REPORT TO SHASTA COUNTY BOARD OF SUPERVISORS

BOARD MEETING DATE:  June  27, 2017
CATEGORY:  Scheduled Hearings - Public Works-8.

SUBJECT:

County Service Area No. 6 – Jones Valley

Supervisorial District No. :  3

DEPARTMENT CONTACT:  Pat Minturn, Public Works Director, (530) 225-5661

STAFF REPORT APPROVED BY:  Pat Minturn, Public Works Director

RECOMMENDATION

Take the following actions on behalf of County Service Area (CSA) No. 6-Jones Valley Water: (1) Adopt a resolution which suspends operation of the CSA No. 6-Jones Valley Water Community Advisory Board until further action by the Board; (2) conduct a public hearing to consider enacting an ordinance pursuant to Water Code sections 350 et seq. which:  (a) finds a water shortage emergency exists in CSA No. 6-Jones Valley Water due to the financial inability to continue to provide potable water which requires the limiting of water usage to 225 gallons per meter per day; (b) implements a moratorium on new water service connections; (c) finds that the project is exempt from the requirements of the California Environmental Quality Act (CEQA); and (d) provides for enforcement of the ordinance including civil and criminal penalties as necessary; and (3) introduce, waive the reading of, and enact an Urgency Ordinance of the Board of Supervisors of the County of Shasta Declaring a Water Shortage Emergency and a Necessity for a Water Conservation Program, Adopting a Water Conservation Program and Finding that the Actions are Exempt from CEQA in CSA No.6-Jones Valley Water.

SUMMARY

Expenditures exceed revenues in CSA No. 6 and have for some time.  A rate increase was rejected by the property owners and/or residents.  Staff recommends that the Board consider measures to limit expenditures and to bring them closer in line to the revenues received.  The measures would conserve the water supply and emphasize use for the greatest public benefit with particular regard to domestic use, sanitation, and fire protection within CSA No. 6.

DISCUSSION

CSA No. 6 provides water service to approximately 500 customers in Jones Valley.  Water is pumped out of Shasta Lake, filtered, chlorinated and conveyed to customers. Operating expenses have exceeded revenues for several years.  A three-year rate increase was proposed but was rejected due to a majority protest pursuant to Proposition 218 and, therefore, the Board was legally prohibited from adopting the rate increase.  CSA No. 6 is presently insolvent and continued insolvency will eliminate the ability to provide water to CSA No. 6.  On June 13, 2017, County Counsel and Public Works staff presented options to maintain operations and regain solvency.  The Board expressed an interest in pursuing the following options:

Late Charges

Over a third of CSA No. 6 customers are routinely more than thirty days in arrears each billing cycle.  CSA No. 6 incurs over $20,000 in costs annually related to billing and collecting late payments.  Staff is currently refining a proposal to impose late fees in all water county service areas.  Additionally, water users who have been subject to disconnection for late payments have not been required to bear the costs related to shutting off the water and then restoring water service.  As a result, staff is also refining a proposal to impose shutoff and reconnect fees.   It is anticipated that these items will come before the Board in July for implementation in the September billing cycle.

Prohibition on Excessive Use and Penalties Violations

Each gallon of water delivered to customers in CSA No. 6 costs more than the incremental revenue received.  Consequently, the more water that the customers use, the more insolvent CSA No. 6 becomes.  The current rate structure only partially recovers operating costs and does not recover depreciation costs.  It would thus be prudent to curtail excessive use beyond basic health and safety domestic needs while also ensuring priority of use for fire and sanitation.  The median water bill in CSA No. 6 is for approximately 7100 gallons bi-monthly (116 gallons per day).  Potential curtailment scenarios are shown below:

Additionally, to ensure compliance with the water consumption limitations, penalties have been proposed in the amount $100 for the first violation, $150 for a second violation, $200 for a third violation and any subsequent violations.  Under certain conditions specified in the Ordinance, a $1,000 penalty may be levied for extraordinary violations.

Moratorium

Further expansion and development of the customer base would contribute to insolvency in CSA No. 6.  A moratorium on new connections is thus recommended in conjunction with the above measures.

Community Advisory Board

Each Community Advisory Board (CAB) has seven seats.  A quorum of four members is required to convene a meeting.  CSA No. 6 CAB began 2017 with five members and two vacancies.  One CAB member has since resigned and another has moved away.  Lacking a quorum, the CAB cannot convene or take any actions.  Staff costs are incurred to notice and attend meetings which cannot convene.  It is recommended that the Board adopt a resolution recognizing these circumstances and suspending CAB-related activities to curtail expenses.

ALTERNATIVES

The Board may elect to pursue these or other options.  The Board may also decline to impose the above measures.  The CSA would continue to become even more insolvent thus threatening the entire water supply or requiring subsidization from the General Fund as water is being sold for less than its cost of production.

OTHER AGENCY INVOLVEMENT

County Counsel has approved the resolution and ordinance as to form. The County Administrative Office has reviewed this recommendation.

FINANCING

CSA No. 6 is presently insolvent.  The proposed measures may at least partially alleviate the deficit.