Inquiring minds want to know...

August 31, 2012

By Marsha M. Rea

Rumors that the City Council is considering selling, or otherwise negotiating away control of the City’s water utility, through what are called “public/private partnerships”, began to surface some months ago and are rapidly gaining steam. If you look at recent history, the possibility is not far-fetched.

Four years ago the City owned and operated three utilities: Wastewater (i.e., sewer), Refuse (i.e., trash), and Water. In 2008 the City contracted with PERC/Alinda to build a new wastewater treatment plant and provide sewer treatment services. So, at this point, the City no longer has its own sewer treatment facility, though it still owns the sewer pipelines and lift stations, which are now maintained by the Ventura Regional Sanitation District. In 2011 the City sold the entire refuse operation to Crown Disposal Co., Inc.  All that is left after disposing of these city assets are the sewer pipelines, some sewer lift stations and, the jewel in the Crown, the water utility. 

In 1996, the City of Santa Paula purchased the city’s water system from a private water company.  At that time all of the city’s water system components were very old and in need of major repair. Indeed, the same is still true to a large extent today.  

The main reservoir, which provides storage for over 88% of the City of Santa Paula’s water, is now 124 years old and no improvements have been made to it since the new roof was installed in the late 1990s.  Construction on the backup for the main reservoir is just recently completed, but that will only cover the amount of water storage that is in the main reservoir.  There will still be no safety backups in the system.  That means essentially only half of the system has been upgraded.  So what is the status of the actual replacement of the main reservoir?  The facility is considered to be a historic structure due to its age alone, so the environmental review process could take years to complete.  Has this been started?  Replacement of this facility could take 5 to 7 years to finish if it were started today.

The Water Master Plan, adopted several years ago, identifies a number of other problems with the water system: a substantial number of pipelines that do not meet fire flow requirements; inadequately sized pipelines; pump stations with no redundancy; groundwater wells well beyond their useful life and requiring substantial maintenance (all of the water in Santa Paula comes from the ground); no redundancy in groundwater wells which puts the entire water system at risk when a failure occurs; water storage tanks insufficiently sized; etc.  The Water Master Plan outlines all of the needed improvements to correct these urgent problems and keep the community’s water supply flowing. One wonders why the Council and administration are not pursuing these projects that are so vital to our health and safety.  It is not for lack of money.  

In October 2010, the city’s Utility Authority (the UA), which we discussed last week, issued $55,715,000 in municipal revenue bonds for the Water Enterprise (Water Bonds/series 2010). These bonds are to be repaid from the revenues of the enterprise over 30 years.

The Water bonds were to be used in part to: refund approximately $29.4 million in bonds issued in 2003, and to finance improvements to the city’s water system.  After paying off the old bonds and, considering the costs of issuing the new bonds, one might estimate that plus or minus $20,000,000 would be available to the water enterprise fund for water system enhancements and upgrades. One might ask the Council and the administration what actions they are currently taking to invest the bond funds to address the high risk of an antiquated and deteriorating water delivery system.  Time is of the essence.

The Water utility is by far the most valuable physical asset remaining to the City. Owning the rights to its water, and the pumps and pipes with which to distribute it to customers is a tremendous advantage to a community trying to remain in control of its future. The City’s rights to water in the Santa Paula Basin (the underlying aquifer) have been adjudicated, meaning that the courts have recognized that Santa Paula has a right to pump a specific amount of water from the Basin. Adjudication occurred after the City and a number of small water companies and ranchers successfully sued the City of Ventura more than a decade ago when Ventura drilled a well in the Santa Paula Basin near Wells Road in Saticoy. Few water basins are adjudicated, and having these recognized water rights is very valuable. 

So why would the City consider giving away control of the Water utility? A good question, the answer to which is unknown; however; if the Santa Paula Water utility is lost to privatization, what assets will the city have left?  Nothing of such value.  The interests of public corporations rarely coincide with public interests over the long term.  At the end of the day a corporation’s interest rests (and very rightly so) with the growth and wellbeing of the interests of its shareholders.  It seems that it would be appropriate to have a full public airing and discussion of the pros and cons of any proposal among all of the parties involved (including the public) before any hard and fast decisions are made.  The water belongs to the public trust and one might think that the people who live in Santa Paula have a right and an obligation to participate in the decisions related to its future.

There are numerous reasons NOT to sell the Water utility, among which are: 1) the ability to determine how water is allocated; 2) the ability to ensure that water quality meets State and Federal safety and quality standards; 3) the ability to ensure that needed repairs, replacements and expansions occur when the community needs them and 4) the ability to keep user rates low, because “profit” is not a required component of the rates customers pay. The results of the privatization of municipal water services do not paint a pretty picture.  If one asks residents of the City of Ojai how things are going with their private water company, one hears about crumbling facilities and through-the-ceiling water rates. At the request of its residents, Casitas Municipal Water District is considering using its powers of eminent domain to purchase its private water company on behalf of the community. Since we already own our water system, why would it make sense to create a similar situation to resolve down the road?  

In the opinion of the writer, Santa Paula has reached a tipping point in its history.  Outside forces in the state and across the country are having impacts on us that we cannot control.  What we can control, if we chose to, are decisions that begin and end here, and have a direct impact on our daily lives.  Our water and how we manage it may be the most significant issue faced by our city government in this decade.  We have a responsibility to our children and their heirs to demand and support transparency and accountability in the decision-making of our city council and its administration.  There are lots of very smart, creative people here who have the capacity to become engaged in solving the questions we face together.  There is great potential in this community for raising our quality of life to what we remember from years past, but it literally “takes a village” to get the job done.  We are in a leaky little boat on a choppy sea. All hands are needed on deck please...

Next time:  The final wrap-up on water issues... then on to other things...

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