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The Santa Margarita Water District Board of Directors unanimously chose to not impose proposed new utility rates for San Juan Capistrano customers that would have resulted in annual costs increasing by 288% for the J.F. Shea Therapeutic Riding Center.
During a meeting on Wednesday, July 12, the Board of Directors instead elected to continue discussions following protests over a rate study submitted by staff that recommended high increases for customers that used the least amount of water, which included the Shea Center.
The issue will be discussed again during an Aug. 2 meeting. A new rate study for San Juan, removing the fire meter component that drove up costs for affected customers, creating a citizen advisory group that would work with SMWD, and keeping the methodology for San Juan rates separate from other parts of SMWD’s customer area are all now on the table.
Approving portions of the existing study is also an option.
SMWD General Manager Dan Ferons said a new study could take up to 12 months.
“This rate study has been ongoing for over nine months already,” Ferons said. “I would say you’re looking at this time next year if you want to start a brand-new rate study with new principles and how we go about doing that.”
Laura Freese, a board member, San Juan resident, and former city councilmember, said the commercial fire meter component needs to be looked at, and the impact from that on customers was not mentioned in the executive summary.
“I just have to say, getting ready for this meeting, I am getting more and more angry,” Freese said. “I’m really angry, because (with) the rate study—it follows the template, and it’s fine—but it’s not done with the people in mind. It’s done with legality in mind and water in mind and not the people.”
Under the rates proposed by staff in the submitted study, the monthly charge would be $175.74 for a 3-inch meter; $274.29 for a 4-inch meter; $546.93 for a 6-inch meter; and $875.41 for an 8-inch meter as of Aug. 1. Meters 10 inches or longer would be charged $1,313.93 a month. The meters do not currently have any monthly costs.
One reason given for the proposed increases is years of deferred maintenance while water utilities were managed by the City of San Juan Capistrano. SMWD annexed the city’s water utilities in November 2021.
“I felt the frustration of watching the other city councilmembers vote down helping our infrastructure in San Juan Capistrano,” Freese said. “That’s why we’re in the pickle we’re in now, where so much needs to be done.”
SMWD crews have been working to update water infrastructure throughout San Juan since the annexation.
The Shea Center, a nonprofit that helps clients with disabilities and mental health issues through horse riding, would have seen its annual water bill go up to $45,000 a year—compared to a previous annual cost of $15,000.
Shea Center staff and volunteers spoke against the rate study and increases during the meeting. Administration for the Shea Center initially found out about additional costs during a May meeting with Freese and Ferons.
“It’s not a what. It’s the how. We agree that our water infrastructure needs to be improved. It’s the how,” Shea Center CEO Dana Butler-Moburg said. “It’s going to take a massive effort to help diffuse the dire impact that these rate increases will have not just on us, but on our friends and our neighbors and our colleagues.”
Other sites that would have been impacted by rate increases include the private schools Fairmont Schools and JSerra Catholic High School, both which are near the Shea Center.
“Should public officials advance a scheme that places a disproportionate burden on a very small number of customers, some of which are extremely vulnerable, related to a single factor of service—the fire meter services—and for which the district’s general manager questioned whether a particular customer could roust an expert who understands it enough to challenge it?” Fairmont Chief Operating Officer Mary Jane Miller said.
San Juan water rates have not increased since 2018.
“San Juan has stayed flat, and all the costs to operate it have gone up,” Ferons said. “There is some work that has to be done that has to balance that out.”
Other factors presented by Ferons include costs for imported water—which makes up 70% of SMWD’s water supply—going up, along with inflation and cumulative cost increases over the past five years.
“The city, because of the way they were structured and what they were doing, they were depreciating the system at about $4 million a year and investing about $1 million a year,” Ferons said. “There were a lot of unfunded facilities that weren’t done. We’re in the mode of going through and looking at that.”
Board President Frank Ury said whatever is done in terms of San Juan could impact other parts of SMWD’s service area.
Orange County Fifth District Board Supervisor Katrina Foley also spoke at the meeting and said SMWD should find alternatives to raising rates, because people are recovering from the COVID-19 pandemic.
The Board of Directors said staff would reach out to Foley’s office for assistance as they work through the matter.
