This is an Ad Valorem Special Assessment that is collected by the County on land value only for those parcels within the District’s service area inclusive of properties in the City of Solvang for repayment of bond and debt obligations, and financing of the District’s water system on-going capital expenditures. This Assessment was in place for many years and since 1996 remained at $750,000 per year which was less than the legal appropriations limitation.
In May 2011, the Assessment was suspended by a previously sitting majority of the Board of Trustees. That past action resulted in the property owners within the District having a reprieve or a rate break over the course of 5½ years. However, this also significantly impacted the District’s ability to generate revenues for repayment of those voter approved debt and bond obligations, and the on-going capital programs for aging infrastructure associated with the District’s water and fire protection system for all customers including the City of Solvang.
Over the course of 5½ years without the Assessment, no water rate adjustments from 2011 to 2013, and minimal water rates adjustment beginning in 2013, along with the significantly lower water sales due to water conservation restrictions by the State and higher water costs, the District used its reserves to meet those debt and expenditure obligations which have been depleted from $7 million to $1.7 million. Even with reduced spending and budget cuts, water sales revenues alone have not been sufficient to maintain reserves while meeting debt obligations. This necessitated the reinstatement of the Assessment.
In June 2016, the Board of Trustees approved the reinstatement of the Ad Valorem Special Assessment collection by the County on land value only for all properties within the District’s service area at $875,000 per year.. This was effective the beginning of the fiscal year and shows up on tax bills..
There are several reasons that the collection of the Assessment was reinstated at the historic amount. This includes the repayment of two bond obligations; financing the continuous replacement and betterment of the aging distribution system that every customer benefits from for drinking water, agriculture water and fire protection; and, the State has now required the District to treat the groundwater it produces to meet certain State mandated health standards. All of this means greater costs for the system ranging from the District’s two 6.5 million gallon reservoirs, one 3.25 million gallon storage tank, its water production wells, pressure zone booster pumps, the State Water Project and Cachuma turnout facility, the 100 miles of pipelines that distribute water and provide fire protection to all customers including the City of Solvang. The system must remain in the best operating condition in order to keep water flowing and available upon customer demand.
The Assessment provides funding from all parcel owners not just the ID No.1 customers but the City of Solvang residents as well to meet needs for delivering safe, healthy, and dependable water for all uses.