Mark L. Johnson March 23, 2018 Coachella Valley Water District Board of Directors PO Box 1058 Coachella, CA 92236 Subject: CVWD Board Study Session (3/21/18)-West & East Replenishment Capital Improvement Budget/Rates and Joint Water Policy Advisory Committee Meeting (3/26/18) Dear CVWD Board: This letter presents comments regarding the West & East Replenishment Capital Improvement Budget/Rates presented at the CVWD Board Study Session on 3/21/18 and comments for the upcoming Joint Water Policy Advisory Committee Meeting on 3/26/18. Replenishment Assessment Charge (RAC) Inequity CVWD’s Domestic Water (Urban) customers pay a blended RAC via the domestic water bill. Averaging the three current RACs for the West Whitewater Area of Benefit (WAOB) [$143.8/acre-feet (AF)], East Whitewater Area of Benefit (EAOB) ($66.0/AF) and Mission Creek Area of Benefit (MCAOB) ($135.52/AF) yields a good proxy for that blended rate at $115/AF. I live in the EAOB where almost all Agricultural, Indio Water Authority (IWA) and Coachella Water Authority (CWA) groundwater production wells are located. Therefore, I and all CVWD Urban customers in the EAOB pay almost double the RAC rate compared to an Agricultural pumper and the domestic water customers of IWA and CWA. CVWD treats the CVWD Urban customers as part of a fully integrated water system for RAC purposes but handles other types of water taxes, rates and charges differently when it conveniently provides other customers, e.g. Agriculture, a lower tax, rate or charge. This is unfair, inequitable and discriminatory. There should be one AOB and one RAC for all groundwater pumpers because the Coachella Valley (CV) water resources are fully integrated as proven by the way in which CVWD Urban customers are already treated for RAC purposes. Establish Separate State Water Project (SWP) Tax Fund The State Water Project (SWP) Tax revenues should not be co-mingled with the RAC funds. A separate SWP Tax Fund should be established and the SWP Tax should CVWD Board Study Session-3/21/18 West & East Replenishment Capital Improvement Budget & Rates & Joint Water Policy Advisory Committee Meeting-3/26/18 Mark L. Johnson Comments Page 2 only go towards paying the SWP Bill in accordance with the recommendation made by CVWD’s General Counsel. The following additional SWP Tax changes are recommended: • SWP Tax should be based on acreage not assessed value. Urban property is valued at about $2.5 million/acre whereas Agricultural property is value at about $13,000/acre. Efficient Urban property uses about 1.0 AF/acre/year compared to Agriculture at 3.5 AF/acre/year. Water consumption has no relation to property value. • SWP Tax should be clearly identified on the Riverside County Tax bill and the Total Cost of Water (Water Rate and Water Taxes) should be identified on the water bill. Reimburse Domestic Water Funds For Mid-Valley Pipeline Construction The CVWD Domestic Water customers funded the construction of the Thomas E. Levy Groundwater Replenishment Facility (TELGRF) and the Mid-Valley Pipeline--both $50+ million projects. The Domestic Water fund is slowly being reimbursed from the EAOB Fund for the TELGRF and the same Domestic Water Fund reimbursement should occur for the Mid-Valley Pipeline construction cost as it will be used for groundwater replenishment in the mid-valley. One Canal Rate The TELGRF is located in the EAOB and its replenishment water comes from the Coachella Canal/Distribution System. However, the EAOB is charged the Class 2 Canal Rate ($102.12/AF) which is three times the Class 1 Canal Rate ($34.32/AF) charged to Agriculture for the same water. This is unfair, inequitable and discriminatory. There should be one Canal Rate with all Colorado River water users paying the same blended cost for Colorado River Water, which is approximately $10/AF. Eliminate Improvement District No. 1 (ID1) Tax The ID1 Tax has been applied to 137,000 acres of land in the eastern Coachella Valley since 1950 but only 75,000 acres are irrigable. The ID1 Tax was originally developed to pay for the Coachella Canal, Protective Works, Lake Cahuilla and Irrigation Distribution System ($34.1 million). This debt was paid in full in 1994/95. Once again, taking into account land valuation, it is estimated that agricultural land only contributed to approximately 25% of the cost to build these CVWD Board Study Session-3/21/18 West & East Replenishment Capital Improvement Budget & Rates & Joint Water Policy Advisory Committee Meeting-3/26/18 Mark L. Johnson Comments Page 3 facilities. The remaining amount was paid by the Non-agricultural land owners. In fact, today, Agricultural land represents only 5% of the ID1 Tax, i.e. the Nonagricultural land owners in La Quinta, Indio and Coachella are paying for the operation of an irrigation/drainage system that they receive little if any direct benefit. This is unfair, inequitable and discriminatory. The ID1 Tax should be eliminated and the Non-agricultural property owners within ID1 should be given a credit spread out over 10 years for the taxes paid without direct benefit for all these years. One Valley-One Water Resource Economic System The CV water resources are managed as one integrated system and should be managed economically as one system for the following reasons: • Boulder Canyon Project Act (1928)-CV Colorado River Water Is For Potable And Agricultural Use • Plans For Utilization of State Water Project (SWP) (1967)-Lowell Weeks (CVWD General Manager) envisioned the CV water resource system as being fully integrated. • QSA (2003)-Colorado River Water-Can Be Used Outside ID1-Anywhere In CV • Aquifer Is Connected Below-See Replenishment Assessment Charge (RAC) Engineer’s Reports • Water Distribution System Is Interconnected Above Managing the CV’s water resources economically as one system will eliminate the existing unfair, inequitable and discriminatory water taxes, rates and charges and the obvious conflicts of interest that led to this situation. CVWD’s Urban customers paid for and built this wonderful water resource system and it is high time we get treated fairly, equitably and without discrimination. Thank you for the opportunity to comment. Sincerely, Mark L. Johnson