The Santa Clarita Valley Sanitation District on Tuesday debated how to inform ratepayers of significant rate hikes that will be necessary over the next five years due to increases in its operating costs.
The fee increases, which are expected to be brought back to the Sanitation District board in May for a rate approval, would hike the current rate by 43% over five years in one scenario and 54% over the same time in another.
Ratepayer advocates fought a well-publicized battle for years with the State Water Resources Control Board for years over whether the SCV should have to pay the full costs for water treatment to remove chlorides, which the state ultimately found it did.
The majority of the rate increase is due to the operating costs for new water desalination plants that are now online and adding significant operating costs for the district, according to Ray Tremblay, acting press information officer for the county’s Sanitation District.
“And now we have to start them up, and the cost to operate them is very high,” Tremblay said following the discussion Monday at Santa Clarita City Hall. “It’s a very energy-intensive process. And so much of the rate increases due to that.”
“We normally try to keep steady rates, but we have a situation here where we have a huge increase in our operating costs,” he said. “So, we presented to the board that we can do a jump now, and then some smaller inflation-like jumps down the road, or we could spread it over five years.”
There are two ways the district can meet its budget and pay for the state-mandated water-treatment projects to remove chloride from water sent downstream to salt-sensitive crops in Ventura County, like avocados and strawberries: They can hit ratepayers with a higher initial rate increase, which would make the increase closer to the 40% figure over time; or the district can gradually adjust over the five-year period, which would result in up to a 54% rate increase.
Sanitation District officials also said Proposition 218 requires officials to alert ratepayers to a potentially worst-case fee scenario, but that if finances improve, the rates could be slightly lower.
The average 2023-24 ratepayer pays $370 a year currently, and in the scenario where the rate increase is larger in year 1, the cost would go to $437 next year, and then increase about $23 to $25 a year over the next four years until hitting a projected $531 annually in 2028-29.
In the scenario where there’s a more level increase, the first-year rate would increase to a total of only $403; but by the fifth year, the rate increases to a projected total of $569.
Tremblay said the rate hikes were worked out after a series of discussions.
“We’ve had a number of meetings with the board where they’ve asked to come back and sharpen our pencils,” Tremblay added, referring to efforts to lower the impact to ratepayers while keeping the district financially sound.
As the board has to notify the public of any proposed rate increase due to Prop. 218, which requires a hearing process for fee increases, two options were discussed: notifying the public of the quick increase versus a gradual increase and allowing feedback to guide the process on the board’s decision; or simply choosing the plan that called for steadier increases and notifying the public of the decision at a rate hearing in May when the increase would be scheduled for approval.
Ultimately, the latter option was chosen, after the board’s discussion.
“I’m of the opinion that we need to do as much public outreach in advance as we can and so that the public has — as opposed to the notification that, ‘the rates have been raised’ — that, ‘the rates are being considered to be raised, here are some of the options and provide input as they can,” said Santa Clarita Mayor Cameron Smyth, who sits on the board with Councilwoman Laurene Weste and L.A. County Supervisor Kathryn Barger.
If the Prop. 218 notices are approved now, then residents can be alerted to the plan, he added.
“I think we should give the public as much … I don’t want to say warning … but as much advance notice and any information ahead of the final vote, so that if people want to come and provide input then they have that opportunity to do so,” he added.
Barger mentioned the state requirements for desalination plants alone were adding 25% of the cost to the district, saying it’s important for residents to understand where the costs are coming from.
While transparency is important, she said, she mentioned concerns shared by Sanitation District officials, saying most people are likely to be confused by the percentages, given all the information and qualifiers that have to be presented in a rate discussion.
That’s why she had “mixed feelings” about giving ratepayers a choice on the discussion, she said.
“I think that at the end of the day, it does get confusing and we can make it as pleasant as possible,” Barger said, adding she doesn’t have a strong preference one way or the other for the rate, but wants the options presented clearly. “I think it’s important for (ratepayers) to weigh in, but I don’t know anyone that’s going to want the 18% up front.”
She said it’s important to put the changes in terms of “dollars and cents,” and as people are struggling with increased costs, she thanked Sanitation District staff for devising a rate plan that’s more gradual than where the district started, which included even higher initial costs.
The agenda for the May meeting will be posted here: https://bit.ly/3PqYM0c. The board is expected to meet on the third Monday of the month unless otherwise noted.
