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ITEM: |
ACTION ITEM |
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15. |
RECEIVE REPORT ON
RULE 19.8 LISTENING SESSIONS OF JANUARY 7, 8, 9, 10 AND 15, 2019 AND
DETERMINE SUBSEQUENT ACTION REGARDING PREPARATION OF A FEASIBILITY STUDY |
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Meeting Date: |
January 23, 2019 |
Budgeted: |
N/A |
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From: |
David J. Stoldt |
Program/ |
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General Manager |
Line Item
No.: |
N/A |
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Prepared By: |
David J. Stoldt |
Cost Estimate: |
N/A |
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General Counsel Approval: N/A |
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Committee Recommendation: N/A |
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CEQA
Compliance: Action does not constitute
a project as defined by the California Environmental Quality Act Guidelines
section 15378. |
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SUMMARY:
On November 6, 2018 voters within the District passed Measure J 56% to
44%. Measure J directed that a new Rule
19.8 shall be added to the Monterey Peninsula Water Management District Rules
and Regulations, Regulation I, General Provisions. The first section of the rule states that “It
shall be the policy of the District, if and when feasible, to secure and
maintain public ownership of all water production, storage and delivery system
assets and infrastructure providing services within its territory.”
The District Board has determined the best means to
meet the “if and when feasible” criterion, requires engagement of a team of
consulting professionals to work with District General Counsel and Special
Counsel to perform a feasibility analysis.
In order to direct the consultants as to which objective measure(s) of “feasible” to apply in their work it is important for the Board to establish its own standards or measures. In doing so, the Board felt it was important to hold “Listening Sessions” for the public in order to both explain the process going forward, and to hear the public’s input on such questions such as:
·
What does “feasible” mean to you?
· Which measure of “feasibility” is most important to you?
· What do you see are the benefits of a publicly owned water system?
It was expected that the public comments would help inform
the Board’s decision making. More detail
on the Listening Sessions is provided under “DISCUSSION” below.
RECOMMENDATION:
The General
Manager recommends the Board receive this report, direct staff to have
consultants recommended for hiring at the February Board meeting, and agree to
discuss and establish objective criteria for the feasibility study in open
session at the February Board meeting.
DISCUSSION:
Five listening sessions were held over
the course of 8 days in January as follows:
Division 1 – Monday, January 7 - Seaside City
Council Chambers
Division 2 – Tuesday, January 8 – MPWMD conference
room
Division 3 – Wednesday, January 9 – Monterey City
Council Chambers
Division 4 – Thursday, January 10 – Pacific Grove
Council Chambers
Division 5 – Tuesday, January 15 – Carpenter Hall,
Sunset Center Carmel
Each session was moderated by the elected Director
from the Division in which the session was held. The agenda was the same for each session and
an example is attached as Exhibit 15-A.
Each session was very well attended by the public
and by District Directors, as summarized in the table below. The general format was introductions by the
Directors, an overview of the evening by the moderator, a presentation about
the process by the General Manager, and then 45-90 minutes of public
comment. There were 91 public speakers
across the five sessions as summarized below.
The public were also asked to fill out and leave behind ranking sheets
on which they rank most important through least important “Measures of
Feasibility” and “Measures of Desirability (Public Benefit)”, an example of which
are attached as Exhibit 15-B. The ranking sheets also had space for the
public to provide additional thoughts.
Note 1: Approximate,
based on seat and head counts
Note 2:
First number is related to “Feasibility”, second number “Desirability”
The presentation highlighted seven key areas related
to process: (i) specific requirements
the initiative added to District Rules and Regulations; (ii) overview of the
eminent domain process and where the determination of feasibility fits in;
(iii) differentiating feasibility, “do-ability, and desirability (iv) example
standards or measures of feasibility and desirability; (v) the process by which
feasibility will be determined; (vi) the types of consultants the District will
hire to execute the study; and (vii) schedule.
A copy of the presentation is attached as Exhibit 15-C.
Leading up to the sessions and through their
conclusion January 15th, the District opened up an email link
through its website to accept public comment.
Additional comments we emailed to specific District staff or hand
delivered at the listening sessions.
Copies of those 32 written comments are included here as Exhibit 15-D.
The spoken comments, written comments, and comments
turned in with the ranking sheets are summarized below.
Feasibility
Measures
Ratepayer Savings: 105 comments were given about
savings, 30 commenters desired savings immediately or within a short period,
yet almost an equal number (29) said ownership is the most important even if
savings do not occur for 30 years. Several commenters (28) said savings were
important in general, but did not specify when savings must occur, including
expectations of a lower rate of escalation under public ownership. Similarly, 18 commenters said over the long-term
rates would be better under public ownership.
Seven people indicated public ownership would result in a lower future
cost of capital for projects.
Water Supply:
24 comments were received that reinforced that any change in ownership
must also ensure sufficient water supply to meet future needs and the
requirements of the Cease and Desist Order.
Taxes v Rates:
Many commenters (12) suggested that the cost of a buy-out must be
reflected in the rates and a separate tax-backed financing should be avoided at
all costs.
Quality of Service:
17 comments were received that suggested a buy-out must either improve
service, provide the same quality service, and certainly no disruption in
service.
Four comments suggest that an acquisition of the
water system is already feasible and just needs to be implemented.
Desirability
(Public Benefit)
Local Control:
Overwhelmingly, 40 commenters felt local control, jobs, services,
participation, leadership, etc was in the public interest.
Profit:
Although somewhat ambiguous, 26 comments were received that getting rid
of the profit motive in water delivery would be better.
CPUC: 20
comments specifically said one of the primary benefits of a buy-out would removal
of the California Public Utilities Commission (CPUC) from regulatory oversight.
Transparency/Accountability: 12 comments indicated
that there would be greater accountability and transparency (to consumers and
regulators) under public ownership
Environment: 14
comments suggested that public ownership would result in greater environmental
stewardship.
Rates: 13
comments indicate that public ownership will create greater “fairness” between
residential and commercial rates.
Analytical
Methodology
A number of commenters weighed in on how the
analysis of feasibility should be conducted.
For example, an equal number of people (20 each) said the desalination
plant should be included or excluded from the analysis, and 5 more suggested
that it would be less expensive to build under public ownership. There were 24 general comments on how to do
the analysis. Other aspects receiving comments were identifying and informing
the public about potential legal costs up-front (13), transparency and
objectivity in the feasibility study process (10), accounting for PERS
retirement benefits (8), including facility renewal and replacement costs (6),
ensure low-income rates (4), and accounting for lost property tax revenue by
the jurisdictions (3).
A number of commenters requested that once the cost
is known, another election should be held to move forward (8), or eminent
domain should not be used (3).
Six commenters said the District should establish
its objectives for determining “feasible” up-front.
Ranking
Sheets
190 responsive ranking sheets of Measures of
Feasibility and 189 for Measures of Desirability (see Exhibit 15-B) were returned. In an interesting twist of the power of
statistics, the average ranking of all 6 Measures of Feasibility was between
3.0 and 4.3. The average ranking of all
7 Measures of Desirability was between 3.4 and 4.5. In other words, almost as many people ranked
a measure as their most important as ranked it as least important, and then
ranked their intermediate criteria approximately the same.
Some information from the ranking sheets can be
gleaned by looking at the number of “most important” or “second most important”
and “least important” rankings were received.
This is shown in the tables below:
Rankings of Measures of Feasibility
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Division 1 |
Division 2 |
Division 3 |
Division 4 |
Division 5 |
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Most Important |
Immediate Savings |
Can handle a slight increase in cost if cheaper over time |
Can handle a slight increase in cost if cheaper over time |
I may not save in first year, but future increases will be lower |
Can handle a slight increase in cost if cheaper over time |
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Second Most Important |
Even if operating costs are the same, future capital projects will be
cheaper |
Don’t care if there is savings until after debt paid off |
Don’t care if there is savings until after debt paid off |
Immediate Savings |
Immediate Savings |
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Least Important |
Immediate Savings |
(tie) Immediate Savings Don’t care if there is savings until after debt paid off |
Immediate Savings |
Immediate Savings |
Don’t care if there is savings until after debt paid off |
Rankings of Measures of Desirability
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Division 1 |
Division 2 |
Division 3 |
Division 4 |
Division 5 |
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Most Important |
Lower Costs |
Lower Costs |
Lower Costs |
Lower Costs |
Lower Costs |
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Second Most Important |
Economy |
(tie) Economy Participation |
Economy |
Community Values |
Leadership |
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Least Important |
Community Values |
Community Values |
Community Values |
(tie) Community Values Lower Costs |
Lower Costs |
Hence, even based on the most and least important
criteria, the community is split.
EXHIBITS
15-A Example Agenda for Listening Sessions
15-B Sample
Ranking Sheets
15-C Listening Session Presentation on Process
15-D Written Comments Received
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