Water districts make pitches to acquire San Juan Capistrano’s water and sewer system
San Juan Capistrano is looking to unload its water utility, as maintaining the system is expected to become costly for the community.
The city is one of very few in south Orange County that manages its own water operations.
After a 10-month review of the options, the City Council discussed on Tuesday, Feb. 5, which agency – Moulton Niguel Water District, Santa Margarita Water District and South Coast Water District – the city should enter into an exclusive negotiation agreement to acquire its water system.
“It’s probably one of the top two or three decision in the history of San Juan Capistrano,” Councilman Derek Reeve said.
It isn’t a matter of having the water supply to meet demand, officials said, as the city is in good shape for well into the future. But funding capital improvement and deferred maintenance needs are expected to force significant rate increases, according a outside study the city had done by the Orange County Local Agency Formation Commission.
Much of the Feb. 5 meeting focused on what the transfer would mean for the ratepayers’ monthly bills and how each district would improve the city’s water infrastructure.
Transferring the city’s utility to bigger agencies, such as Moulton Niguel Water District and Santa Margarita Water District, is expected to bring initial modest reductions in water rates, followed by more stable increases, the city’s Chief Financial Officer Ken Al-Imam said.
But, he said it’s premature to quantify how much the rates would be initially cut.
It was unclear from the meeting which district would bring the lowest rates. Moulton Niguel Water District residential customers pay the lowest monthly bill on average, $79, compared to $99 for residential customers of the Santa Margarita Water District and $134 in the South Coast Water District. San Juan Capistrano residential customers pay an average $146 a month.
But John Perry, a former councilman who sued the city over tiered water rates in 2012, cited the commission’s report saying the Moulton Niguel district drawing substantially more than the others from the residents’ property tax. Adding those up makes the Santa Margarita Water District the cheapest district, he argued.
Each of the three districts has proposed millions in additional investment to the city’s water infrastructure, which may add to rates.
The Moulton Niguel district emphasized its efforts to improve reliability for imported water, which has been the cheapest water source for the district, said Joone Lopez, the district’s general manager.
The Santa Margarita Water District proposed spending millions on replacing the city’s sewer lines. The district also highlighted how it has been trying to develop alternate sources of water, saying it has led the San Juan Watershed project to improve the capture of stormwater runoff.
The South Coast Water District focused on its proposed desalination plant at Doheny Beach in Dana Point, saying the plant may provide another water source and lessen the dependence on imported water.
The City Council could make a decision as soon as its Feb. 19 meeting. But the resulting negotiations on a final deal would take six months, City Manager Ben Siegel said. “The devil is in the details.”
The Orange County Local Agency Formation Commission, which oversees special districts and the provision of services countywide, would need to sign off on the transfer. If enough residents were to register their opposition through the commission, the transfer could be blocked or sent to a referendum.