Ventura County Waterworks District 19 – Somis
Financial Stabilization Plan – Information Outreach
Current Status of District
The District’s Cash Reserves were depleted in Fiscal Year 2020. The primary reasons are:
- State ordered blend of well water with expensive imported water to reduce the Iron and Manganese levels
- USDA debt service for pipeline replacement projects completed in 2014
- Las Posas Groundwater Adjudication legal fees
- Public Safety Power Shutoffs (PSPS) – fuel and labor costs to run generators
- Significantly reduced water demand due to a reduction in small farming
- COVID impacts
- Critical infrastructure repairs
- Greentree Reservoir Re-coating
- Pipeline breaks
- General maintenance on an aging water system
Q: What is the Citizens Advisory Committee?
A: The Ventura County Waterworks District No. 19 Citizens’ Advisory Committee (CAC) is a group comprised of 5 community members that reside within the District and are appointed by the County Board of Supervisors. Their role is to advise District staff on community issues regarding the water services provided to District customers. The CAC holds at least six scheduled public meetings per year to review annual budgets, status of projects, and receive updates on issues affecting the delivery of water services. They make recommendations to staff regarding any proposed rate adjustments. The CAC also serves as a liaison between the community and the Board of Supervisors.
Q: What has changed since the Rate Hearing in December 2019?
A: District staff recognizes the unique nature of the Somis Community as a vital Ventura County greenbelt and agricultural center. Staff has listened to your community’s concerns regarding the rising costs of water and have worked to find a fair and proportional solution to the District’s financial challenges. The two major financial issues impacting the District are: 1) the requirement by the State of California to build an Iron and Manganese treatment facility at Well 2, and 2) legal fees to defend the District’s groundwater pumping rights. The potential loss of either Well 2 or the District’s groundwater rights would cause future water rates to increase significantly. Rather than proposing a permanent rate increase to fund these two requirements, staff worked closely with the CAC to propose temporary surcharges in proportion to your water meter sizes. See letter of support from CAC.
The Las Posas Adjudication settlement agreement was upheld by the Courts on September 17, 2020. This agreement will increase the District’s groundwater pumping allocation by approximately 300 acre-feet per year. This increased allocation will save the District $250,000-350,000 per year, which will help in mitigating future year rate increases. Additionally, the District is investigating the following measures:
- Refinance USDA loan with lower interest County loan will free up $350,000 in USDA-mandated reserves that was set aside for future projects and lower principal and interest payments
- Low Interest County Financing for Well 2 Project is required to make up funding shortfall from State Grant
- In order to refinance USDA loan and take out loan for Well 2, the County needs a guarantee that there will be sufficient revenue set aside to pay the County back
Q: What are the Priority Capital Projects?
A: The three major projects include:
- Well 2 Treatment Facility (required by the State Division of Drinking Water)
- 538 Reservoir and Pipeline Replacement
- Caltrans Right-of-Way Pipeline Replacement
Q: What is the State order regarding the building of Well 2 Treatment Facility?
A: The raw water pumped from Well No. 2 is high in iron and manganese concentrations and produces milky, brownish, and sometimes even reddish colors. Although safe to drink, it stains clothes and fixtures, and customers have concerns about drinking and cooking with water that has colors and suspended particles. In addition, it exceeds the secondary Drinking Water Standards regulated by the Los Angeles Regional Water Quality Control Board (LARWQCB). The LARWQCB Division of Drinking Water (DDW) has required District 19 to treat and remove iron and manganese from the well water to meet the secondary Drinking Water Standards. Currently, the District is operating under a waiver for secondary standards for iron and manganese that expires at the end of 2020.
Q: What if we don’t build the Well 2 Treatment Facility?
A: The State could revoke the District’s waiver for Iron and Manganese treatment and order the shutdown of the well if the District does not build the treatment facility. In Fiscal Year 2019, Well 2 produced almost 1,000 acre-feet (AF) of water for the District. Shutting down Well 2 could result in the loss of up to 1,000 AF per year of the District’s groundwater supply, which would have to be replaced with expensive imported water and could increase the District’s expenses by up to $1.5M, a 40% increase above the FY21 budget.
Q: What is the plan to fund and construct the Well 2 Treatment Facility?
A: The District received grant funding of $2.65M from the State for Well 2. However, there is a shortfall of up to $1.5M required in order to start the $4.2M project. There are insufficient cash reserves to cover the shortfall. District seeks to fund the Well 2 with a low-interest loan from the County of Ventura. The plan is to begin construction in early 2021.
Q: How will the District pay off the Well 2 loan?
A: The options considered for paying the Well 2 loan principal and interest were:
- A permanent, general rate increase on rates and fixed meter charges to be used towards any District expense
- A fixed monthly surcharge based on relative meter size. (Proposed)
- Well 2 Surcharge would expire after 30-year loan term is completed
- Any surcharge collected above amount required to pay off annual loan principal and interest will go towards future critical capital replacement projects
- The Well 2 Surcharge will not be used for operations and maintenance expenses
- This Surcharge was reviewed by the CAC at the August 20, 2020 Public Meeting and received favorable support from all five CAC members
Q: What is the Groundwater Basin Adjudication?
A: In 2018, a few agricultural landowners (“Plaintiffs”) that overlie the Las Posas Groundwater Basin (“Basin”), a groundwater basin that underlies an area between roughly Somis and Moorpark, filed a comprehensive groundwater adjudication lawsuit to determine the rights of all persons to extract groundwater from this Basin. The lawsuit seeks a court adjudication of groundwater rights against all persons or entities that either (a) extract, or pump, groundwater from this basin, such as Ventura County Waterworks Districts Nos. 1 and 19, several water mutual companies, and several farm operators or (b) own real property overlying this basin.
Q: What is the current status of the Las Posas Adjudication?
A: District staff negotiated a settlement agreement that would increase the District’s groundwater pumping allocation from 1,844 acre-feet per year (AF/yr) to approximately 2,145 AF/yr. The settlement agreement was approved by the court on September 17, 2020.
Q: What is the impact of the Adjudication and settlement on the District’s financial situation?
A: District has spent $312,000 from its cash reserve fund since 2018 defending its groundwater rights due to the Las Posas Groundwater Adjudication lawsuit. In 2019, 84% of District water supplies came from local groundwater. A loss of the District’s groundwater rights would have catastrophic consequences to District rate payers and the small farmers who rely on the District’s relatively affordable groundwater. Loss of groundwater rights would have forced the District to purchase 100% of its water supply from imported sources, causing water rates to skyrocket.
Q: How will the District pay for the Las Posas Adjudication legal expenses?
A: District seeks to replenish the $312,000 in legal expenses through a monthly surcharge to be recovered over the course of 12 months. A fixed surcharge based on meter size would be charged to rate payers for 12 months, from January 2021 through December 2021. The Las Posas Adjudication Surcharge would expire December 2021. This Surcharge concept was presented to the CAC at the August 20, 2020 public meeting and received the support of all five CAC members.
Q: What methodology was used to determine the Well 2 and Las Posas Adjudication surcharges?
A: The surcharges are allocated to each individual customer based on the hydraulic capacity of their water meter(s). The relative costs for meter sizes is based on the District’s current meter capacity equivalency schedule, which is used to calculate the District’s monthly meter service charge. An example of how the equivalent meter ratio is calculated is based on the principle that a ¾-inch meter represents a meter ratio of 1.0. A 1-inch meter has the ability to provide 1.67 times the capacity of a ¾” meter, it would have a meter ratio of 1.67.
The annual principal and interest payment for the $1.5M Well 2 loan is projected to be $84,631. The proposed surcharges are listed in the below table:
| Well 2 Loan Surcharge ($1.5M Loan w/30-year payback) | ||||||
| Meter size (in) | Capacity (gpm) | Equivalent Meter Size Ratio | No. Meters | No. Equiv Meters | Total Annual Surcharge | Monthly Surcharge |
| 3/4″ | 30 | 1.0 | 489 | 489 | $19,864.49 | $3.39 |
| 1″ | 50 | 1.67 | 413 | 688 | $27,961.95 | $5.64 |
| 1 1/2″ | 100 | 3.3 | 55 | 183 | $7,447.49 | $11.28 |
| 2″ | 160 | 5.3 | 55 | 293 | $11,915.99 | $18.05 |
| 3″ | 350 | 11.7 | 26 | 303 | $12,322.21 | $39.49 |
| 4″ | 630 | 21.0 | 6 | 126 | $5,118.46 | $71.09 |
| $84,631 | ||||||
The Las Posas Adjudication Surcharge was calculated to recover the $312k in legal expenses over the course of 12 months. The proposed surcharges are listed in the below table:
| Las Posas Adjudication Fee ($312,303 over 12 Months) | ||||||
| Meter size (in) | Capacity (gpm) | Equivalent Meter Size Ratio | No. Meters | No. Equiv Meters | Total Annual Surcharge | Monthly Surcharge |
| 3/4″ | 30 | 1.0 | 489 | 489 | $73,303.76 | $12.49 |
| 1″ | 50 | 1.67 | 413 | 688 | $103,184.91 | $20.82 |
| 1 1/2″ | 100 | 3.3 | 55 | 183 | $27,482.66 | $41.64 |
| 2″ | 160 | 5.3 | 55 | 293 | $43,972.26 | $66.62 |
| 3″ | 350 | 11.7 | 26 | 303 | $45,471.32 | $145.74 |
| 4″ | 630 | 21.0 | 6 | 126 | $18,888.09 | $262.33 |
| $312,303 | ||||||
Q: What will be the impact to my monthly water bill from the new surcharges?
A: In calendar year 2021, a Residential Customer with a ¾-inch meter with average monthly water usage of 20 hundred cubic feet (HCF) would see their water bill increase from $72.28 to $88.16. In 2022 and beyond, a Residential Customer with a ¾-inch meter and 20 HCF of usage would see their monthly bill reduced from $88.16 to $75.67.
The average Agricultural Customer with a 1” meter with average monthly water usage of 150 HCF would see their 2021 monthly water bill increase from $483.88 to $510.34. In 2022 and beyond, an Agricultural Customer with a 1-inch meter and 150 HCF of usage would see their monthly bill reduced from $510.34 to $489.52.