REPORT TO SHASTA COUNTY BOARD OF SUPERVISORS

BOARD MEETING DATE:  August  15, 2017
CATEGORY:  Scheduled Hearings - Public Works-8.

SUBJECT:

CSA No. 3-Castella Water Urgency Ordinance

Supervisorial District No. :  4

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. 3-Castella Water: (1) Conduct a public hearing to consider enacting an urgency ordinance pursuant to Water Code sections 350 et seq that: (a) finds a water shortage emergency exists in CSA No. 3-Castella 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; (2) close public hearing; 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 the CEQA in CSA No. 3-Castella Water.

SUMMARY

Expenditures exceed revenues in CSA No. 3 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. 3.

DISCUSSION

CSA No. 3 provides water service to 73 customers in Castella.  Water is pumped out of Castle Creek, filtered, chlorinated and conveyed to customers. Operating expenses have exceeded revenues for several years.  A four-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. 3 presently has a fund balance of approximately $5,000.  Insolvency would eventually eliminate the ability to provide water to CSA No. 3.  The following measures are proposed to forestall insolvency:

Prohibition on Excessive Use and Penalties Violations

Each gallon of water delivered to customers in CSA No. 3 costs more than the incremental revenue received.  Consequently, the more water that the customers use, the closer to insolvency CSA No. 3 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. 3 is for approximately 8000 gallons bi-monthly (131 gallons per day).  The recommended curtailment scenario is 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. 3.  A moratorium on new connections is thus recommended in conjunction with the above measures.

ALTERNATIVES

The Board may decline to impose the above measures and/or pursue other options.  The CSA is likely to become 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

The Community Advisory Board for CSA No. 3 has been defunct for ten years due to a lack of prospective candidates. County Counsel has approved the ordinance as to form. The County Administrative Office has reviewed this recommendation.

FINANCING

CSA No. 3 has a fund balance of approximately $5,000.  The proposed measures may successfully forestall insolvency.  As long as the CSA is able to pay its bills, there is no General Fund impact.