Water budget to have trickle-down effect
By Stephanie Bertholdo bertholdo@theacorn.com

John Mundy

The Las Virgenes Municipal Water District adopted a $53.3-million budget for the fiscal year beginning July 1, a newly adopted financial plan that includes $11.7 million for capital-improvement projects designed to strengthen and renew portions of the district's aging infrastructure.

The water district runs both potable water and wastewater treatment operations.

"The approved budget is $1.2 million less than last year, most of the decrease being reflected in reduced funding of capital projects," said John Mundy, general manager of the district.

"We also saw operating expenses reduced by some $100,000, largely because anticipated increases in electricity and chemical costs did not occur," Mundy said.

"In addition to other projects, the 2007-08 plan includes improvements to the Tapia Water Reclamation Facility made necessary by the conditions found in the 2005 permit issued by the Regional Water Quality Control Board."

To make ends meet, district officials said they will draw $4.2 million from reserves.

Mundy explained the strategy.

"Part of the district's financial strategy is to only borrow for large projects that require long-term repayment," he said. "For medium- to small-scale projects, we believe it is better to set money aside, effectively eliminating the cost of borrowing, which, spread over 30 years, can double or triple the expense of a project to our ratepayers.

"Through this method, we also preserve the district's borrowing capacity for a time when that may be needed."

The district's largest single expense stems from water purchased through the Metropolitan Water District of Southern California, Mundy said.

"We've already been told their rates will be increasing over the next four years, and that presumes there are no interruptions in the supply from the State Water Project and that we will not have another record dry winter across the state," Mundy said.

The cost of wastewater treatment services is expected to rise because of construction at the Tapia Water Reclamation Facility. Mundy said volatile market prices for electricity and chemicals are also part of the equation when it comes to rising costs.

Over the past four years, electricity prices and the cost of chemicals steadily rose.

The district has dodged some expensive bullets. Last year the it was faced with building a reverse osmosis plant to prevent pollution from entering Malibu Creek. At the time, the estimated cost was $160 million. Although the requirement was dropped, the district must add a $10-million denitrification facility at the Tapia plant within the next four years.

The facility will enhance the natural process for beneficial bacteria, which will lower harmful pollutants in streams leading to the ocean.

Pollution control is also a factor playing into rising costs. Several state and federal laws are requiring cities, sewer treatment plants and other public agencies to comply with guidelines governing water pollution.

Las Virgenes Municipal Water District provides potable water, wastewater services, recycled water and biosolids composting for more than 65,000 residents in the cities of Agoura Hills, Calabasas, Westlake Village and Hidden Hills, as well as unincorporated portions of western Los Angeles County.