This week Bob Dunning posted excerpts from a Village Homes plan to go to well water rather than pay for the increased cost of water under the new project.
Drilling through the morass of tongue-in-cheek comments, it appears the crux of the situation is, “The Village Homeowners Association Board has been contemplating construction of a well on Village Homes property for over two years to help defray the rapidly increasing cost of water.”
“We think this is a feasible project that could help Village Homes save on its unsustainable water costs,” he quotes and then adds, “The board did not anticipate that our rates would be raised so significantly, so rapidly.”
Moreover, “The board fears that our current HOA dues will be insufficient to keep up with the doubling of our water rates… For this reason, constructing a well has become a critical issue. The first step in that process is to actually install the well. The VH Board voted to move forward on installing the well. Once the well is installed and we know how much water the well can provide, the VH Board and the Well Committee will study how best to expand the reach of the well and how to finance that portion of the project.”
The move makes a great deal of sense, actually, for both Village Homes and the community. First, the users who are most likely to have the greatest impact are those users with large outdoor water uses – that includes also the city and the school district.
Eventually, it seems likely that those entities would all go to well water. They do not need the lower constituent count and the water would evaporate or seep into the ground rather than going into the wastewater system.
In short, the use of well water is ideal for outdoor use and, during the hot summer months it will help ensure that even during peak hours, we will be using the surface water rather than some form of conjunctive use.
From conversations this has been expected, and it is one way the city hopes to keep some of its water costs down that otherwise are expected to contribute to the city’s structural deficit.
Mr. Dunning writes, “”With the unsustainable increase in our water bills, the board felt it had no choice but to move forward as quickly as possible to install that well.” … well said … the rest of us will no doubt be exploring similar options in the days and weeks ahead … call it the ‘wellness’ movement …”
The well-played pun aside, most of the rest of us are probably not going to need to pursue such an option, unless we have large open areas that require watering.
Mr. Dunning, however, adds, “The bad news in the Village Homes announcement (see above) is that every time someone drills a well, the net effect is that the cost of water for everyone else in town will inevitably go up, given that the $113 million surface water project is a fixed cost to deliver the water to our homes … if, say, 10 percent of the homeowners in Davis figure out another source of water, the other 90 percent will have to pick up the slack … it’s not a matter of supply and demand, it’s a simple matter of fixed costs that can’t be mitigated …”
While that logic sounds good, Mr. Dunning’s math is off and he should know better. But he is not alone. Some readers pointed out, as well, that removing the huge volume from the customer base would make the city have to recover that lost money through raising the rates.
As Matt Williams explained in December, “Both the Bartle Wells and Distribution-Supply-Use (CBFR) models use price elasticity formulas to project reduction in demand.”
Doug Dove from Bartle Wells explained to the council that the CBFR has built into it an automatic 25% consumption reduction component that would allow the city to automatically recover costs based on a declining consumption.
“We have a rate structure that will automatically recover a 25% reduction in consumption, automatic. That works as well as a fixed rate structure within those parameters,” he told the council. So while it’s not 100% fixed (which is illegal in California), they have a way of splitting the proverbial baby between consumption and fixed, where they can mitigate the worst-case scenario drought.
However, others believe they will get the 25% reduction through water conservation alone. They believe that the areas that go off line are in addition.
That does not seem to be a likely scenario. However, the advantage of bonding the project is that the city will be able to compensate over time if that is the case. The city is borrowing the money upfront in an effort to reduce the increase of the initial water rate hikes. That would seem to give them the flexibility they would need to adjust to shortfalls in revenue from water rates.
However, it does not seem likely that, even if the city, DJUSD and some other larger tracts went to well water, the city would surpass 25% reduction in the water use.
Based on this, it would seem that areas needing large amounts of outdoor water should go to the use of wells – it is a better use of the water. If the city ends up with excess water capacity, it always has the ability to sell it.
—David M. Greenwald reporting
David, I would hope that conservation is incented by the water rates and education and if I understood your article, the 25% estimate for conservation would have to include wells such as the proposed Village Homes’ well(s)…..
also, maybe naive, but if they drill a well (or others too; how about a South Davis (SODA) well??) won’t that decrease the ground water for the city’s system? theoretically at least? So the water is less and the pot has fewer rate payers…..too simplistic?
I’ll let Matt Williams or someone else who has more expertise on this address your question.
“The board fears that our current HOA dues will be insufficient to keep up with the doubling of our water rates… For this reason, constructing a well has become a critical issue.”
Ah, the thin line between skepticism and paranoia…
SODA, packed into your very short question are a whole raft of issues. Let me try and illuminate and address a few of them:
1) The rate structure that Bartle Wells, Staff and I put together allocated the costs across water usage volumes that assumed consumption volumes that were 20+% conservation over the 2011 consumption levels. Interestingly enough the water consumption in Davis in 2012 was more than 8% above the 2011 levels, so the reduction from 2012 to 2018 would have to exceed 30% before there would be an negative impact on rates. Rebates are more likely over the next five years than rate hikes.
2) Village Homes has a lot of work yet to do before their dream of an irrigation well coming on line becomes reality. The drilling of the well is the easy part. Getting approval from the State Department of Health to make the water available (since people could indeed drink from a hose) is a step still to come. Having to Install and maintain chlorination equipment is almost a certainty. Periodic testing and filing the test reports with the State on a regular basis. All that and more.
3) Finally, the rather minor amount of irrigation water that Village homes uses for itrrigation will not affect the groundwater acquifer enough to make any difference.
so you are saying we have nothing to worry about?
Thanks as always Matt.
Am not following the 20 and 8%. Can you make that clearer for me?
SODA, all the actuarial calculations that underlie the rates were based on 2011 consumption, which was an average of 152 gallons per person per day. The 2018 rate structure is based on a gallons per person per day level of between 120 and 122 (20+% below 152). The actual gallons per person per day in Davis in 2012 was over 165 (an 8% increase over 152). So if you use 2012 as the base year rather than 2011, the 2018 gallons per person per day level included in our actuarial calculations would be an almost 30% reduction from a baseline of 165.
Did that clarify it for you?
Davis Progressive, worry would indeed be too strong a word in my opinion, but that does not mean we should not be paying close attention.
[quote]the rather minor amount of irrigation water that Village homes uses for itrrigation will not affect the groundwater acquifer enough to make any difference.[/quote]
It wouldn’t matter anyway, since we’re largely shifting over to deeper wells that don’t recharge from directly above, at least at any rate that matters.
It’s hard to imagine there isn’t some cost shifting if VHOA develops their own landscape water supply and separates from the city system.
yes thx Matt. That is what I thought, but it seemed strange that our consumption went up that much in 2012: idea why?
SODA, the reason is simple. 2010 and 2011 were “wet” years, which meant reduced irrigation needs. 2012 was a “dry” year, so irrigation need came earlier and was more intense. Thus far 2013 is another “dry” year. As yet I have not heard anything about where we stand with respect to year-to-date consumption in 2013.