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The Soquel Creek Water District (SqCWD) is a nonprofit, local government agency that provides water service and groundwater resource management to the mid-Santa Cruz County area from Capitola/Soquel to La Selva Beach. The SqCWD is governed by a board of five directors elected by the voters within SqCWD's service area.

SqCWD serves a population of more than 49,000 through approximately 15,000 connections. Ninety percent of our customers are residential.

Currently, SqCWD's only source of water supply is local groundwater pumped from 16 wells. The water is delivered through over 130 miles of pipeline. There are 18 storage tanks with a capacity of 7.5 million gallons to provide supply reliability and fire protection.

Since 1981, SqCWD has developed and maintained an extensive monitoring and management program to better define the underlying groundwater resources. It has been determined that the local aquifers cannot support current water demand. The eventual consequence of continued over-pumping would be seawater intrusion, which would contaminate the water supply and render the groundwater unusable. SqCWD is engaged in a major effort to reduce customers' water use, protect and enhance groundwater resources, and develop a supplemental water supply project sufficient to meet customers' long-term needs.

98% of SqCWD's operating income is derived from water rates (73%) and service charges (25%). We do not receive any tax revenues or other subsidies. The revenue collections fund all of SqCWD's operating expenses including capital improvements, gas and electric costs, water quality costs, wages and benefits for staff, supplies and services, insurance premiums, bond debt and prudent reserves for emergencies and unexpected shortfalls in revenue.

SqCWD operates on a July – June Fiscal Year. The 2007/2008 budget would be partially funded by the proposed rate change, but the bulk of the revenue would be generated in 2008/2009 and would fund expenditures in that fiscal year. Budget increases for operating and debt service expenses are 3% in 2007/2008 and are anticipated to stay within the 3% to 5% range in 2008/2009. In both years, however, Capital Improvement budget increases have and will be substantially more in response to escalating construction costs and the need for major projects to assure reliable water supply for our customers.

Capital Improvements are projects and studies associated with wells, supply development, water treatment, the distribution system (pipe mains, storage tanks and pumps), facilities, equipment and carbon footprint reduction costs. SqCWD needs to complete a number of major projects over the next several years. At this time, these projects are being funded on a "pay-as-you-go" cash basis as opposed to being debt financed.

1. Approximately $2 million in Fiscal Year 2008/09 will be needed for SqCWD's share of evaluations associated with the proposed Regional Desalination Project with the City of Santa Cruz. Under a cooperative agreement, the two agencies are equally sharing the costs for studies required by regulatory agencies, the legally required environmental impact reports, and design for a potential ocean desalination project. These activities will take approximately four years to complete at a total cost estimate of nearly $12 million. To date, $2.5 million of State grant funds have been approved to offset local costs for the project.

2. $2.5 million (less $1.65 million grant) for construction of a new well, treatment plant and water main to connect the well to the distribution system. These facilities are needed to replace aging infrastructure that is no longer reliable and also to redistribute pumping inland to avoid localized seawater intrusion. This would be the first of several new wells that are planned for construction over the next three to five years. The average cost of a new municipal well in 2007 dollars is approximately $1 million. A treatment plant that removes iron and manganese also costs approximately $1 million.

3. $800,000 for the Vienna Woods water main replacement. Replacing aging and undersized mains has been an ongoing project for the District in order to improve system reliability and provide adequate fire protection. The remaining mains identified for replacement will cost approximately $5 million over the next several years.

4. $850,000+ to acquire property and install a pump station that is necessary for moving water from one area of the District to another, which will improve water supply reliability and utilization of water supply sources. This project would kick off a comprehensive system intertie program to be implemented over a number of years and is necessary to incorporate a supplemental source of water supply (e.g. desalination) into District operations. The preliminary cost estimate for projects related to creating a water system that can move water throughout the District is more than $20 million.

The basis for setting water rates is the Annual Budget, which is first presented to the Board of Directors in May and eventually adopted at a public meeting in June. The adopted budget is then forwarded to an independent Rate Setting Consultant. A major component of rate setting is determining the projected water sales since 73% of all our revenues come from water sales. The consultant analyzes historical water sales data, then develops a "rate model" to calculate the rates needed to fund the budget based on anticipated water sales and other income. The 2008 Rate Setting Report was presented to the SqCWD Board at a public meeting on December 18, 2007. The Board then discussed modifications to the proposed rates and budget to balance income and expenditures at a level they felt was reasonable. In accordance with law, the SqCWD sends out a Notice of Public Hearing which instructs affected property owners on how to oppose the rate change. The Board will consider the written protests and conduct a public hearing on February 19, 2008 before making a final decision about the rates. Any changes to the water rates will become effective March 1, 2008.

The service charge covers costs that SqCWD incurs regardless of whether any water is sold - such as maintaining the system necessary to deliver water, providing 24-hour emergency response, reducing a portion of bond debt and business requirements including meter readings, billing, collections, and customer service.

The six largest public water agencies in Santa Cruz County all have fixed service charges. SqCWD's proposed service charge for the typical meter size is $34 for a two-month billing period. This would be about 6 percent less than the average service charge paid by other Santa Cruz County residents served by comparable water agencies and lower than all with the exception of the City of Watsonville.

As proposed, the quantity rate for single-family residences would be separated into three tiers instead of the current two. This is intended to encourage conservation.

With few exceptions, single-family residences are served by a 5/8-inch meter. For these customers, it is proposed that Tier 1 charges would apply to the first 8 units of water use in a two-month billing period, Tier 2 charges would apply to water use of 9 to 30 units, and Tier 3 would apply to water use exceeding 30 units. (One unit of water equals 100 cubic feet or 748 gallons.) As proposed, the quantity charge for the first 8 units of water would be lowered from $3.36 to $2.71 per unit; water use from 9-30 units would be charged $5.17 per unit up from the current $3.36; and water use above 30 units would be charged $8.96 per unit up from the current $6.78. The average indoor use for most single-family homes is 14 units in a two-month billing period. This means that a typical home could use 14 units of water for indoor use and 17 units for outdoor use before the most expensive Tier 3 would apply.

The concept behind these varying rates is to create a financial incentive for customers to minimize water consumption. SqCWD has many programs designed to help customers conserve water and avoid the Tier 3 rate. Under the proposed rates, customers reducing their water use by 10-15% would significantly reduce the impact of the price change. The chart below illustrates the differences from current to proposed rates at various usage levels then how much the bill could be lowered with moderate conservation actions.


Current Consumption in Units*	Current Bill	Bill at Proposed Rate	Reduced Consumption in Units*	Bill at Proposed Rate with Reduced Consumption
8	$54.88	$55.68	6	$50.26
10	$61.60	$66.02	8	$55.68
12	$68.32	$76.36	10	$66.02
14	$75.04	$86.70	12	$76.36
16	$81.76	$97.04	14	$86.70
18	$88.48	$107.38	16	$97.04
22	$101.92	$128.06	18	$107.38
35	$162.70	$214.22	33	$196.30
50	$264.40	$348.62	48	$330.70


* 1 unit = 748 gallons of water

As described above, SqCWD's rates are calculated by a rate setting consultant who uses the adopted budget as the basis for rate adjustments. When compared to the six largest public water agencies in Santa Cruz County, a typical bill for SqCWD customers under the proposed rates would be comparable to that charged by the City of Santa Cruz Water Department and Scotts Valley Water District. Click here for the survey of single family bimonthly bills for neighboring Santa Cruz County water agencies.

A decision by the State Supreme Court in July 2006 clarified previous uncertainty whether water related fees were subject to the provisions of Proposition 218. As a result of that decision, water agencies such as SqCWD must comply with the following procedural requirements before implementing any rate changes:

(1) The agency must provide written notice by mail of the proposed fee or charge to the record owner of each identified parcel upon which the fee or charge is proposed for imposition, the amount of the fee or charge proposed to be imposed upon each, the basis upon which the amount of the proposed fee or charge was calculated, the reason for the fee or charge, together with the date, time, and location of a public hearing on the proposed fee or charge. Please note that effective January 1, 2008, that notice only needs to be sent to customers.

(2) The agency must conduct a public hearing upon the proposed fee or charge not less than 45 days after mailing the notice of the proposed fee or charge to the record owners of each identified parcel upon which the fee or charge is proposed for imposition. At the public hearing, the agency must consider all protests against the proposed fee or charge. If written protests against the proposed fee or charge are presented by a majority of owners of the identified parcels, the agency shall not impose the fee or charge.

For years prior to the relevant court decision, the SqCWD Board of Directors published notices of proposed rate changes, held a public hearing, and considered comments from customers before implementing new water service rates. That practice has not changed. What has changed is the public’s ability to legally prevent the implementation of rate changes through a specific written protest process.

The courts have determined that each property is entitled to one vote under Proposition 218 protest procedures. In order to accurately tabulate the protest vote, SqCWD needs the address and parcel number for each property submitting a protest. There are 13,768 parcels served by SqCWD; therefore 6,885 written protests (50% plus 1) are needed to legally prevent implementation of the proposed rate changes.

If you oppose the proposed rate change, follow these instructions to assure that your protest is counted:

3. Mail the written protest so that it is received by Tuesday, February 19, 2008; or hand deliver the protest to the SqCWD office at 5180 Soquel Dr. , Soquel by 7:00 p.m. that day. Email and FAX protests will not be accepted.