Those who want to build new homes or commercial structures in Cambria could pay a lion’s share of the cost of a planned desalination plant that could cost upwards of $23 million.
The plant would be designed to augment the town’s water supply, which can be insufficient in dry years.
The owners of 665 Cambria properties on the Cambria Community Services District’s “water wait list” might pay that share through sharply higher connection fees, a special taxing mechanism, a combination of both, or through other means, according to a presentation and directors’ comments at the district board meeting Nov. 10.
Current fees to connect to the district’s water system are $3,255 per “equivalent dwelling unit” or EDU. A house typically counts as one EDU. District Engineer Bob Gresens estimated water-connection fees could rise to $13,000 per EDU. At that rate, it would cost the 665 on the water wait list a total of $8,645,000 to connect to the water system.
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Current customers also would have to shoulder some of the project costs, according to Greg Sanders, outgoing president of the Cambria Community Services District Board of Directors.
He estimated in one hypothetical scenario that present ratepayers might be assessed about $100 a year or less for the plant.
“It’s a tradeoff for an assured water supply,” Sanders said. “This is something the district can afford to do.”
Another possibility, Gresens estimated, could be water-rate increases of 5 to 11 percent.
Gresens said his estimates are based on previous reports and a variety of factors, including a maximum of 4,650 water connections in the district, having bonds for the wastewater-treatment plant paid off in the 2014-15 fiscal year, bond/loan interest rates of 5 percent for the local share of the costs and inflation rates of 3 percent a year.
The engineer also assumed 125 “intent to serve” water connection letters would be issued in the plant’s first year of operation, to give the district a fiscal boost and satisfy some of the pent-up demand. He estimated there’d be 40 connections or “intent to serve” letters issued per year in subsequent years.
With a waiting list of 665, at that pace it would take at least 15 years to use up all available water connections.Gresens calculated that the community would use 50 acre-feet of desalinated water in 2013-14, rising to as much as 600 acre-feet in fiscal year 2022-2023.
The district likely would have to hire an assessment-district engineer to determine exactly how the total cost to build a desalination plant — currently estimated to be in the range of $17 million to $23 million, with the latter figure including costs for a solar energy facility — would be fairly distributed between existing customers and owners of properties on the water wait list.
That apportionment would be based on how much benefit each group would receive from the desalination plant’s output, considering such factors as value of current infrastructure and other costs already borne by current customers, and how much “new” water those customers might receive.
Also, it’s not known for sure how much of that cost would be paid for with federal funds. The current federal allocation is $10.3 million, paying 75 percent of the plant’s cost, but the amount and/or the percentage could change, according to an Oct. 19 report from Greg Burns, the district’s lobbyist in Washington D.C.
Sanders said he’d discussed the possible cost distribution scenarios at a recent meeting of United Lot Owners of Cambria, which represents many of those on the water wait list.
“I explained to them this is probably the direction the district will go, that a lot of this stuff will be financed on the backs of the people on the water wait list,” Sanders said. “They understand. They know (Cambria’s) water/sewer connection fees are very low” compared with fees in other communities.
Jeff Hodge, general manager at the Templeton Community Services District, said Templeton’s current water connection fee is $24,478 per “water unit,” which corresponds to an EDU. The Templeton district provides water to 2,783 units. Cambria currently serves about 4,000 water customers.
A report prepared by the consulting firm Black & Veatch for the Cambria district in 2007 recommended a water connection fee of $22,331 to cover the new customer’s share of desalination plant and related costs.
Paying for the plant “is not the problem,” Director Frank DiMicco said at the meeting. “The problem is getting over the hump to construction I think it’s doable.”