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HomeMy WebLinkAbout14 E. OR. WTR. CONSOL. 01-19-98DATE: JANUARY 19. 1998 NO. 14 1-19-98 In t e r-C o m TO' FROM: SUBJECT: WILLIAM A. HUSTON, CITY MANAGER PUBLIC WORKS DEPARTMENT/WATER SERVICES DIVtSION PROPOSED EAST ORANGE COUNTY WATER DISTRICT CONSOLIDATION SU~4MARY: East Orange County Water District (EOC\VD) has proposed a reorganization, which would consolidate EOCWD, Serrano Wat'er District (SID), Carpenter Irrigation District tCID), or alternately, the above three agencies and Irvine Ranch \Vater D/strict (IRXYT)). Other options which should be considered, include dissolution of EOCWD or a consolidation of EOC\X,'T) wifl~ Municipal Water District of Orange Counb' (MWDOC). RECOMMENDATION Receive and file. FISCAL [MPACT None at this time. BACKGROU.Nq) EOCWD was established in 1961 to provide wholesale imported water sen:ice to the areas of Orange Park Acres, Panorama Heights, Crawford Canyon. Cowan Heights, Lemon Heights, small portions of the City,. of Orange and the City of Tustin (see attaChed map). The district was established when most of the area was siill semiLrural. T~e small private water companies which serYed the area at the time were unable (or unwilling) to incur debt to construct facilities to accormnodate future grox~h. Local leaders and properrs.' ox~ners were concerned x~Sth this issue and established EOCWD, a public agency, in anticipating of issuing L, eneral obligation bonds to purchase capacits' in regional imported water pipelines, along with building reservoir storage and a distribution system to supply the retail a,2encies. In 1963, EOCWD issued bonds to purchase capacib' in two re~onal pipelines, build a surface water treannent plant and a 6 million gallon reservoir, and install distribution pipe. In 1978, an additional bond issue was passed to install additiT)nal pipelines and build a 20 mill/on gallon and a 1 million gallon reservoir. Both of the above bond issues have recently been retired. In 1985, EOCWD took over operation of Orange Counb' Waterworks District No. 8 from the County' of Orange, and designated it the EOC\VD Retail Zone. The EOC\~,T) Retail Zone provides water directly to abou~'l,000 customers in the Panorama Heights"CraM'ord Cany'on area of north Tustirv%ast Orange. Proposed East Orange Count).' \Vater District Consolidation Januar)., 19, 1997 Page 2 In 1996, EOCWD removed its treatment plant from service because it did not comply v~Sth the new Surface \Vater Treatment Rule. It was deemed not cost effective to upgrade the plant. EOCWD now buys treated water from the Municipal Water D/strict of Orange County (MWDOC). MWDOC is the designated member of the Metropolitan Water District of Southern California (MWD) for Orange County. MWD is the agency wh/ch imports water to SoUthern California from the Colorado River and Northern California. Shortly after it was formed by/ts 13 or/g/nal founding cities, it became apparent that numerous other municipalities xvould want to join. In an effort to prevent an unmanageable number of members and directors, MWD required that agencies desiring to join form single public agencies, along lo,cai political and geographical boundaries before joining. MWDOC was formed to represent Orange County as the single public agency responsible for purchasing imported water. As a result, MWD sells water to MWDOC which sells it to EOCWD. EOCWD is governed by a 5 member Board of Directors who are elected at large. Staff consists of 5 full time employees along with consulting contracts for eng/neering, accounting and legal serv/ces. The operations have historically been funded by various combinations of rate surcharges, property tax revenues, and interest earnings from cash reserves. In recent years, cash reserves increased to the point that a cash refund was issued to member agencies and water was sold at less than cost for years 1995/96 and 1996/97. The Grand Jury has issued a report recommending the consolidation of some districts, and there have been several unsuccessful legislat/ve attempts to consol/date spec/al districts in Orange County. Serrano Water District (SWD) recently announced its intention to consolidate with Carpenter Irrigation District (CID) and EOCWD's retail zone. SWD provides water to 2,500 customers in the Villa Park area, and CID provides untreated a~cultural water to 12 remaining small farmers in the City of Orange. Both agencies are supplied by In.'ine Lake. EOCWD protested SWD's proposed action and SWD modified its application to Orange County Local Agency Formation Commission (LAFCO) to include consolidation wSth CID only.- EOCWD's protest was based on its contention that any consolidation should include the entire EOCWD wholesale and retail systems, even though EOCWD operates and accounts for each system separately. SWD does not want to include the entire EOCWD area, because with the much larger number of customers it would lose control of its major asset, its share of the water supply from Irvine Lake. That supply is not adequate to seix, e the entire area. In spite of SWD's modification to its proposal, EOCWD Board of Directors elected to proceed with a competing proposal that would consolidate SWD, CID, the entirety of EOCWD or alternately, the above three districts and IRWD. (See attached EOCWD Resolution) Some EOCWD board members appear to believe that since SWD and IRWD share ownersh/p in Irvine Lake, it would be beneficial to consolidate that Proposed East Orange Counw Water District Consolidation January 19, 1997 Page 3 ownership into one agency and include EOCWD. Some also appear to believe that the consolidation would provide ~eater organizational depth and technical expertise than EOCWD is currently able to afford. While - all of this needs additional study, it does not appear that the added water supply that could be provided to the EOCWD area by Irdne Lake is of sufficient volume to be of any si~maificance. DISCUSSION EOCWD has sen, ed a beneficial purpose since the time it was formed. However, with the evolution of its service area from semi-rural to nearly fully developed, and with the change in character of the retail agencies from small, inadequately funded private entities to modem well financed public and private agencies, the time has come to evaluate whether EOCWD is still needed. While the alternatives proposed by EOCWD merit further stUdy, the City of Tustin's Water Sendce will simply experience the replacement of one layer of government with another It may be more cost effective and efficient for the City,'s customers to have the City petition LAFCO to detach the City's service area from EOCWD or the successor agency. The portion of EOCWD's assets for which Tustin's customers have paid (pipeline capacity ri~ts, pipelines and reservoir storage) could be distributed to Tustin, and similar asset distributions could be made for the other retail agencies EOCWD sen, es. EOCWD, SWD and LAFCO have engaged consultants to represent their respective interests in evaluating the proposals discussed above. The staffs of the Cities of Orange and Tustin along with Orange Park Acres Mutual Water Company have requested that EOCWD consider the dissolution opt/on, but the EOCWD board has not acted on this request. The current proposals to LAFCO from EOCWD and SWD wiLl be required to complete a thorough evaluation of EOCV~© serxdces, assets, liabilities, and funding contributed to EOCWD by the retail agencies customers since the time of its inception prior to LAFCO reaching a decision. This information will provide the City staff with adequate information to formalize a recommendation to the Council regarding EOCWD. Staff will continue to monitor the situation, but may remm to the Council in the future with a request to fund consulting servSces for assistance in analyzing the proposals. Tim D. Serlet k../' Director of Public Works/Cib' En~neer Gary R(~eeh Water Services Manager GRV:klb/COUNCIL:EOCg,~ Consolidation FRFY CITY OF ANAHEIM TAFT KATELLA AVENUE AVENUE OIlY OF ORANGE · CHAMPMAN CITY OF VILLA PARK I CITY OF ORANGE COUNTY OF ORANOE 17TH 1ST STREET STREET CITY OF /R VINE EDINGER CITY OF ~ SANTA ANA ~ WARNER AVENUE DYER ROAD TUSTIN MARINE CORPS AIR STATION EAS'I' ORANGE COUNTY WATER DISTRICT ~CITY OF ORANGE: WATER SERVICE ORANGE PARK ACRES MUNICIPAL WATER CO. ~ SOUTHERN CAUFORNIA WATER bO. r--~ EOC¥/D RETAIL ZONE ~CITY OF TUSTIN WATER S£RVIC£ RESObUTIOr! I, lO. · · RESOLU'fiOD OF THE E~OARD OF D1PECZORS OF TEE ORANGE COU~TY W~TER. DIETEICT i.]AKiNG ~P~LICATIOH TO THE LOCAL AGENCY FOEMAYZO~ COHMIBSION FOR REOP. GA~I!ZATION OF 5~ST ORANGE COUNTY WATER DISTRICT, 5ERRAND WATEP. DISTRICT AND IRRIGATION DISTRICT, OR ~N THE ALTERNATIVE SAiD DISTRICTS AND IEVII~E P. ANCH WATER DYSTRICT, INYO A S II.IGLE DISTRICT ~4HER~kS, tho_ East Orange County wster District ("EOCWD"), a county wate~ district formed and existing pursuant zo Sect. ion 30000 and following cf the California Water code, provides water service to the se'rvice area g~_nerally depicted on Exhibit "A," %.;hich exhibit ls attached hereto and incorp°rated herein by this reference; and WHEREAS, the ~errano Water District {"SWD"), an irrigation distrlcr, formed and existing pursuant to Section 20500 eno following cf the C.-,lJfcrnia Water Code, provi,~es ;:a~er _~ervice cc the service area ,~enerally deuicted on Exhibi~ "k," which exhibi.'-' is attached hereto and inccrperat,~d herein by this ref~-rence; .End WHEREAS, the Carpenter Irri~ation District ("CID"), an irrigation disEric5 formed and existing pursuant to Sea~icn 20500 and fullowing of the California Water code, provld@~ ~.:a[er serv:S9 ,:0 the service area sen~raily depicte:! cn Exhibit "A,' ~bich exhibit is attached hereto an'~ incorporated herein h~ [bls reference; ~nd WHEREAS, the Ir'/in~ Ranch Water District ("!RwD"%, a California water district formed 8nd existing pursuant to Section 34000 and followin~ of the California water Code, provides ~,aEer servxc~ to ~he ~erviCe area generally depicted on Exhibi~ "A," which e:{hibit is attached hereto and incorporated herein by th!$ refcr,2ace; and . . · .:';HEREA$, tlue Board of Direct. ers '&·f EOCWD h~s ~_:.:p!ored . actual and ccnr-racc/c~erani°nal con?olidanion options winh surrounding a?encies and belieCe$ that The best opr~ion for efficient deli'~ery of sera'ice and respoDsi';gn~--~s to the con~i~uens$ would be the reor~_anization of SWD, CID and the entire EOCWD, er in th~ alternative said Districts and IP. WD, :nr.e a sin~.le district: and WHEREAS, the Board of Oirector~ desires to make application [he Local Agency Formation Commission of Orange Coonty ("LAFCO") for such reorganization pursuant ~o California Government Cod~ Section 56600 and ,pti]ar requirement5 of the Cornese-Knox Local Government B~organitatlon ACt of 19~5; NOW THEREFORE, the Board of Directors of EOCWD DOE~ HEREBY RS$OLVE, DETERMINE and ORDER as follows: ?.~C~.c,n ~. The Board of Directors of £OCWD h~_reby submits the followinq ~]e$crib~d pro~o$al and requests approve much proposal be taken by LAFCO pursuant to Title 5, Division 3, Part 3, of th~- California Government Code. ~..csion 2. Th~_ proposal z-~ 'a recr?anizar-ion, ccnsisting of ~uch combination of c¢.n$olidaticn$, di_-.$oiuticns ~nd.'er or_her changes of organization as mas' b~ ~etermin~_d necessary or desirable to form a single district con~istino, of EOGWD, S~'~D aha CWD and/or their respective territorigs, or in the alternasivg, said 5,~$sricts and IRWD and/or their r~spective terri~¢,rigs. ~..~_%j. Qn 3. The area proposed to be included in th9 reor.~anizaticn ccnsiats of 5he %mrrito=igs cf SWD, CID and £OCWD (~n~ire district), or in the altgrnative said Districts and I~.WD, with th9 selecclcn betwgen the two alternatives.to be made basea upon such criteria as are appropriate ~o dgtezmine which ai~ernanive bes~ fulfills nhe Oelow-stat~d Durpose. ~11_~- The r~ason and purpose for the proposed reorganization is that a s~ngle district would be more efficient in £he managemeng of, and in £he delivery of services presently proui~ed [han either the provision of those services by s~parate districts and/or 5he prevision of [he services through a series of contractuml arran~emenss, and that, ~n!ike such contrmc~ual arrangement~, the proposed reorganization would avoid the disenfranchisement of ~igniflcant nunODer~ cf voters from the governance of their waser service delivery. -~~. The aff~csed t~rritory is "inhabited territory" as defined in Governmen~ Code Secticn 56046. · 5_~-~- The Secretary is hereby authorized and directed to file a certified copy of this resolution with the Executive officer of LAFCO. The Secretary and each other off~ce£, employee and agen~ of EOCWD are hereby authorized and direcned to submi[ any o~her supporting information as may be requested by the gxecuslve Officer ~o complete and process this applicsuicn- AC. OPTEE', SIGNED AND APPROVED ~his 4th day of October, ...7. ~ . ;~-of thm Board of Director ~hereof STATE OF C]~J~!FORNIA ¢OITNTY OF OKTcNGE I ~'' I, JOAN C. ARNESON, Secretary of the Board of Directors of the EAST ORANGE CO~TY WA/ER DISTRICT, do hereby certify that ~he foregoing Resolution No. 560 was duly adopted by nhe Board of Director~ of said District at a Special Meeting of said Distric~ held on Octobe~ 4, 1997, and that it wee so adopted by the following vote: AYES: BARRETT, CABLE, CH3~?MAN, VANDERWERFF NOES: NONE ABSENT: VEEH ABSTAIN: NONE Se~.re:ary ~ST ORANGE COUNIY WATER DISTRICT //and 'of the B~ard cf' Director~ thereof