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Home My WebLink About07/01/2008, C3 - RESPONSE TO GRAND JURY REPORT ON NACIMIENTO PROJECT council MminD� 7-1-08 j AQe.naa REpont CITY OF SAN LUIS OBISPO FROM: John Moss, Utilities Director Prepared By: Gary W.Henderson, Water Division Manager�wt� SUBJECT: RESPONSE TO GRAND JURY REPORT ON NACD IIENTO PROJECT CAO RECOMMENDATION Authorize the Mayor to send the attached letter responding to questions raised by the San Luis Obispo Grand Jury relative to the Nacimiento Water Project. DISCUSSION The San Luis Obispo County Grand Jury prepared a report titled"Nacimiento Water Project—Water from The Dragon" which was received by the City of San Luis Obispo on May 7,-2008. The report commended the participating governmental agencies, project staff and consultants for their work thus far on this very challenging project. The Grand Jury Report requested a response to two specific questions (shown below). The response must be submitted to the Presiding Judge at the Superior Court of California by August 18, 2008. 1. "Because the project only addresses the area's short term water requirements, the County and other participating agencies should frequently review and update their strategic water resource plans. These plans also need to address the "growth inducing" effects of increasing available water resources." 2. "For customers to adequately evaluate the advantages and costs of projects like this one, participating agencies should insure that their water customers can readily identify which portions of their utility bills are attributable to the project." The attached letter drafted for the Mayor's signature addresses the above questions. Concerning the first question, the City of San Luis Obispo has extensive policies in place to review and update our plans relative to adequate water resources to meet current and future City needs. The City agrees that water management and water supply planning are critical to a healthy community. The second question posed by the Grand Jury is more difficult to accommodate and based on the details provided in the response letter, the City does not feel that the request is either desirable or feasible. Staff would recommend approval of the draft language (Attachment 1) in the letter to Presiding Judge Martin Tangeman in response to the Grand Jury's report on the Nacimiento Water Project. G3 - 1 Grand Jury Response- Nacimiento Water Project Page 2 FISCAL IMPACT There is no fiscal impact associated with this letter of response to the Grand Jury. ATTACHMENT Letter responding to County Grand Jury questions relative to the Nacimiento Water Project AVAILABLE FOR REVIEW IN THE COUNCIL OFFICE 2007/2008 San Luis Obispo County Grand Jury Report titled: Nacimiento Water Project— Water from The Dragon" G 3- 2 G�tY 0/ �* of sAn luis oBispo 4440 cityOFFICE OF THE CITY COUNCIL 4/g 0� 990 Palm Street ® San Luis Obispo, CA 93401-3249 ■ 805/781-7119 July XX, 2008 Presiding Judge Martin Tangeman Superior Court of California 1035 Palm Street, Room 385 San Luis Obispo, CA 93408 Subject: Grand Jury Report-Nacimiento Water Project Dear Judge Tangeman: This letter is in response to issues raised in the 2007/08 San Luis Obispo County Grand Jury Report on the Nacimiento Water Project: "Water from the Dragon".•The report commended the participating governmental agencies, project staff and consultants for their work thus far on this very challenging project. The Grand Jury Report required a response to two recommendations in the report. The questions raised by the Grand Jury and our agencies response to each are presented in the following sections. A. "Because the project only addresses the area's short term water requirements, the County and other participating agencies should frequently review and update their strategic water resource plans. These plans also need to address the "growth inducing" effects of increasing available water resources. " Response: The City of San Luis Obispo agrees that water management and water supply planning are fundamental to a healthy community. Resource considerations must be an integral part of a community's long range vision, as such, the City consistently reviews and updates many plans and documents relative to water resource issues. City staff annually provides the City Council with a Water Resources Status Report that focuses on five specific areas: Existing Water Supply Status, Multi-Source Water Supply Projects, Water Conservation Programs, Water Supply Strategy to Meet Future Needs, and Projected Water Supply Situation. This report is very extensive and provides an annual review on the water resources required to meet City needs. In addition, the City has an adopted Urban Water Management Plan(UWMP) and a Water Management Element to the General Plan that contain specific policies relative to water resource planning and water available for development. The Urban Water Management Plan must be updated every five years and the plan is submitted to the State per their requirements. Chapter 2 of the UWMP contains the policies that are the basis for the Water Management Element (WME) to the General Plan. In response to the issue of growth inducing impacts, the water identified from the Nacimiento Water Project will meet the water demand at build-out as identified in the 6 .3-A city of san tuts oBispo Grand Jury Response Page 2 City's General Plan and meet"secondary water supply"requirements as identified in the WME. The growth inducing impacts were evaluated during the update of the General Plan and related Elements. B. "For customers to adequately evaluate the advantages and costs ofprojects like this one, participating agencies should insure that their water customers can readily identify which portions of their utility bills are attributable to the project." Response: The City of San Luis Obispo agrees that it is important for our customers to understand and appreciate the costs of providing water service to the community. The City provides cost information(including the costs for Nacimiento) to our customers in a variety of ways. Our.annual water fund analysis provides a detailed breakdown of all of the revenues and expenses that dictate the necessary water rates. In addition, the City Utilities Department provides a quarterly newsletter to all customers and information relative to the Nacimiento Project has been included in numerous articles over the past years. Also with the recent passage of Proposition 218, a separate notification is sent to all customers to clearly identify what the proposed rate increases will.mean to our customers. In response to the Grand Jury's specific recommendation to display the cost broken out for Nacimiento on individual water bills, the City does not feel this is either desirable or feasible for three primary reasons. 1. In the City's annual water fund analysis, the Utilities Department staff prepare a projection of costs for a minimum of four years into the future. This is done to identify future major capital expenses and moderate necessary rate increases on an annual basis. As such,based on the future costs associated with the Nacimiento Project, the City is projecting annual rate increases over several years to fully pay for the costs of the Nacimiento Project as well as the increasing costs associated with operations and maintenance of our complex water system. Attempting to breakout the cost for Nacimiento at any point in time would not necessarily reflect the complete costs for Nacimiento. 2. The City's water rate structure is 100% commodity based. As such, customers only pay for the amount of water actually used and there are no fixed fees in our rate structure. The City has a three tiered rate structure for single family residential customers and a two tier rate for all other customers. With this "commodity based" rate structure it would be difficult to show that portion of the customer's variable bill that was attributable to the Nacimiento Project. 3. The City has a"Multi-Source Water Supply"policy in our Water Management Element of the General Plan as shown below: "The City shall continue to develop and use water resources projects to maintain multi-source water supplies, and in a manner, reduce reliance on any one source of water supply and increased its supply options in future droughts or other water supply emergencies." r -S-d Grand Jury'Response Caty of san luis ompo Page 3 The City of San Luis Obispo has various water supply sources to meet our current as well as future needs. The City's water resources currently include water from Salinas Reservoir(Santa Margarita Lake), Whale Rock Reservoir, groundwater, and recycled water from our Water Reclamation Facility. Our water rates do not separate the costs for the various water supplies available to the City. Our water rates are based on a blended cost for all supply sources and costs for operation and maintenance of the water system. The City does not believe it is desirable to provide a separate cost on the water bills associated with the Nacimiento Project. I hope this adequately response to the questions and recommendations raised in the County Grand Jury Report on the Nacimiento Water Project: "Water from the Dragon". I appreciate the Grand Jury's time to investigate and report on the Nacimiento Project. As they have discovered, water supply is a critical and complex subject that should be constantly on the minds of elected officials and those staff serving the public. Sincerely, David F. Romero Mayor cc: Gary Henderson John Moss Jonathan Lowell C3- 5