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Posted on: February 20, 2019

San Juan Capistrano eyes transferring its water utility to Santa Margarita Water District

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OC Register: San Juan Capistrano eyes transferring its water utility to Santa Margarita Water District 


San Juan Capistrano is entering into an exclusive negotiation agreement with the Santa Margarita Water District to acquire the city’s water and sewer system.

The council members said they liked the district’s work in developing alternative sources of water for the region, which relies heavily on imports. The vote was unanimous at the Tuesday, Feb. 19 meeting.

“In my gut, it feels right to try to conserve what we can locally and use what we can locally,” Councilman Troy Bourne said.

The city has for years been trying to get out of the water business – catching up on its system’s deferred maintenance would have forced significant rate increases for residents. Three districts had vied for the job: Moulton Niguel Water District, Santa Margarita Water District and South Coast Water District.

“There is a little bit of this decision that’s a leap of faith,” Mayor Brian Maryott said. “There’s nothing that can be done about that.”

The city is one of very few in south Orange County that manages its own water operations. The transfer to one of the larger water districts should result in initial modest reductions in water rates, followed by more stable increases, officials have said.

Each district stressed its perceived strength: Financial record for Moulton Niguel Water, the proposed Doheny desalination project for South Coast Water and the San Juan Watershed and the Trampas Canyon Reservoir for Santa Margarita Water. All three proposed significant improvements to the city’s water and sewer infrastructure.

Maryott said Santa Margarita Water’s projects could better insulate the city’s system from droughts and disasters, such as an earthquake that can affect imported water pipelines.

Santa Margarita Water is leading the San Juan Watershed project, which includes putting inflatable rubber dams where Trabuco and San Juan creeks meet in the city to capture runoff water that would flow out to the ocean. It could collect billions of gallons of water in a year, the district said.

The district is also building the Trampas Canyon Reservoir that can hold 1.6 billion gallons of recycled water, it said.

Most public commenters at the meeting spoke in support of Santa Margarita Water and its projects’ potential benefits to the city. But foreshadowing what lays ahead for the city as it enters into the negotiation, resident Richard Gardner noted the district’s use of a tiered rate structure. The city lost a lawsuit in 2015 over its own tiered structure. 

“That’s not the way we do our water rates,” he said.

San Juan Capistrano does still have a tiered system, albeit with much less extreme highs and lows. Having a tiered system doesn’t necessarily mean the district is running afoul of state laws, Santa Margarita Water District General Manager Daniel Ferons said.

The issue of tiered rates is just one of many that lay ahead in the negotiations. The city and the district will need to discuss what will happen to the city’s existing staff, as well as how much voting power the city’s residents will get in governing the district.

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