FPUD customers come out in force to oppose rate increases

The Fallbrook Public Utility District board of directors held a special board meeting the evening of Nov. 15 to provide background information regarding proposed water rate increases and to allow customers the opportunity to give their input regarding the rate hikes.

FPUD officials were expecting a large turnout and they got it as more than 100 people crammed inside the FPUD board room. A sound system allowed those that weren't able to get a spot inside the room to hear the meeting while sitting or standing in the courtyard.

Twenty-eight people signed up to participate in the public comment portion of the meeting and 24 made it to the podium to speak their piece. To the surprise of no one, all were against the proposed water rate increase of 8 percent per year over the next five years.

A pair of informational PowerPoint presentations – one by acting FPUD general manager Jack Bebee and the other by Sanjay Gaur of Raftelis Financial Consultants – preceded the public comments.

Bebee explained what was driving the need for the rate increases.

"About half of the cost is buying water," said Bebee, noting that FPUD buys "99 percent" of its water from the San Diego County Water Authority.

Bebee said purchased water makes up 48 percent of the total cost of water service, infrastructure and capital improvement projects account for 26 percent, and operating costs (labor, power and chemicals) the other 26 percent.

"We have stuff buried in the ground, it's old, it's going to fail and we're getting in there and replacing it before it fails," said Bebee, adding that FPUD maintains approximately 270 miles of pipeline and about 7,000 valves. "That's largely what our capital improvement projects are."

Bebee explained that the cost of capital projects and water has exceeded FPUD's revenue the past few years, resulting in "an annual debt expense."

Bebee said that if FPUD had to rebuild its water and wastewater infrastructure today, it would cost $440 million. He added that the district currently has $14 million in reserves (money in the bank) and that that number has been steadily dropping the past few years. Bebee said in 2014-2015 FPUD had about $18 million in reserves and in 2015-2016 the number was a little more than $16 million.

"We're getting to the point where the reserves, if we continue in this way, we're not going to have any sufficient reserves to deal with emergencies and other events," said Bebee.

Bebee added that the district is looking forward to getting some financial relief in water costs through the Santa Margarita Conjunctive Use Project, a local groundwater supply project with Camp Pendleton that is coming to fruition after 66 years of litigation between FPUD and the federal government.

"This project is finally going to get done," said Bebee. "The benefit for us – it's about 30 percent of our water needs. After it starts operation, it's about $1 million a year in savings in water."

Bebee said FPUD has cut costs by reducing staff from 73 full-time employees in 2007-2008 to 68 today.

"For this district, the total costs of salary and benefits has actually gone down over the last three years," said Bebee.

Gaur went over Raftelis Financial Consultants' rate study report, which can be found at http://www.fpud.com. He explained how Prop 218 mandates that an agency cannot collect revenue beyond what is necessary to provide service.

"We can't arbitrarily choose rates and we can't subsidize certain groups of customers that we may feel should be subsidized," said Gaur. "(Rates) have to be based on cost of service, based on actual cost. That's a requirement of prop 218."

Gaur said for most FPUD customers the water rate increase will result in bills increasing by about $5 a month, although those individuals with larger meters will "see more significant increases."

Gaur said Raftelis' recommendations – "an eight percent increase on water, eight percent on recycling and 4.5 on wastewater" – are a necessity for FPUD.

"If the agency doesn't do these kind of increases what will happen is that the agency will basically run out of money and would be in default," said Gaur. "So because of these changes and because of Prop 218 and because of the financials, what we're recommending is to do these increases to make sure water and wastewater services is a viable service in this community and is available."

Following Gaur's presentation, the public comment portion of the meeting began and resident Charles Bertolino set the tone.

"The bottom line is, you guys are running a monopoly," said Bertolino, noting his rates have gone up every year since he relocated to Fallbrook four years ago. "We have no choice. You're providing an essential commodity. It's your job to make sure this district runs efficiently."

Gary Hesser, who moved to Fallbrook four years ago from the San Francisco Bay Area, said he is so perplexed by his water bill that he carries it around with him. He recently showed it to his buddies during their weekly get together for coffee.

"I'd like to understand it," said Hesser. "I had six units of water for $32. My bill was $170. My operations charge was $54, sewer flow $40, water capital improvement charge $13, sewer capital improvement charge $22, charges levied by others – MWD ready to serve $6, (and) CWA access charge $5. I don't use a lot of water and I can handle the $5 more – for me – in water. It's all these other things. And how much are they going to go up?"

Alan Geraci, a consumer attorney and a candidate for California Assembly District 75, said FPUD should think about its clients.

"The one thing that you're ignoring in your entire analysis are your customers," said Geraci. "Your consumers. These people are avocado farmers. They run nurseries. They're working families. They're students. They're young people entering the workforce. They're retirees on fixed incomes. They are widowed people living alone. They're single families.

"They're all suffering from increased taxes, stagnant wages and the inability to make their daily bills," continued Geraci. "So, enough is enough. Please reconsider any further rate increases. Let these people alone."

Dan Cox is an avocado farmer who is worried about the future of agriculture in Fallbrook.

"I use millions of gallons every year," said Cox. "What's going to happen to FPUD when the Ag industry is gone. My increase on the meter is going up 105 percent. How do you justify that? What is the mathematics behind that?"

Cox concluded by saying his pumping charge "is going up 83 percent between Dec. 31 and Jan. 1."

Larry Sinagub said he expected more from FPUD after doing his best to conserve water.

"We just went through a multi-year drought," said Sinagub. "You asked us to conserve, which we did in spades. So all of sudden we have increased rates because of your overhead and your not covering your costs, and I understand that too. I understand the business aspect, but the drought is over and I haven't seen that rate go down yet. Now you want to raise them again."

Ryan Promack kept his speech to the board short.

"We're disappointed in each and every one of you, because when we elected you, we expected better than this," said Promack.

Robert Landes criticized FPUD for its financial situation.

"There are a lot of Fallbrook residents that are on fixed incomes and we're angry and we're frustrated and we're scared," said Landes. "These increases represent not only an undue burden for the citizens but they represent what we feel is a failure on the fiscal management part of our board. We're asking you to sharpen your pencils a little bit and be cognizant of the fact that we're on a fixed income. We're counting on you to do better."

Jason Burgess stated that the board should reward those who conserve.

"I strongly encourage the board, instead of raising the cost of services, to create a plan that rewards conservation and penalizes negligence," said Burgess. "There's no reason for us to pay more if we're actively conserving."

Burgess then offered up his own summation of the situation.

"In conclusion, this board has failed," said Burgess. "You have failed to adequately represent the members of this community you serve. Do not continue to ask the great people of this community to fork over more of our hard-earned money and support the district and never see a return from that. Lastly, show us how you can benefit us, the customers. In the end we're the ones that have entrusted you to do the right thing for us."

FPUD board president Charley Wolk said the special board meeting was helpful.

"That was the purpose – to get people's input – and I think we got that," said Wolk. "My impression is the ratepayers were candid and respectful. Some of them obviously were dissatisfied more than others. Others had comments on specifics within the rate, but I think it was good."

The FPUD board is scheduled to set new water rates at its regular meeting Dec. 11.