Rate Increase FAQ
Why is it necessary to increase rates?
Operating costs have been steadily increasing for water districts across all of California. In addition, SLVWD’s operating costs are inherently higher than those of many other districts because of the unique challenges presented by the mountainous topography of the San Lorenzo Valley. Furthermore, SLVWD needs to pay for repairs caused by the CZU fire and last winter’s storms (for which it will be only partially reimbursed by FEMA) and to continue to address long-deferred maintenance and upgrades to essential infrastructure.
SLVWD can only contend with these increased expenses via some combination of improved cost-savings, additional sources of revenue, and higher rates. SLVWD has taken multiple steps to reduce operating expenses (e.g., hiring an in-house engineering staff to reduce consulting costs). SLVWD has also successfully applied for and received several grants for infrastructure upgrades and fire hardening. Additional grants and cost savings are clearly a priority, but for the purposes of the rate study, they cannot be assumed. As a consequence, SLVWD must adopt some sort of rate increase.
This being said, reasonable people can question whether SLVWD has overestimated or underestimated its future revenue requirements (and, hence, the size of the required rate increase). The primary argument against the new rate structure is that SLVWD should find a way to operate more cost efficiently (presumably, with a smaller staff). The primary counter-argument is that SLVWD has reduced costs, and nobody has yet figured out how it can save significantly more. While the Board can make cost reduction a priority for the to-be-hired General Manager, arbitrarily limiting its rates to a level too low to meet its obligations is not a financially responsible way to proceed.
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