What Measure U Does:
SLVWD monthly water bills have two parts:
“Fixed” baseline charges (labeled service charge, capital charge, and fire surcharge) that are independent of the amount of water consumed. This provides a stable revenue stream that reflects the reality that over 90% of SLVWD’s costs are tied to infrastructure maintenance, repair, and upgrade without regard to how much water a ratepayer uses.
“Water rates” that are based on the amount of water used by a ratepayer. SLVWD has adopted “tiered” rates, which increase the cost of each gallon as use increases. This encourages water conservation and allows low-volume ratepayers to shoulder a smaller fraction of the overall financial burden.
Measure U is exclusively concerned with fixed charges.
Measure U has two key provisions:
It repeals two separate monthly fixed charges:
The “Capital Charge” ($7.65/month for most residential bills)
The “Fire Surcharge” ($9.67month (for most residential bills)
It limits any increase to the remaining fixed “Service Charge” (currently $48.04/month) to 2% per year through 2048.
What Measure U means for ratepayers:
If enacted, Measure U will take effect within approximately ten days.
Most residential ratepayers’ December bills will be reduced by $17.32.
The service charge rate is scheduled to be raised from $48.04/month to $52.85/month in January 2025. Under the current structure, residential fixed charges would be $70.17. If Measure U passes it would be $49.00, for a savings of $21.17.
These savings will most likely be temporary.
The severe reduction in revenue will force the SLVWD Board to propose a new rate structure as rapidly as feasible.
This new rate structure will most likely take effect sometime in mid- to late-2025, assuming the Board agrees to it and it does not face another ratepayer challenge.
This will likely eliminate much or all of the Measure U monthly savings and will likely increase water rate charges significantly.
What Measure U Means for SLVWD:
Simply by being placed on the November ballot, Measure U has already imposed significant costs and has damaged SLVWD’s financial standing.
The existence of Measure U has reduced SLVWD’s credit-worthiness, increasing the costs of obtaining needed loans by as much as $200,000 in additional loan-processing costs.
Santa Cruz County is expected to charge SLVWD between $40,000 and $80,000 in election-related fees.
SLVWD has incurred additional charges from its Legal Counsel and staff time that have yet to be fully tabulated.
If Measure U is enacted, SLVWD will lose roughly $140,000 in revenue in December and roughly $170,000 per month beginning in January 2025. A new rate study will cost $50,000 or more and require significant staff and board time.
The lost revenue could easily total $1 million before a new rate structure takes effect.
The new rate structure would have to recover roughly $160 per ratepayer to make up for the lost $1 million in revenue and the $300,000 in unforeseen expenses. Most likely, the district would have to sharply reduce its budget and expenditures, putting the valley at serious risk. CLICK HERE FOR MORE INFORMATION
Over the ensuing 25 years, the 2% cap on annual increases in the Service Charge will prove increasingly problematic. SLVWD’s actual costs will almost certainly increase far more rapidly than this, meaning that more and more of SLVWD’s revenue will need to come from water rate charges which are inherently less predictable and more complex to manage.