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LAFCO addresses FPUD/Rainbow merger, Campus Park West, Healthcare district MSR

Thursday, August 14th, 2014
Issue 33, Volume 18.
Joe Naiman
Village News Correspondent
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During the Aug. 4 meeting of San Diego County’s Local Agency Formation Commission (LAFCO), executive officer Mike Ott gave a presentation on major potential jurisdictional boundary changes which may be before the LAFCO board in the near future.

Ott noted that LAFCO is monitoring approximately 30 potential boundary changes, including eight major ones. "I would like to let you know that essentially a freight train’s coming your way," he said.

The proposed merger of the Fallbrook Public Utility District and the Rainbow Municipal Water District, the water service boundary changes associated with the proposed Campus Park West development, and municipal service reviews for the county’s four healthcare districts including the Fallbrook Healthcare District are among the eight major projects. The other five projects consist of three potential fire district consolidations and two development-related jurisdictional territory transfers.

On April 28, the Fallbrook Public Utility District board of directors voted to submit an application to LAFCO for the consolidation of FPUD and the Rainbow Municipal Water District. "These two districts have been in discussion regarding a functional consolidation for several years," Ott said.

In February 2013, the North County Joint Powers Authority was created to test functional consolidation. In November 2013, the joint powers authority, along with the two individual districts, began discussing actual jurisdictional consolidation. FPUD elects its board of directors by specific seat, but the entire district votes for each director. Rainbow’s directors are selected by division with only voters within the division participating in the process to elect that particular director. The two districts were not able to reach an agreement on the form of governance, and on March 5 Rainbow voted to terminate the joint powers authority.

"It was not a harmonious breakup," Ott said.

FPUD chose to pursue the merger despite Rainbow’s objections to jurisdictional consolidation and submitted the application to LAFCO. A public comment period for information to be considered during staff review closed on Aug. 1. The Rainbow Municipal Water District provided the only response.

"What we’ll do is respond to the major issues that have been raised," Ott said.

LAFCO staff will conduct a review of the proposed reorganization prior to the hearing. "It will be subject to a number of administrative and bureaucratic processes," Ott said.

One of those is the property tax exchange in which property taxes currently received by the Rainbow Municipal Water District would instead be received by FPUD. Because the County of San Diego collects property taxes, the San Diego County Board of Supervisors must approve the property tax exchange.

"The property tax exchange by law will have to occur before any scheduling of the hearing," Ott said. "Once that occurs we’ll have a better idea of schedule."

A municipal service review, which evaluates services provided and anticipated needs, and an update to the sphere of influence study, which determines boundaries best served by a particular agency, will be necessary before a consolidation or other jurisdictional change can be approved. LAFCO may approve the municipal service review, the sphere of influence update, and the jurisdictional boundary change at the same meeting.

The Campus Park West annexations are expected to be less controversial, although the San Luis Rey Municipal Water District may contest the conditions of detachment from that district. On June 18, the Board of Supervisors approved the Campus Park West tentative map, rezone, general plan amendment, specific plan amendment, and Supplemental Environmental Impact Report. Approximately 17 acres of the site are already within the Rainbow Municipal Water District while approximately 100 acres are currently within the San Luis Rey Municipal Water District, which is not within the San Diego County Water Authority or the Metropolitan Water District of Southern California boundaries. Campus Park West will need to be annexed into MWD and the SDCWA, which will also require detachment from the San Luis Rey district and annexation into Rainbow (or FPUD should the merger precede the prerequisites for the Campus Park West annexation). "I anticipate that will be quite a routine annexation," Ott said.

The process to annex territory into MWD and the CWA begins when the CWA member agency desiring to annex the territory approves a resolution requesting concurrent annexation of that area into the CWA and MWD. The Rainbow district approved such a resolution in September 2013.

CWA staff reviewed the request for compliance with the CWA annexation policies, and on May 22 the CWA board approved a resolution establishing preliminary informal terms and conditions while requesting that MWD grant conditional approval for annexation.

The next step is for MWD to grant conditional approval, after which the CWA will approve the terms of conditional approval. MWD will then grant formal approval, and the CWA will approve the formal approval resolution, sending the annexation back to the member agency for a formal request to LAFCO.

"It’s just in the early stages of being processed," Ott said.

On April 7, LAFCO approved the annexation of the proposed Meadowood development into the North County Fire Protection District (while detaching that area from the San Diego County Regional Fire Authority) and into the Valley Center Municipal Water District, the CWA, and MWD while detaching 243 acres of that territory from the San Luis Rey Municipal Water District. LAFCO took advantage of the Meadowood annexation issue to update the sphere of influence for water, recycled water, and sewer services in the Bonsall and Pala hydrologic subareas of the San Luis Rey River Watershed. The sphere of influence update included Campus Park West, so the annexation into Rainbow (or FPUD), the CWA, and MWD will likely reaffirm the recently-adopted sphere. All of Campus Park West is currently within the North County Fire Protection District, so no fire district reorganization will be required.

LAFCO staff is working on a municipal service review and sphere of influence update for the county’s four healthcare districts (the Grossmont, Palomar, and Tri-City districts are the other three). The studies will evaluate governance, community accountability, opportunities for shared services and infrastructures, potential governmental changes, the financial ability to provide services, and potential sphere changes.

Ott expects the municipal service review for the hospital districts to be ready for the LAFCO board by the end of calendar year 2014. "The primary issues will probably have to do more with boundaries," Ott said. "That really will be a future topic for the healthcare districts to look at."

The boundary changes could include areas not currently in any healthcare district, Ott said. "There are some areas between the districts."

Ott indicated local interest in creating a healthcare district for the Borrego area. The creation of such a district would be a separate process.

He noted that some of the healthcare districts have had governance problems in the recent past. "I think they’re settling down," Ott said.

Ott added that some healthcare districts are still plagued by administrative turnover.



Comment Profile ImageGary Bryson
Comment #1 | Monday, Aug 18, 2014 at 3:27 pm
Dear (sir or madam)

I am writing to OPPOSE the annexation of the Rainbow Municipal Water District (“Rainbow”) by the Fallbrook Public Utility District (“FPUD”). What we know is that Rainbow has been and is responsibly managed and is financially sound. FPUD is burdened by substantial debt. No compelling reason has been given for the merger. The claimed cost savings are negligible as a percentage of either organization’s operating budget. Therefore, I respectfully suggest that the reasons against the annexation far outweigh the reasons to do it, and I ask you to protect the Rainbow ratepayers from this self-serving hostile annexation by the FPUD. I believe the following points are relevant.

1. The area served by the Rainbow district differs substantially from the area served by the FPUD. Rainbow serves a larger share of agricultural users. In addition, the residential customers served by Rainbow tend to be dispersed equestrian properties, larger estates and rural properties. By comparison, FPUD serves more residential tracts.

2. Because it elects its commissioners by district, Rainbow does a far better job of reflecting the needs and responding to the concerns of its ratepayers.

3. A vast majority of the public comment in favor of the annexation focuses on rates. These commenters assume that the annexation will result in lower rates to the present Rainbow ratepayers. Their logic is that, assuming Rainbow’s rates are currently higher than those paid by ratepayers in the FPUD, after the annexation, their rates will be lower. In public statements Brian Brady, General Manager of the FPUD, has stated that the merger will not result in lower water rates for current Rainbow customers. Rising water rates are unpopular, and the incumbent water district becomes the messenger people want to shoot. It is not a valid argument in favor of annexation.

4. There is a bad smell associated with FPUD’s dogged pursuit of the Rainbow district’s assets. Claims have been made that FPUD’s debt has placed it in financial jeopardy, and desperately needs Rainbow’s assets to stabilize its shaky financial position. Unfortunately, the FPUD has not advanced any factually supported arguments in favor of the annexation. By its own admission, when Rainbow and FPUD were engaged in a JPA, most of the benefits accrued to Rainbow. Moreover, all of savings claimed to result from the annexation are insubstantial compared to FPUD’s debts. Thus, even with the annexation, FPUD’s finances will remain uncertain.
Comment Profile ImageRMWD ratepayer
Comment #2 | Monday, Aug 18, 2014 at 5:03 pm
Well said, Mr. Bryson.

Will you please send it to LAFCO at the e-mail address below?
Comment Profile ImageOmen
Comment #3 | Thursday, Aug 21, 2014 at 9:26 am
I Could Not Have Put That In Better Words MR. Bryson
Comment Profile ImageRtotheM
Comment #4 | Thursday, Aug 21, 2014 at 2:49 pm
The article fails to mention FPUD filed the paperwork on March 6th, one day after Rainbow's decision to leave the JPA. It appears that FPUD Board, FPUD staff and LAFCO staff worked to pursue the hostile merger while Rainbow was still actively participating in the JPA.
Comment Profile ImageRMWD ratepayerD
Comment #5 | Thursday, Aug 21, 2014 at 5:10 pm

AND while Rainbow was paying half of FPUD GM's salary and benefits.
Comment Profile ImageRMWD ratepayer 2
Comment #6 | Friday, Aug 22, 2014 at 3:11 pm
Thank you Mr. Bryson, you said it well. Though I wonder why FPUD keeps. Referring to a consolidation when in fact it is an assassination.
Comment Profile ImageRMWD ratepayer
Comment #7 | Wednesday, Aug 27, 2014 at 2:41 pm
" The Rainbow Municipal Water District provided the only response."

Odd...the LAFCO web site shows over 300 communications opposing the takeover, most of them filed before that meeting.

Article Comments are contributed by our readers, and do not necessarily reflect the views of The Fallbrook Village News staff. The name listed as the author for comments cannot be verified; Comment authors are not guaranteed to be who they claim they are.


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