Water Authority Settles with Water Districts on Detachment
December 21, 2023
Rainbow Municipal Water District and Fallbrook Public Utility District to Immediately Pay $25 Million
The San Diego County Water Authority (SDCWA) has agreed to drop all litigation and allow the Rainbow Municipal Water District (RMWD) and Fallbrook Public Utility District (FPUD) to detach from the Water Authority in exchange for an immediate $25 million payment from the two districts plus related costs and fees. This settlement avoids expensive litigation, provides institutional certainty, and minimizes rate impacts on San Diego County’s 3.3 million residents.
“While the majority of SDCWA’s remaining 22-district membership remains opposed to detachment, they agree that this settlement makes the best of a bad situation,” said Mel Katz, chairman of the San Diego County Water Authority Board. “While we continue to believe the detachment award should have been higher, RMWD and FPUD are required to pay all costs, above the amount ordered by the Local Agency Formation Commission (LAFCO) in addition to its entire exit fee up front, meaning there will be no immediate rate impacts for ratepayers.”
As part of the settlement agreement, both RMWD and FPUD have agreed to pay all costs related to the decommissioning of SDCWA facilities that will not be used post-detachment. Further, the two agencies have agreed to indemnify and hold harmless the SDCWA against any future claims related to detachment and completion of all administrative, technical, and infrastructure-related tasks before the SDCWA’s facilities can be transferred. This is above and beyond what LAFCO prescribed as part of its conditions for detachment.
In response to LAFCO’s July decision to approve RMWD and FPUD’s request for detachment, Assemblymember Tasha Boerner – with the support from Mayor Todd Gloria and the City of San Diego – introduced and passed Assembly Bill 399: The Water Ratepayer Protection Act. This legislation, which was signed into law by Governor Gavin Newsom this fall, will go into effect in January 2024 and will require, in the future, a countywide election be held for a detachment of a local district, thereby protecting the long-term integrity of the SDCWA and regions ratepayers.