Buy fresh, buy local
You may recall that the Landscape Advisory Committee, back on April 10, recommended that the District raise water rates by more than the suggested amounts, to encourage water conservation and to fund other needed capital projects.
The Agricultural Water Advisory Committee did no such thing today. After the groundwater charges presentation (my fourth viewing; this one tailored to its South County audience) the committee asked for a short break to talk amongst themselves. All present recognized that the South County agricultural price increase of $1 per acre-foot was small both in relative and in absolute terms, but there was significant sentiment that the District should try to control its own costs better before passing the increases along to customers. The committee did pass a motion endorsing the proposed increases, but with a rider that the public should understand that farmers pay more than $16.50 per acre-foot to get water out of the ground, that pumping costs were many times that.
There were three Board members in attendance: Directors Sanchez, Wilson and Judge. Director Wilson pointed out that the law governing the District allowed them to charge farmers 25% of the M&I cost for water, which would be $68.75 per acre-foot. Director Judge did not repeat his previous assertions that it may be time to eliminate the North County subsidy for open space in South County.
There was also a presentation on the amended District Act, and the glossy FAQ I posted about this morning was distributed. Scott Wilson, a member of District staff, dwelled on the cost savings to be realized from avoiding runoff elections under the new law, ironic, since uncontested seats are the norm. The South County farmers on the committee were concerned that that region would lose political clout in losing their at-large representative. And one member raised the spectre of seven new Board members’ being elected in 2012, and how the lack of experience would hurt the District. Since AB 2122 is designed to keep the present Directors in place, I’m not too worried.
Diana, the button marked recommended does not work.
The board of supervisors appointed Sig Sanchez to the water board in 1980. As the former mayor of Gilroy, who also served four terms as a county supervisor for that area, Sanchez has well represented South County farmers and landowners during his 50 + years of public service.
No one has been a better friend to the landowner/farmer than Sanchez. He insisted that their water rates be kept way below the revenue needed to pay for the South County’s use of the water infrastructure, knowing that as urbanization took place, higher rates could pay off the mounting debt incurred by the district. The water district readily admits this in its response to the grand jury report. (See the district’s response to recommendation # 6).
Despite having two representatives on the newly formed water district board, the farmers and Gilroy’s residents voted to keep their local water district in place when the other separate agencies merged to form the Santa Clara Valley Water District in 1968. Only after the water from the San Felipe aqueduct, funded by federal money, arrived in 1987 did the Gavilan District voters authorize the merger with the Santa Clara Valley Water District, thereby avoiding a double pump tax on all pumpers in the area.
In determining how to spread the costs of this new water, the district chose to abandon its “pooling concept†for setting water rates within the county. Instead, it set up a new zone for the South County farmers, which included the City of Morgan Hill, and set water rates to recover only the costs incurred to serve water within this new zone. The 1977 contract with the federal government, which was based on the farmer’s “ability to pay,†provided that agricultural water be sold to the district at a mere $16 per acre-foot. But the district melded this cost with the local South County supplies and set the local agricultural rate at even less—$5.50 per acre-foot. The new melded rate remained frozen at or below $11.50 per acre-foot until 2001. Meanwhile, pumping rates in the North County went from $100 to $330 per acre-foot for urban water suppliers in that same period.
The district eventually moved away from using crop factors to determine water charges and began putting meters on the wells of the largest agricultural users. The revenue collected from the farmers, however, does not even cover the cost of reading and maintaining the meters. From the district’s net revenue perspective, the water is being delivered for free.
When I was on the water board, I took it upon myself to demonstrate that raising water rates would not severely harm the farmers. Relying on the Agriculture Commissioner’s annual report, I calculated the percentage of water cost for each crop, using a sensitivity analysis for various rate increases. Doubling and even tripling the rates showed only increases of a fraction of a percent of the crop value. Despite this evidence, the board and staff ignored the unauthorized study, stating that it was not District policy to set its water rates on “ability to pay.â€
One year when the staff actually recommended significant rate increases for farmers in South County, the Board took a rare position and froze the agricultural rates and instead added an “open space surcharge†on urban rates in the North County to generate the needed revenue that staff had identified. This surcharge is still in place today
Gilroy City Council members would often testify at rate hearings that farmers would quit farming and sell to developers (sooner rather than later) if the agricultural water rates were increased. But securing development rights in exchange for receiving this cheap water was never suggested or required.