The concept of creating a new public water district in the Santa Clarita Valley challenges the status quo. It would turn a currently fragmented and at times inefficient system into a more modern, integrated approach to water management. For some, this has caused misunderstanding of intentions and potential outcomes. We owe it to the public to ensure a fact-based discussion about the future of water governance and have clarified some of the more persistent myths below.
MYTH: A merger will create a water monopoly.
FACT: This is intentionally misleading. Monopoly is a scary word. It has long been recognized that certain essential public services are best provided by what are called “natural monopolies” because of the large capital requirements. In order to place pipelines in every street to serve every home and business, it was important to have a single dedicated service provider in a given area. It is impractical to build two or three sets of pipes and have customers choose, as the cost of any one system per customer would effectively double or triple. For this reason, every water system in the state is effectively a natural monopoly. This proposal simply combines several providers to achieve greater economies of scale for operations and to match the scale of our valley.
MYTH: CLWA is proposing to eliminate or take over NCWD.
FACT: False. There is no proposed takeover. NCWD is willingly exploring this concept to see how it can benefit its customers and export its brand of water governance across the Santa Clarita Valley. In fact, 14 of the 15 elected and appointed officials involved in this process have supported the exploration process – this includes four of five of NCWD’s elected board members. If NCWD doesn’t believe it will benefit its customers, it will walk away. The same is true for CLWA. This is very much a voluntary process done for the benefit of SCV water customers.
MYTH: NCWD customers lose if a new district is created.
FACT: FALSE NCWD would gain the benefits of economies scale, while retaining the principles that make it a unique district. It would be protected from the debt of other agencies. Its entrepreneurial model of water governance would serve as a foundation of a potential new district. And the districts have mutually agreed to principles that would further protect NCWD’s way of doing business, including supermajority votes on key financial decisions. If these principles are not included, NCWD would likely walk away.
MYTH: This process is complete.
FACT: FALSE Any final decision would not happen until well into 2017 with dozens and dozens of opportunities to shape the process and voice your opinions in between. Nothing is complete and the public is urged to continue to engage.
MYTH: A merger would benefit Newhall Ranch or other developers.
FACT: FALSE Put plainly, there is nothing about this merger that would benefit or impact Newhall Ranch’s years-old water supply plan. The supplies for Newhall Ranch and all future projected land use have been documented in the area’s Urban Water Management Plan and are not impacted by the merger.
MYTH: CLWA is in financial trouble. NCWD shouldn’t join with them.
FACT: FALSE All of the region’s water providers are in strong financial shape. According to Standard & Poor’s, CLWA has an AA to AA+ rating on the basis of its robust liquidity position, consistent debt service coverage, and well-delineated financial policies, which address any contingent liabilities.
MYTH: The merger was decided a year ago in closed session.
FACT: FALSE To the contrary, it will take at least another year for any decision to be made. Earlier settlement discussions on years-old litigation have served as the springboard to the more constructive, potentially regionally beneficial discussions.
MYTH: This will create another LADWP.
FACT: FALSE This will not be anything like the LADWP. The Santa Clarita Valley is less than one tenth the size of LADWP’s service area. Also the LADWP does not have an elected Board.
MYTH: Rates would go up as a result of the merger.
FACT: FALSE The effect of a merger to form a new agency would not contribute to rate increases. In fact, it would have a stabilizing effect to rates due to economies of scale, elimination of duplicative services, stronger buying power, more state and federal grant opportunities and other strong financial benefits.
MYTH: These discussions are not transparent.
FACT: FALSE NCWD and CLWA have launched among the Santa Clarita Valley’s most extensive public engagement processes in recent history to ensure our customers are a driving force behind this issue. A public workshop series, priority-setting sessions, joint public board meetings, direct communications and engagement, public opinion survey, digital priority-setting tool, and many other tools have helped us gain exceptional feedback from the public that can be used to shape any final policy proposal.
MYTH: This will reduce reliability in the Santa Clarita Valley.
FACT: FALSE Our region is currently a patchwork of different water providers. The model generally works fine. But odd-shaped boundaries, complex pipeline interconnections and redundant services create challenges and conflict. A potential new agency would optimize the delivery of water. It would also allow us to create new supplies for the region, including recycled water and stormwater capture.
MYTH: One agency will reduce customer service.
FACT: FALSE Customers can and should expect the same level of service and attention they currently enjoy and from the same people. Customer service would not be centralized or diminished. Both districts have heard from the community on this matter and have generally agreed that customer service and certain operations would need to be retained in order for the idea of a new agency to proceed.
MYTH: Los Angeles County Waterworks District #36 will be taken over.
FACT: FALSE District 36 would continue to operate as it does today and provide retail water service to its customers. The new district would serve as its wholesale water provider and collaborative regional partner, just as Castaic Lake Water Agency does today. Any decision to join the new district would be at the discretion of the Los Angeles County Board of Supervisors in cooperation with the Local Agency Formation Commission. Simply put, District 36 is not impacted by the formation of a new district.