Customers of the Scotts Valley Water District will likely face water rate increases for the next five years.
The increases — which amount to about 3 percent more each year — are meant to provide enough money to maintain the district’s infrastructure based on the predicted rate of inflation, according to Dave Hodgin, the president of the Scotts Valley Water District board.
“It is probably going to be adequate, and it will keep us from having a very large rate increase,” Hodgin said.
Hodgin referred to a 23 percent increase in Soquel Creek Water District rates from 2010 to 2012 as an example of what the Scotts Valley district intended to avoid.
“We’re trying to stay financially healthy and not have to go back to the public (for another increase),” Hodgin said.
Scotts Valley Water District’s financial reserve is expected to shrink from $4.12 million on June 30, 2012, to $2.65 million on June 30, 2013, and could be completely spent by 2017-18 if rates remained the same, according the district’s customized financial model. The model projects revenue and costs for a decade at a time.
Increasing rates would maintain a reserve of slightly more than $2 million for the next five years, according to the model.
Rising annual expenses include a 2 percent cost-of-living raise for district employees, an expected 3 percent increase in power costs and a 3 percent increase in operations and management costs resulting from inflation.
The rate increase — 3.8 percent on water use and 1 percent on a ready-to-serve charge for each two-month billing period — was selected from eight options by the district board in October.
The district sent a letter Oct. 18 to all customers explaining the rationale, the amount of the increase and how residents can respond to it.
If half the district’s 3,500 customers — about 1,750 customers — submit a written, signed protest by the start of a 7 p.m. public hearing Dec. 13, the rate increase would be canceled.
Protests may be dropped off at the district office, 2 Civic Center Drive, in Scotts Valley, or mailed to: Rate Protest Officer, Scotts Valley Water District, P.O. Box 660006, Scotts Valley, CA 95067-0006. Each must include the customer’s signature and an account number, address or other identifying number.
The increase will affect all water users in the city, from those who in tier one who use less than 3,000 gallons in a month to those in tier six who use more than 25,000 gallons each month.
Business owners and multi-family customers, such as apartment buildings, can apply for a flat-rate fee in tier three or four if they have taken water conservation measures. Customers who have special medical needs that require high water use can also apply for flat charges, equal to tier two, if they take steps to conserve water.
Recycled water, typically used for landscaping, will still cost 80 percent of the potable water fee.