RMWD moves forward with sewer improvements

   Feeling their hands tied due to government regulations and realizing timing is critical to avoid possible fines, Ramona Municipal Water District Board voted to move forward with Phase 1 improvements to Santa Maria Sewer Service Area (SMSSA) facilities, despite lack of funding.

   RMWD District Engineer Tim Stanton and Chief Financial Officer David Barnum made a presentation to the board at its Dec. 22 meeting, giving an overview of the SMSSA facilities, explaining the need to expand as required by the Regional Water Quality Control Board (RWQCB), and suggesting possible financing options.

   Improvements to the facility become complicated with various regulatory agencies involved, an August 2011 permit deadline looming, environmental studies imposed and financing in question.

   “Financing is a critical part of this project,” said Barnum. “It takes anywhere from six months to a year.”

   Barnum said the mechanism to borrow money can depend on the marketplace. In 2011 or 2012, he said, the water district might do a public offering or a private offering.

   Barnum said he and his staff receive calls two to three times a week from financial advisers offering to help on financing different projects. He said staff can find the best deal for the district and then bring it back to the board. The board, he added, will have the ultimate authority to direct staff on what type of money to borrow.

   As far as timing, Barnum said they have until late 2011 to mid-2012. Between now and then, he anticipates workshops to look at the financing climate and the rates.  

   With Phase 1 improvements estimated to cost  $13 million, Barnum said debt service will add to that cost, approximately $.9 to $1.2 million per year. If the district borrows $13 million, that amount could look more like $17 million with debt service added, Barnum noted. He said he won’t know the exact number for a while.

   “Because of the size of this financing, there will most likely be a requirement for us to pledge with property tax revenues and rate increases,” Barnum said. “In 2012 we are in a more enviable position than we are now.”

   In 2012, he said, the district will have the majority of water debt paid off, so it will have approximately an additional $1 million in property tax revenues available.  Barnum said staff will continue to bring forward solutions to include funding debt service for Santa Maria with a combination of rates and property tax.

   He added that the board wisely set a precedent in the last budget by putting aside some money for the rate stabilization fund. The board approved an 8 percent increase in Santa Maria sewer rates as part of the fiscal year 2009-2010 operating budget in anticipation of the construction of Phase 1.

   “It’s really difficult for me to ask people to pay more money for services but seems to me like we’re faced with a considerable amount of unfunded mandates that we don’t get paid for here,” said Director Darrell Beck.



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