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Officials set stage for water rate increases, $10M in bonds

Rising costs, falling use have added to district income woes.

July 13, 2011|By Melanie Hicken, melanie.hicken@latimes.com

LA CRESCENTA — The Crescenta Valley Water District this week adopted a budget built on at least two rate increases and an additional $10 million in bonds to help maintain aging infrastructure.

The adopted budget calls for a 4.9% rate increase in January, with an additional 3.2% increase six months later. Other planned rate hikes through 2016 would add up to an additional 19%, which officials say is needed to keep up with the rising costs of imported water while also maintaining infrastructure.

The increases would come on top of last year's average rate increase of 8%, which officials said was needed to keep the utility from continuing to dip into its reserves to cover operations.

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The board of directors on Tuesday voted 3 to 1 to adopt the budget, although they cautioned that incurring millions in additional debt or raising rates would require separate approvals.

The water utility is already paying debt service on $10 million in bonds, and its customers pay rates that are among the highest in the region.

“I’m going to support this,” said board member James Bodnar. “But it’s not a done deal with respect to getting the bond money depending on what the costs are.”

Utility officials will now work with consultants to create a bond proposal and then return to the board.

District officials say dwindling revenues in the wake of water conservation rules, combined with the rising cost of imported water, have forced the utility to defer basic maintenance of pipelines and reservoirs in recent years.

And District General Manager Dennis Erdman has warned that deferring the maintenance could lead to a slow deterioration of the system.

The majority of board members have said a bond makes the most sense to fund the improvements in order to spread the cost of the improvements among current and future ratepayers.

Board member Judy Tejada voted against the budget, saying she was against putting the utility into more debt to pay for the improvements.

“It just seems to me that there is a lot of gray area in that the cost to the ratepayers is unknown,” she said.

Among the capital projects scheduled for the next year are the $500,000 replacement of 2,000 feet of old pipeline, a $1.2 million emergency connection with Los Angeles Department of Water & Power infrastructure and the $90,000 design of a new nitrate removal plant at a local well.

Crescenta Valley rates are higher than those charged by utilities in Burbank and Glendale, although those utilities also have approved rate increases.

All three utilities have had to face the rising cost of water imported from the Municipal Water District of Southern California, which has instituted double-digit rate increases. Crescenta Valley imports about a third of its water from the Foothill Municipal Water District, which in turn relies on imports from Metropolitan.

Crescenta Valley officials said the constantly rising price of imported water has continued to put pressure on rates.

“We end up being the ones that have to explain to our customers,” said board member Ken Putnam. “We’re at the end of the line, so to speak.”
 
 

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