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We are raising awareness and understanding of why Vallecitos Water District rates are high, and what can be done about it.

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The True Increase in Water rates is 19%, not the 1.77% in the Public Hearing Notice.

We are currently paying $6.9 million, 14.5% of our water bill, every year, for a “Transfer to Capital Reserve”. At the time of the last rate increase, customers already funded a reserve that was nearly double their entire 5-year CIP revenue requirement. The money was collected from our rates and used to subsidize developer fees. To be fair, the starting point to calculate this impact of the increase to $94.06 for 13 units of water is $79.02 and the increase in 19% as illustrated below.

Protest the rate increase – protest template

Instructions on how to protest can be found on page 7 of the Public Hearing Notice.

Accumulated Ratepayer Money compares Vallecitos July 31, 2022 balance in accumulated ratepayer money as reported in their last Board Meeting agenda packet, to all the other neighboring independent special districts as reported on their most recent audited financial statements. CIP = Capital Improvement Projects (pipes, pressure stations, pump stations, tanks, reservoirs, etc.)

The pending Vallecitos water rate increase includes $7.6 million, 16.7% of our water bill, for “Rate Funded CIP Expenditures”.  Vallecitos has already accumulated $38.1 million from water rates for “CIP Expenditures”.  Their entire 5-year CIP Expenditure requirement is $22.4 million.

So what will the $7.6 million really pay for?

Debt Burden is equal to loans and bonds payable as reported on Vallecitos’ most recent audited financial statements (June 30, 2021) plus the $28 million recently issued in bonds. Vallecitos issued debt to cover developer obligations because the developer fee is maintained at a “competitive” rate and not sufficient to cover the full impact of growth – increased only once in the last ten years, other than inflationary adjustments.

Vallecitos customers are paying too much for water. Capacity Fees and Water rate Workshop April 10, 2022

Letter to the Vallecitos Water District Board of Directors and General Manager signed by 86 customers sent in December 2021 – no reply . Letter

An FVC co-founder presented to the American Institute of Certified Public Accountants and was asked to submit a brief on his advocacy efforts for publication. Please read and don’t keep it to yourself – be an advocate. Thank you

The roles of elected officials include setting the general direction of the agency and making policies consistent with the vision and mission of the agency.  Executive management is responsible to implement policies and make the elected officials and the public aware of the impacts of policies considered.  When policies are not in the public’s interest, and executive management fails to disclose the true impact of adopted policies, consumer advocates take on the role of ensuring that the public’s interest is at the fore-front of decision making.

***On the Agenda***

Vallecitos Water District’s March 3, 2021, Board Agenda includes Action Item 2.2 Capital Facilities Expansion (Capacity) Fund Presentations. Please consider sending in comments and/or participating in the meeting. Suggested questions:

Your staff report states “Projects intended to serve new development are paid for by new development.” How can that be when there is no money from new development – a deficit balance since 2013, now $15 million deficit balance? Are contractors and bondholders accepting IOUs for payment or are they being paid with ratepayer money?

The second paragraph on the Discussion Section suggests it is common to have a deficit in the developer fund. If it is common, why is Vallecitos the only water agency in San Diego County with a developer fund deficit? Why hasn’t Vallecitos established developer fees sufficient to pay for their impacts? Why does Vallecitos continue to finance developer expansion projects with ratepayer money instead of issuing debt?

For more potential questions, preparation and background, please review emails sent to the General Manager on February 18, 2021, and February 23, 2021. A response was never sent to either communication.

The Development Subsidy Paid for by Ratepayers

As of June 30, 2020, the developer fund deficit is now $15.5 million (up from $14.6 million this time last year).  This deficit represents money paid by Vallecitos customers (ratepayers) to fund urban development – a subsidy.  Developer fees are not sufficient to pay for their impacts and Vallecitos has no plans to adjust developer fees for at least five years. Vallecitos projects the subsidy paid out of our water and sewer rates will increase to $21.2 million within one year.  Vallecitos is the only water or sewer agency in San Diego County, likely all of California, with a developer fund deficit – the only agency that subsidizes urban development with ratepayer money.

Ratepayer Reserve Surplus

As of January 31, 2021, ratepayer reserves are now at $102.2 million, compared to $23.2 million when developer-backed politicians gained control of the Board in 2013 – that’s money above and beyond what is necessary to pay for operating costs and asset replacements.  It is prudent to maintain some level of reserves, but no other water or sewer agency in San Diego County has accumulated more ratepayer money in reserve than Vallecitos.  Fifteen percent of our current water bill goes to increase reserves even further.  Vallecitos projects water and sewer rate increases of 3.5% to 4% next year “and beyond.”

Attend VWD Board Meetings

Vallecitos Water District Board of Directors meets every first and third Wednesday of each month at 5 pm. Attend and provide public comment expressing your concern about the breaks given to developers at the expense of ratepayers. For agendas and more information.

Get the confidence you need to address the Vallecitos Board of Directors. Get educated. View FVC’s GET EDUCATED and RATEPAYER EQUITY COALITION pages.

BIA and Developer Payments to Martin and Sannella

Vallecitos Water District (VWD) Board Members Mike Sannella and Hal Martin receive campaign contributions from the Building Industry Association (BIA) and developers. Even though the two-member standing committees of VWD must, by policy, rotate members every year, Sannella and Martin have remained the only members of VWD’s Finance Committee since 2014. Since then VWD ratepayers have paid $52.3 million to amass reserves, fund the developer deficit, and pay for future developer obligations. Also, since then, not one action item has come before the Board regarding long-range financial planning. Learn more at https://friendshipvallecitoswater.org/get-educated/#developer-contributions

Vallecitos’ balance is from their most recent Reserve Report in the Board Packet online. Agencies contiguous to Vallecitos’ service area balances are from their most recent audited financial statements online.

The Political Shift that Cost Water Customers Millions

In 2013, newly elected officials of the Vallecitos Water District broadened their scope to include growing the economy.

“The District’s interest has to do with providing basic services, sewer and water, at the best price. That’s all it is. It has nothing to do with helping out developers.” Jim Poltl, Former Member of the Board of Directors

In response, “I look at the bigger picture – economic stimulus. Smaller governmental agencies … make that happen.” Hal Martin, Member of the Board of Directors

Would the economy have grown without the breaks given to developers? Did we pay more for water to stimulate the economy? Or did we just bolster developer profit margins?

Recent Presentations

Check out these recent presentations to learn more: San Marcos Water Rates and Politics, San Marcos Democratic Club, June 13, 2020; Attorney General Consumer Complaint, May 22, 2020; California Water Politics and Pricing, AICPA Government Performance and Accountability Committee, May 5, 2020; San Diego County Taxpayers Association Golden Fleece Nomination, February 12, 2020; San Marcos Water Rates and Politics, Republican Women of California, February 3, 2020; and San Marcos Water and Politics-The Price We Paid, Palomar College Political Economy Days, October 23, 2019, recorded lecture, presentation slides, and news article.

Vallecitos’ balance is from their most recent Reserve Report in the Board Packet online. Agencies contiguous to Vallecitos’ service area balances are from their most recent audited financial statements online.

Developer funds (developer fees paid less expenditures to offset impacts from development) plummeted to record deficits when development in San Marcos soared! Why? Visit RATEPAYER EQUITY COALITION

How was the developer deficit funded? Visit RATEPAYER EQUITY COALITION