CCMIN022195 - Laserfiche WebLink

Vince Wong, representative of Zone 7, indicated the surcharge was in response to the 1991 drought when there was a considerable reduction in water sales. Zone 7 is just starting to realize the benefits of that because in 1992 water sales were still down. There was therefore no money from the surcharge to repay the other funds from which Zone 7 borrowed to continue to pay for its operations in 1991. 1993 and 1994 were normal years and $1 million was collected to pay back the loan. The original amount borrowed was about $3 million from the Zone 7 operating fund. Mr. Wong estimated the surcharge would be in effect for another three years, assuming they are normal water years. Many factors could affect that such as drought, decreased water delivery from the State, excessive rainfall, etc. He also anticipated revenue bonds, which were sold by Zone 7 twenty years ago, to be paid off in four years. Mr. Wong could not say the water rates will go down, but he can say they will not go up as much as they would have. Within five years there will be a fully implemented replacement program which will assist in stabilizing rates. The charts indicate the water rates have doubled in the last ten years, but the charge for water from the State has tripled in the same period. Beginning in 1990 the rate increases were partly due to regulatory requirements and laboratory costs. In order to preserve reliability of supplies Zone 7 has 1) bought water options through the State Water Bank; 2) an agreement with the Byron Irrigation District to purchase water (which is not necessary this year); and 3) purchased water for the groundwater basin. That is a $3 million expense that Zone 7 will try to pay back over the next two years. Mr. Tarver asked for clarification on the surcharge and expenses for recharging the groundwater basin. Mr. Wong indicated Zone 7 had to borrow money from the general operating fund in 1991 and that is being paid back by the surcharge. In 1993-94, Zone 7 bought more water and that debt is in addition to the 1991 debt. Mr. Tarver observed the Zone 7 and DSRSD charges went up at about the same time. Did Zone 7 suddenly adopt a different policy or add replacement costs or did water costs just go up. Mr. Wong indicated replacement costs are part of the increased fees. Even in the City's water expenses, the replacement accounting also went up at about the same time. He attributes the Zone 7 increase more to trying to provide a firm water supply and the regulatory requirements. Zone 7 has had a replacement allowance since 1978. Mr. Tarver noted the State has tripled its cost for water; has it tripled its supply or is it planning to get more water? Mr. Wong indicated the State has reduced its firm yield, which is why Zone 7 has looked to other sources for water supplies. There is a separate account funded by the connection charge 02/21/95 16-