Oceano ponders rate increases

Oceano Community Service District leaders this week discussed raising water and sewer rates for the first time in 13 years to meet operating expenses and repay $1.16 million borrowed from the agency’s restricted reserve funds for its water and sewer funds.

However, board members were not satisfied with the proposed rates included in a study commissioned by the district and asked General Manager Raffaele Montemurro to explore other ways to lessen the rate hikes, such as selling extra district water to neighboring communities.

“This is a tremendous increase for our population,” board Vice President Pamela Dean said. “What I see around my neighborhood is people aren’t watering their yards because they can’t pay” the district’s current rates.

The board will meet again Wednesday, but no action is expected.

Residential users are 93 percent of the district’s customers, according to the study by Newport Beach-based Tuckfield & Associates.

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 the district’s restricted reserves.

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 bi-monthly water bill for $115, said district board member Jim Hill.

Sewer rates are also 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 bi-monthly 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.

The district has spent about $27,000 on the report. Tuckfield & Associates wrote it based on the district’s plan for capital improvements — mainly waterline replacement projects — and estimates of operation and maintenance expenses.

Historical revenue, billing and expense information was not available, nor were audits for the district beyond June 30, 2008.

“We have to have a rate increase for the benefit of the district moving forward,” said Montemurro, who suggested selling some of the district’s water and phasing the rate increase in over a 10-year period.

Community members at the district’s board meeting on Wednesday raised concerns about the rate increases and questioned whether they were based on the correct assumption of how much water customers use on average.

Richard Margetson of Cayucos and Keith Swanson of Los Osos — who said they helped design the Los Osos Community Service District’s water rate structure a few years ago — said they were concerned that the rate increases would prompt more water conservation than estimated in the report.

“It seems to me we need to look at selling major blocks of water,” Hill said.

Oceano gets its water from three sources: Lopez Lake, groundwater and the state. The community has 1,953 acre-feet available; it uses about 900 acre-feet a year, mainly from Lopez Lake and state water, said John Wallace, the district’s engineer. An acre-foot is enough water to serve a few single-family homes for a year.

Oceano is currently selling 100 acre-feet of water to Arroyo Grande on a temporary basis.

Arroyo Grande City Manager Steve Adams said Friday that the city is looking for a permanent water supply for its long-term needs. He said he will meet with Oceano district staff to discuss a solution that might benefit both communities.

An improvement plan in the report has identified $1.28 million worth of projects, mainly waterline replacement projects, which would be completed over the next five years.

The waterline replacements are proposed to be paid for with a $1.3 million loan from the U.S. Department of Agriculture with a 4 percent interest rate over a 40-year term.

Rate discussion

The Oceano CSD board will meet on Wednesday at 7:30 p.m. to discuss the proposed rate increases. The board meets at 1655 Front St. in Oceano.