The Idyllwild Water District directors chose NBS of Temecula to study the current water and sewer rates, and propose possible changes to the rate structures. The work could be completed by June, according to the NBS proposal.
IWD had three firms submit proposals. At $51,000, NBS was the least costly of the three. The high bid was $80,000. The other two firms were Raftelis Financial Consultants from Murrieta and David Taussig & Associates of Newport Beach.
When asked for his recommendation, Interim General Manager Jack Hoagland said he has had good experiences with each firm and knows the principals at each.
While Director Peter Szabadi asked whether it was possible to ask the firms to make a presentation at a future board meeting, Hoagland and Board President Dr. Charles “Chip” Schelly expressed skepticism that the board would actually choose a firm whose cost proposal was $15,000 to $30,000 more than NBS’s proposal.
Eventually, the board voted 4-0, with Director Geoffrey Caine absent, to award the contract to NBS.
When he began the discussion, Hoagland suggested the board consider what it wanted from a new rate structure. If it was only sufficient revenue to operate the district and make some capital investments, then perhaps he and Chief Finance Officer Hosny Shouman could do the review.
If the board wanted the rates to do something else, such as encourage conservation or treat the various classes of customers (for example, residential versus commercial) differently, then a consultant would be a better choice.
In a discussion preceding the vote, directors Steven Kunkle and Catherine Dearing wanted to decide on a rate structure before selecting a firm to study the need and possible rate proposals.
Dearing strongly favored having IWD staff — Hoagland and Shouman — do the study. Her concern was whether paying a consultant was simply an expensive step to justify raising rates.
Shouman replied that IWD’s capital program is “suffering” because the district is limited to funding it from the property-tax revenue. The water revenue basically is sufficient to pay the operating costs. There is little excess available for capital investment. In December, Hoagland described a 10-year capital improvement program with costs exceeding several million dollars.
“We want to change rates as little as possible while doing what we need to do going forward,” Schelly replied.
Szabadi added, “There may be an increase. But it wouldn’t be a surprise if we have opposition to it and it needs to be justified.”
“I would have it done as an in-house project. Jack and Hosny have a feel for the community,” Dearing said initially. “I’ve scrutinized the [proposals] and they haven’t been dealing with communities of our nature. We need a tailored approach.”
Schelly argued that the benefit of a consultant study would be its value in the future. It could be used for 10 or 15 years, not “one and done.”
Dearing eventually agreed with her colleagues to use a consultant and then agreed with the choice of NBS.
Kunkle raised questions about how possible rate structures might affect different customers. While there would be “winners and losers,” Hoagland replied, “… we don’t know who they’ll be.”
And Shouman commented that the IWD customer base was very complicated — many full-time residents, a large number of part-time customers and a large commercial sector.
The first motion Szabadi made was to contract with a consultant for a rate study. Then he moved to select NBS. Kunkle seconded both motions, which were approved unanimously, 4-0.
In its proposal, NBS highlighted three issues, which would be addressed during its work. Recognizing the level of vacation homes, the proposal would focus on revenue stability. Secondly, the rates should provide sufficient revenue to carry out a capital-improvement program. Finally, there would be options to encourage conservation of water.