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Pay Me Now, Pay Me Later – No Easy Answers for CVWD

Posted by on Jun 23rd, 2011 and filed under News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

By Maddy PUMILIA

The Crescenta Valley Water District at Tuesday’s public meeting motioned to have staff finalize the district’s 2011-2012 budget using bond measures rather than a pay-as-you-go method.

With the current proposal, CVWD will be issued bonds to fund capital improvements within the next five fiscal years. It will also create a $1.2 million reserve to fund capital improvements when the district goes back to a pay-as-you-go strategy entering the 2016-2017 year. It will also fund some of OPEB, a program that helps retired water district employees. The bonds will take 30 years to repay, with one benefit that the rate would gradually increase. The total cost of the bond is unclear as it depends on many factors including interest rates, issue costs and legal fees among other data. The interest rate will probably be in the high-four to low-five percentage. Director James Bodnar said the interest rates would probably never be as low as they are now.

“The thought is to spread the cost to future residents,” Ron Mitchell, CVWD secretary and treasurer, said.

One capital improvement would be at the Glenwood Operation Facility. The project will take care of piping and coding. The system needs to be replaced. It’s been operating for 14 years, longer than the original estimate of between eight to 10 years.  The project will initially cost $125,000 and will be under the 2011-2012 budget. Other projects include a new removal plant at Mill and other pipeline replacements.

“We’re falling behind,” said General Manager Dennis Erdman. “There are times where things need to be replaced.” Erdman pointed out that some pipes need to replaced for fire safety.

“As time goes on, our pipes get older and older,” said Director Judy Tejada.

The board hadn’t looked at how the bonds will affect low income seniors’ bills. They were quick to say they needed to pay attention to seniors’ needs before they set the rates for customers.

The district has been conflicted on whether to use bonds or a pay-as-you-go strategy for future budgets. With a pay-as-you go strategy, capital improvements would most likely be postponed. The board had been split 3-2 on which proposal to use. However, at Tuesday’s meeting only one director – Judy Tejada – was opposed to using bonds. She said that there is no interest on reserves, which would have been used with the pay-as-you go plan.

“If we don’t go with a bond, we won’t have sufficient funds for capital improvements,” said Bodnar.

With the bonds, the average initial price for each customer would be an extra 8%. Attending audience members Tuesday evening weren’t too thrilled about the increased rates. One woman pointed out that if CVWD raised rates again, people would conserve water. There would be less revenue – something she said the board should take into consideration. The customer added that she couldn’t even afford medical insurance, so the increased rates really affected her.

“This is a terrible recession. This is a hard time,” said Greg Wilkinson, who has lived in La Crescenta for 30 years. Wilkinson submitted a letter to the board writing, “Our choices should not be limited to the pay-me-now or pay-me-later options suggested by the Board’s pay-as you-go or 30-year bond proposals. None of which is any real solution to the out of control spending and outrageous cost of delivering water to your customers.”

The official vote on the new budget will be cast at the July 12 meeting.

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