Our View: Water merger needs cost adjustment
By Signal Editorial Board
Friday, January 20th, 2017

It’s been three years since local water wholesalers openly declared the Santa Clarita Valley needs one unified water district. It’s been more than two years since talks were under way to achieve that goal.

On Dec. 13, with one dissenting vote, Castaic Lake Water Agency and Newhall County Water District agreed to set aside their differences and merge. Castaic Lake would bring with it the Santa Clarita Water Division and the stock in Valencia Water Company to turn the valley into one big water district.

But the deal isn’t done yet. New law creating the district has to be written and passed by the state Legislature and signed by the governor for the agreement to take effect.

And there remains at least one big problem in the Santa Clarita Valley water district deal: While “economies of scale,” shared infrastructure, consolidated facilities and other measures could save water district customers a lot of money, the proposed governance of the new district would be unacceptably costly – especially at first.

The good news is the still-to-be-written law should be able to address the issue.

As envisioned in the plan approved Dec. 13, the initial board of the merged districts would have 15 members – 10 representing the original Castaic Lake Water Agency and all five currently sitting on the Newhall County Water District board – so no one is shut out during the transition period.

In two years’ time the board would be whittled down to 12 members with three voting sub-districts drawn up governed by geography, not arbitrary boundaries, to comply with demands under the California Voting Rights Act.

The 12 representatives would be elected to represent those three sub-districts, resulting in the valley’s water interests being represented democratically for probably the first time in history.

The board could be reduced to nine at a later time but the deal between the two agencies doesn’t require that, current directors of the two boards said during a recent Signal Editorial Board meeting.

Compensation

Castaic Lake board members receive a stipend of $228.15 for each meeting they attend, with a cap set at 10 meetings per month. An annual increase of 5 percent per year is allowed.

Directors said they rarely hold the maximum number of meetings a month and haven’t given themselves a substantial raise in their stipends for years. But the possibility is there.

And if Newhall County Water District directors, who currently make a $100 stipend per meeting, are also elevated to that level of pay – and since they would all serve a single board, why would they be paid otherwise? – the new district could be quite costly to operate.

Its first two years of operation – with the maximum number of meetings per month and 15 directors attending – could run up total stipend payments of about $380,000 annually.

Castaic Lake Water Agency directors are also entitled to health benefits for themselves and their families – as if they were laboring in a full-time professional job, not a part-time public service to their communities.

We find the total cost of launching this new water district unacceptable.

Opponents of the merger believe they’ve been steamrolled in the process of the wholesale water seller taking control of Santa Clarita Valley’s water supply, noting both water boards failed to reveal during the first year of talks that the merger was on the table.

No public balloting was held to determine whether Newhall County Water District’s customers want their district dissolved. When questioned about that, directors from both districts at The Signal’s Editorial Board said the November election – in which four Castaic Lake Water Agency directors were returned to office while all challengers lost the race – was a measure of the public’s approval for the merger.

To be fair, they said, a special election on the merger would have to be conducted not just in one district but valleywide – and it would cost some $500,000.

Perhaps. But only Newhall – the first water district in the valley and the only one, besides Castaic, to have a publicly elected board – is due to be dissolved under the plan. Castaic’s function would expand and its name change to reflect its joint role as wholesaler and retailer.

The two water boards are under a tight deadline. They want to see the Legislature pass their district-forming bill or bills this year, and they have until only Feb. 17 for those bills to be written, approved for language and introduced.

That should give residents some leverage in convincing leaders that they need to reduce costs of operating the fledgling district. Specifically:

▪ In 2018, when the first election for the re-formed water district is held, board members must give up their health insurance benefits. Those benefits place unrealistic costs of operation on the shoulders of the public financing the new district.

▪ In 2020, when the second election in the new district is held, the board must downsize from 12 to nine members.

▪ In 2022, when the third election is held, the board must downsize further to seven members – unless voters approve a measure to specifically allow the board to continue with nine or some other number of members.

The goal in this entire process is a democratically elected governing board directing the entire valley’s water policy in the public’s interest. Let’s keep our eye on that goal and make sure the Legislature understands the interests of the people in this matter.

We at The Signal will keep readers up to date with the water district legislation.

About the author

Signal Editorial Board

Signal Editorial Board

Our View: Water merger needs cost adjustment

It’s been three years since local water wholesalers openly declared the Santa Clarita Valley needs one unified water district. It’s been more than two years since talks were under way to achieve that goal.

On Dec. 13, with one dissenting vote, Castaic Lake Water Agency and Newhall County Water District agreed to set aside their differences and merge. Castaic Lake would bring with it the Santa Clarita Water Division and the stock in Valencia Water Company to turn the valley into one big water district.

But the deal isn’t done yet. New law creating the district has to be written and passed by the state Legislature and signed by the governor for the agreement to take effect.

And there remains at least one big problem in the Santa Clarita Valley water district deal: While “economies of scale,” shared infrastructure, consolidated facilities and other measures could save water district customers a lot of money, the proposed governance of the new district would be unacceptably costly – especially at first.

The good news is the still-to-be-written law should be able to address the issue.

As envisioned in the plan approved Dec. 13, the initial board of the merged districts would have 15 members – 10 representing the original Castaic Lake Water Agency and all five currently sitting on the Newhall County Water District board – so no one is shut out during the transition period.

In two years’ time the board would be whittled down to 12 members with three voting sub-districts drawn up governed by geography, not arbitrary boundaries, to comply with demands under the California Voting Rights Act.

The 12 representatives would be elected to represent those three sub-districts, resulting in the valley’s water interests being represented democratically for probably the first time in history.

The board could be reduced to nine at a later time but the deal between the two agencies doesn’t require that, current directors of the two boards said during a recent Signal Editorial Board meeting.

Compensation

Castaic Lake board members receive a stipend of $228.15 for each meeting they attend, with a cap set at 10 meetings per month. An annual increase of 5 percent per year is allowed.

Directors said they rarely hold the maximum number of meetings a month and haven’t given themselves a substantial raise in their stipends for years. But the possibility is there.

And if Newhall County Water District directors, who currently make a $100 stipend per meeting, are also elevated to that level of pay – and since they would all serve a single board, why would they be paid otherwise? – the new district could be quite costly to operate.

Its first two years of operation – with the maximum number of meetings per month and 15 directors attending – could run up total stipend payments of about $380,000 annually.

Castaic Lake Water Agency directors are also entitled to health benefits for themselves and their families – as if they were laboring in a full-time professional job, not a part-time public service to their communities.

We find the total cost of launching this new water district unacceptable.

Opponents of the merger believe they’ve been steamrolled in the process of the wholesale water seller taking control of Santa Clarita Valley’s water supply, noting both water boards failed to reveal during the first year of talks that the merger was on the table.

No public balloting was held to determine whether Newhall County Water District’s customers want their district dissolved. When questioned about that, directors from both districts at The Signal’s Editorial Board said the November election – in which four Castaic Lake Water Agency directors were returned to office while all challengers lost the race – was a measure of the public’s approval for the merger.

To be fair, they said, a special election on the merger would have to be conducted not just in one district but valleywide – and it would cost some $500,000.

Perhaps. But only Newhall – the first water district in the valley and the only one, besides Castaic, to have a publicly elected board – is due to be dissolved under the plan. Castaic’s function would expand and its name change to reflect its joint role as wholesaler and retailer.

The two water boards are under a tight deadline. They want to see the Legislature pass their district-forming bill or bills this year, and they have until only Feb. 17 for those bills to be written, approved for language and introduced.

That should give residents some leverage in convincing leaders that they need to reduce costs of operating the fledgling district. Specifically:

▪ In 2018, when the first election for the re-formed water district is held, board members must give up their health insurance benefits. Those benefits place unrealistic costs of operation on the shoulders of the public financing the new district.

▪ In 2020, when the second election in the new district is held, the board must downsize from 12 to nine members.

▪ In 2022, when the third election is held, the board must downsize further to seven members – unless voters approve a measure to specifically allow the board to continue with nine or some other number of members.

The goal in this entire process is a democratically elected governing board directing the entire valley’s water policy in the public’s interest. Let’s keep our eye on that goal and make sure the Legislature understands the interests of the people in this matter.

We at The Signal will keep readers up to date with the water district legislation.