Crescenta Valley weighs water bond

For the second time in four years, the Crescenta Valley Water District is considering a multimillion-dollar bond — and a rate increase to pay for it — as officials work to upgrade aging infrastructure and reduce reliance on more expensive water imports.

Officials say the money is needed for capital improvement projects, which include replacing old pipes and pumping water at maximum capacity so the district buys less water from outside sources.

Board members directed district officials to come back with various bond options. The maximum would be a $10-million, 30-year bond. That would be on top of the $10-million bond the district issued in 2007, which is scheduled to be paid through 2037.

Without a bond, the board is weighing a “pay-as-you-go” strategy, where they would increase water rates twice next year. A typical residence using 22,000 gallons of water over two months would see an 8.2% hike, raising their bi-monthly payments from $119.36 to $129.20 beginning in January, according to the district.

A 2.1% increase would go into effect in July, pushing the average homeowner’s bi-monthly payment to $132.

The water district has a tiered rate schedule in which residents who use more water pay higher rates.

Additional revenues are needed for several reasons, according to General Manager Dennis Erdman. The Metropolitan Water District of Southern California, where the Crescenta Valley Water District buys about 40% of its water, has raised its rates the past several years and another increase is expected next year.

Customers have also been following requests to conserve water due to drought conditions and allocation limits set by Metropolitan, so less water used has meant depressed revenues, officials said.

Several residents who spoke at a public hearing on Monday said they were opposed to a rate hike, contending they’ve already been subjected to one increase after another.

In January, the district raised the average rate by 8.4%, preceded by a 2% hike in January 2010. The largest jumps came in 2004 and 2005, when the rates shot up by 10% and 11.8%, respectively.

“Let’s give it a break this year,” resident Michael Chonos told board members at the meeting.

He also pointed out that the Foothill Municipal Water District has also raised its rates without approval from the Crescenta Valley Water District, and the additional cost is automatically tagged onto residents’ water bills.

The Foothill district purchases water directly from the Metropolitan and passes the water — and often the rising costs — on to the Crescenta Valley district.

But not all residents were opposed to the rate hikes.

“[If the district doesn’t replace pipes], it will be left with a system that is aging and about to fail,” Danny Kim said. “That is not a prudent way to run a water system.”

Board member Judy Tejeda said she prefers raising water rates over issuing a bond because she doesn’t want the district to pay the interest, which is passed on to customers through their rates over the course of the bond.

She said dipping further into the district’s reserve fund is a better idea. During the 2009-10 fiscal year, the district withdrew $320,000 from its reserve fund, spokeswoman Christy Scott said.

But board President Kathy Ross said reserve funds should only be used for emergencies, such as natural disasters.

Water district officials are scheduled to bring bond options back to the board on Nov. 15.