The Los Osos Community Services District (LOCSD) has missed its revenue targets by $543,069 since 2014, a district management report finds.
After commissioning a water rate study in 2014 and adopting a plan that mandated four years of rate hikes, the LOCSD predicted a 15 percent revenue boost for 2015-2016.
Instead, LOCSD revenue fell 3.1 percent as customer water consumption has declined 41 percent since 2014.
On May 5, the LOCSD board of directors will meet to discuss strategies to rebound from that deficit. Interim General Manager Peter Kampa told New Times that the district needs more money to continue operating and to pay for its numerous capital improvement projects on the horizon, which include digging new wells and building water treatment systems.
“We’ve got mandatory projects that we need to move on,” Kampa said. “We’ve been in this rate structure for a year now, and we see that we’re pretty stabilized at this low [demand].”
Among the revenue-generating options, the most “aggressive” action the board can take, Kampa said, is to implement emergency shortage rates—a higher water rate structure tucked away in the rate plan to use in the event of a fiscal crisis—and to declare a Stage 4 water supply emergency, a status determined by rainfall totals and that also enables the district to charge higher water prices.
The LOCSD declared a Stage 3 emergency last year.
“We’re definitely hitting all the marks for a Stage 4,” Kampa said.
Working together, those two actions could bring about a 47 percent rate increase beginning in July to help fill the LOCSD budget gaps.
While the LOCSD board can implement the emergency shortage rates with a majority vote, it has not yet put in place any specific revenue trigger markers for implementing them, even though defining those perameters was mandated by the adopted rate plan.
“A number of actions [were] required of the district to further define the implementation triggers and timing association with implementation of the emergency shortage rates,” the management report states. “To date, the district has not developed the specific triggers.”
Other strategies up for discussion to improve the district’s financial standing are reducing water conservation requirements to increase sales, cutting back on operating expenditures, canceling one or more of the capital improvement projects, and commissioning a new water rate study.
While drought and seawater intrusion jeopardize the Los Osos Valley Water Basin—where the LOCSD pulls its water from—residents in Los Osos have been asked to drastically reduce their water consumption. They’ve done that, and now, predictably, the LOCSD is suffering financially.
“It’s a disconnected process and a balancing act,” Kampa admitted. “But in reality, there’s a specific amount of revenue needed for the district to keep up its operation.”
The open session board meeting on May 5 begins at 7 p.m. at the South Bay Community Center.