In August 2017, the Lake Hemet Municipal Water District, which provides water to much of Garner Valley, proposed to raise its water rates in Garner Valley.
Those customers objected. The board held a special meeting at the Garner Valley Common and decided to table the rate increase until its staff could review the issue further.
Eventually, the district hired a consulting firm, Raftelis of Murrieta, to study water rates throughout the district, including Garner Valley. Last week, Habib Isaac, senior manager at Raftelis, gave the LHMWD board a preliminary review of the results and requested direction for completing the study. Most of the issues he raised involved the rates in the Hemet area of the district.
The board agreed that it would receive the final report and adopt preliminary new rates at its October meeting. This would enable it to have a 45-day period before a public hearing on the new rate structure, likely at its December meeting.
For the Garner Valley customers, the proposed rates would be $3.73 per hundred cubic feet, which is an increase of $1.47 or about 65 percent. Currently, there are five water tiers for Garner Valley customers and the rates range from $1.626 to $3.711 per hundred cubic feet.
A hundred cubic feet is equivalent to 748 gallons. So, the rates per gallon range from 0.22 cents to 0.40 cents and, if approved, the new rate will be 0.50 cents per gallon.
Currently, LHMWD applies a fixed charge of $37.26 to each bimonthly bill. The proposal would implement water-meter charges. All customers will see an increase, regardless of meter size. All but 11 Garner Valley customers have a 1-inch meter and would pay $68.24 bimonthly, an increase of 30.98.
Raftelis did offer an alternative with a smaller initial increase, but the long-term rates beginning in 2020 would be higher. Director Steven Pastor, who represents Garner Valley, asked Isaac to develop some additional options for the October meeting.
However, the principal issue separating the board and its Garner Valley customers is $1.7 million from some past legal cases related to Garner Valley water. The cost to litigate was not fully collected from the Garner Valley customers. About $1.7 million remains outstanding and the board does not believe that its customers in the other areas should be responsible for these costs.
“The $1.7 million deficit came from two cases involving eminent domain and water rights,” stated Director and Finance Committee Chair Todd Foutz. “The legal costs were incurred by the district, and paid by ratepayers in Hemet and San Jacinto.
The last Garner Valley rate increase was in 2010. Some of those revenues began to reduce the borrowed debt. In 2010, it was about $2.3 million, according to General Manager Mike Gow.
Also, in collecting the costs, the board has to decide on an interest rate. Isaac suggested either the state’s Local Agency Investment Fund rate, which is 1.3 percent, or the interest rate LHMWD pays on its bonds, which is 4.1 percent.
“What is the time frame [for repaying the deficit]? Twenty, 40 or 50 years? What interest rate? Zero, investment 1.3 percent of bonds we issued 4.1 percent?” Foutz asked rhetorically. “All is part of the discussion. What is not part of the discussion is whether the $1.7 million has to be paid back!”
The only speakers at the Thursday, Sept. 20, board meeting were Garner Valley residents. Several questioned why they, as new residents, were now responsible for costs associated with costs from 17 years or longer in the past.
“This is something we had nothing to do with,” said one attendee, who moved to Garner Valley two years ago.
Another felt that trying to collect a 17-year-old debt exceeded the statute of limitations.
Others raised objection to a Prop 218 process that would include the entire customer base rather than limited to the Garner Valley customers, who will have to pay the higher rates.
Raftelis did recommend that Garner Valley customers should only have a single-tier rate structure. Isaac argued that all of their water demand is supplied from the wells in Garner Valley. Consequently, even when demand increases, the cost of production does not increase.
In the Hemet area, as water demand grows, the district must use higher-cost wells or buy water from Eastern Municipal, which is more expensive than its production costs from its limited well supply.