ITEM:		ACTION ITEM
9.	CONSIDER APPROVAL OF FUNDS FOR RATE DESIGN CONSULTANT FOR REPLACEMENT WATER SUPPLY CHARGE SUBJECT TO A PROPOSITION 218 APPROVAL PROCESS
Meeting Date:			November 18, 2024	Budgeted:	No
From:			David J. Stoldt	Program/	N/A
			General Manager	Line Item:	N/A
Prepared By:			David J. Stoldt	Cost Estimate:	$47,250
General Counsel Review: N/A
Committee Recommendation: N/A
CEQA Compliance: This action does not constitute a project as defined by the California Environmental Quality Act Guidelines section 15378.

SUMMARY: In its opinion filed on September 11, 2024, the Appellate court upheld the March 2023 Monterey County Superior Court ruling that determined the District’s Water Supply Charge should be suspended and no longer collected. Depending on the settlement with the Plaintiff – the Monterey Peninsula Taxpayers Association – the District may seek to replace some or all of the lost revenue with a new replacement fee. The previous fee was based on the cost of the provision of certain District services and allocated on a “Land Use” basis to each parcel in the Cal-Am Main System, rather than as part of rates paid by customers on their Cal-Am bill.

Such a replacement fee would require Proposition 218 compliance, including mailing notice of a public hearing to the record owner of each parcel upon which the fee or charge is proposed to be imposed.  The notice must include:

  a.  the amount of the fee on that parcel

  b.  the basis for calculating the fee or charge

  c.  the reason for the fee or charge

  d.  the time, date and location of the protest hearing

In order to substantiate the amount of the fee on a parcel and establish the basis for calculating the fee or charge, a consultant would be engaged to prepare an updated rate study. The previous study was performed in 2012 by the firm Bartle Wells Associates.

The District received quotes for scope of services from three rate consulting firms:

Firm	Fee Quote
Bartle Wells Associates	$45,000
Hildebrand Consulting	$40,750
Raftelis Financial Consulting	$35,450

It is envisioned that a new replacement charge, and the rate study itself, would not be initiated until the Board approves moving forward with a new ordinance and Proposition 218 hearing process, sometime after the first of the year in 2025. A new ordinance would have the following differences from Ordinance 152 which established the Water Supply Charge in 2012:

· Greater description of uses of the revenues raised;

· Expand to include customers in Ryan Ranch, Bishop, and Hidden Hills subareas;

· Eliminate sunset provision; and

· No Citizens’ Oversight Panel

RECOMMENDATION: The General Manager recommends the Board approve an amount not to exceed $47,250 (high quote plus 5% contingency) and direct staff to select the most qualified consultant. However, no work is to be initiated until the Board elects to move forward with establishing a new replacement charge.

EXHIBITS

None

U:\staff\Boardpacket\2024\11182024\Action Items\09\Item-9.docx