Board members of the Oceano services district last week harshly criticized a study that proposed steep water and sewer rate hikes in the South County community and then set up a committee to craft its own — presumably lower — increases.
District board members Lori Angello and Mary Lucey were tasked in a unanimous vote to develop recommendations for such increases, as well as justify the need to do so.
The Oceano Community Services District board also seemed unanimous in its frustration with a hired consultant’s rate study that proposed to increase water rates by more than 40 percent and double sewer rates by 2014.
Water rates in Oceano have not been raised in 13 years, and sewer rates in 14 years.
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“This report is completely useless for this community,” said board member Jim Hill, who suggested the district pursue legal action to recoup the nearly $30,000 it spent on the rate study.
The board did not take action on whether to initiate a claim against the company that completed the rate study, Newport Beach-based Tuckfield & Associates.
Clayton Tuckfield of Tuckfield & Associates could not be reached for comment on the report.
The Oceano district receives its water from Lopez Lake east of Arroyo Grande, the state and groundwater.
It has 1,953 acre-feet available but uses only about 900 acre-feet a year, mainly from Lopez Lake and state water. An acre-foot is enough water to serve a few single-family homes for a year.
Board members said they felt the report did not take into account Oceano’s unique situation — that it has more water than it currently uses—nor did it address how the largely blue-collar community, 16.3 percent of which lives below the poverty line, according to the U.S. Census, could afford the increases.
John Wallace, the district’s engineer, said Monday he did not recall Tuckfield’s scope of work including a potential sale of water.
Instead, Tuckfield was directed to analyze proposed capital improvement projects as well as operation and maintenance costs and come up with rates to meet those needs, he said.
The district has 2,121 customers, 1,985 of whom are residential users, according to the Tuckfield report.
According to the report, rates need to increase by 8 percent on Jan. 1 and again on July 1 of each successive year from 2011 through 2014 to meet operating and maintenance expenses and to repay $1.16 million the district borrowed from its water and sewer funds to meet annual operating deficits.
A residential customer using 20 units of water every two months currently receives a water bill for $78.24; under the proposed plan, that would increase to $84.48 on Jan. 1. A unit of water is 100 cubic feet of water.
By July 1, 2014, that customer would receive a bimonthly water bill for $115, Hill estimated.
Sewer rates were proposed to increase by 15 percent on Jan. 1, and again by 15 percent on July 1 of each year from 2011 through 2014.
For a single-family residential customer, the bimonthly bill—excluding a fixed charge of about $30 from the sanitation district for processing—would increase to $18.65 in 2014 from $9.25 currently, a 101 percent increase.
Hill suggested that the district instead raise fixed rates for water by $4 a month and for sewer by $2 a month to close an estimated $150,000 shortfall in the district’s budget.
The rate study had proposed lowering the fixed rates that residential customers pay for water and increasing the amount they pay based on consumption.
Hill also suggested using proceeds from selling district water and grant funding to pay for the $1.32 million worth of projects, mainly waterline replacement projects, identified in an updated version of the rate study.
He proposed district General Manager Raffaele Montemurro bring back more information on the district’s operating costs and the shortfall between the district’s revenues and its expenditures. The board did not act on that suggestion.
Montemurro told the board that the solution to the district’s financial situation should be dealt with by raising rates, selling water to other communities, including Arroyo Grande and possibly Grover Beach, and replacing water meters around the community.
The district has purchased 442 water meters and plans to replace old meters around the community so that they will more accurately record how much water is used.
It’s expected that doing so will bring in additional revenue, though it’s unknown how much.
Oceano is currently selling 100 acre-feet of water to Arroyo Grande on a temporary basis.
Montemurro suggested the board halve the rate hikes in the Tuckfield rate study and extend them 10 years instead of five — a recommendation the board did not follow.
“You can cut a rotten apple in half, but you still end up with a rotten apple,” said board President Vern Dahl. “We have to at this point figure out where we’re going to go.”