, and the North County Transit District were also created by the state and have boards selected by member agencies rather than by district voters.

On July 10, LAFCO voted 5-3 to approve the reorganization for the Fallbrook Public Utility District and the Rainbow Municipal Water District to detach from the CWA and annex to the Eastern Municipal Water District (the reorganization was contingent upon FPUD and Rainbow voter approval, which occurred Nov. 7). LAFCO began its FPUD and Rainbow reorganization hearing June 5 before continuing the issue. During both hearings the operational practices of the CWA were addressed. A July 10 motion calling for a municipal service review of the CWA was withdrawn after it was noted that such an action was not on the July 10 agenda and would need to be noticed for a subsequent LAFCO meeting.

The Aug. 7 LAFCO meeting included a revision of LAFCO’s Fiscal Year 2023-24 workplan to give the highest MSR priorities to the CWA and to the county’s four healthcare districts. LAFCO’s 7-1 vote, with San Diego City Council member Stephen Whitburn opposed, moved the MSR for the CWA from 14th to first on the priority list while moving back the 13 projects which had been a higher priority and moved the MSR for the healthcare districts from eighth to second while moving back six projects.

(The higher focus for the healthcare districts was due to recent operating losses and even bankruptcy filings by hospitals elsewhere in the state.)

Because the SDCWA is part of the Metropolitan Water District of Southern California, which includes San Diego County as well as several other counties, the MSR being conducted by LAFCO will include a review of MWD operations as well as of the CWA.

Although LAFCO may take some action based on the municipal service reviews, those will also include recommendations for the regional water agencies. The MSR will include growth and population projections, present and planned service capacities, adequacy of services relative to community needs, financial standing, opportunities for shared facilities, and accountability of the governmental structure and alternatives.

The Feb. 5 presentation was a quarterly progress report. “Our goal from the start here was to inform stakeholders very early and allow the process to be inclusive as possible,” Wilson said.

The stakeholder activity included meetings with water agency general managers as well as with CWA executive staff. Recurring themes during stakeholder input were the need to change the CWA’s voting structure, the CWA’s rate structure and ensuing that the CWA has sufficient revenue to cover fixed costs in the event of a decrease in water usage and thus CWA sales, “take or pay” contracts which obligate the CWA to purchase a minimum quantity at a specified price, optimizing CWA facilities to meet future growth, and alignment of future production with future demand.

LAFCO will also be conducting a municipal service review for the port district in the near future. During the Feb. 5 presentation, Jim Desmond, who is one of two county supervisors on the LAFCO board, indicated that he would also like to see a municipal service review for SANDAG in the future.