By Perry Smith
Chloride costs are bad for business
With a 3-0 vote this week, a county board made up of two Santa Clarita City Council members and a county supervisor ok’d a plan that’s likely to raise rates for Santa Clarita Valley residents and businesses.
While some say the move isn’t “the end of the world” for local development, it will put the pinch on the ratepayers’ wallets and, in the Santa Clarita Valley, the opinion seems to be nearly unanimous that it’s “bad for business.”
“Any time you have regulation, it’s Economics 101 — it results in an overall reduction in the welfare for that entire group,” said Brady Bryan, who owns a business consulting firm and sits on the board for the Santa Clarita Valley Economic Development Corp., an organization that seeks to support, retain and attract local business.
Bryan added that the chloride situation wasn’t an end-all for business, by any means. But the targeted chloride limit, which opponents have referred to as another arbitrary state mandate, makes it that much more important for businesses to know what’s out there and to continue to innovate to stay competitive, he said. And it certainly won’t help local business.
The reason behind the treatment
It appeared, at least from most of the business-advocacy representatives that spoke at Monday’s Sanitation District hearing where the chloride-treatment plan was approved, that a chloride treatment plan was an unavoidable certainty.
“It’s not often business groups are in support of spending money,” said Jim Backer, the JSB Development president who spoke at the hearing as a Santa Clarita Valley Chamber of Commerce representative. “If we’re going to respect the rule of law, we need to find the best solution and move forward.”
The state’s Regional Water Quality Control Board, which permits the two local plants that treat local wastewater before it heads downstream to Ventura County, said the Sanitation District, which oversees the plants, must reduce the amount of chloride in that water. Local water has a chloride level of 130 milligrams per liter, and the state said it must lower that level to 100 milligrams.
The problem is, removing salt from facilities that treat millions of gallons of wastewater each day isn’t cheap. The most inexpensive plan that Sanitation District officials could find that also complies with environmental law has an estimated price tag of $130 million. And, it appears more than likely that Santa Clarita Valley homeowners and business interests are likely to be the ones who foot the bill.
The cost of chloride
Many expressed concern that Santa Clarita Valley Sanitation District officials only have estimates for the costs that will be paid by ratepayers for the chloride treatment facilities.
Sanitation District officials, such as Phil Friess, head of the district’s technical services department, looked to allay these concerns at the hearing, when Friess presented what the expected costs are.
“For a typically sized 3,000-square-foot restaurant, there will be a 27 percent increase (in connection fees),” said Friess, “with that increase slowly phased in from 2019 to 2039.”
When the plan is phased in, the connection cost, which is what new businesses and home developers would have to pay for new homes, is expected to increase by $4,134 in 2019, and then gradually go up until it reaches $140,565 in 2039. New business won’t see a difference in the one-time cost for connection fees until the plan comes online, because those costs are associated with operations and maintenance, said Dave Bruns, assistant department head for financial management. The construction is expected to be online by the fiscal year 2019, according to estimates from district staff. However, the average ratepayer should expect to see a cost much sooner, which could happen as early as next year, Bruns said, if the Sanitation District Governing Board approves staff members’ current plan.
The increase in rates for the average homeowner, again, if approved by the board, would start at about $30 to $32 a year more than what ratepayers now pay each year.
“Pretty much the numbers that we had run would go in a straight line,” Bruns said, adding “to the degree that we can get any state or federal funding, that’s going to lower that number.”
The current rate for Santa Clarita Valley Sanitation District ratepayers is $247, if they use the average amount of water for a single-family home. For a condominium owner, that rate is $203, and the increases are also slightly less. The total cost for ratepayers is expected to bring their total annual bill to $410.
But, either way, building a facility would be cheaper than not being in compliance with the chloride levels in the wastewater, state officials have repeatedly said. The Sanitation District was given the Oct. 31 deadline as part of a fine settlement for previously missing a deadline to come up with a compliance plan. The district was fined $280,000 last year, which district officials negotiated down to $225,000 on the condition that a chloride treatment plan be approved by the end of the month.
At one point in the meeting, Santa Clarita Mayor Bob Kellar asked Sam Unger what fines would be like if the sanitation district fell out of compliance. Unger, who leads the staff of the Regional Water Quality Control Board, said the fines could tally $10,000 each day of noncompliance, dating back to last year, in addition to $10 per gallon each day for each of the 20 million gallons the district treats.
One last hope for ratepayers
During Monday’s two-hour meeting, Sanitation District officials said they had exhausted all of their options in regard to working with Ventura County for a lower chloride limit. It was only because the district had run out of time and support from downstream users that staffers recommended Alternative 2, Friess said.
E. Michael Solomon, general manager for the United Water Conservation District, a representative for the Ventura County water users who were mentioned repeatedly Monday, expressed exasperation with Santa Clarita Valley interests over their inability to reach the state’s chloride level.
“Ventura County stakeholders have been trying to work with you and our staff for several years to try to identify a cost-effective means,” Solomon said. “We appreciate the diligence…we believe they negotiated in good faith. With that said, the (Sanitation District) has only made partial progress toward complying with its legal obligation to halt contamination of the Santa Clara River with excessive levels of chloride.”
Countering that notion, Assemblyman Scott Wilk, R-Santa Clarita, spoke during the public comment portion to offer support for a legislative plan to limit the ability of state agencies to set “arbitrary” limits for contaminants, such as chloride. There’s also an administrative battle being fought by Sanitation District staffers who are looking to the state to fund what they are calling an unfunded mandate. A hearing next year in front of the Commission on State Mandates would negate the cost to Santa Clarita Valley Sanitation District ratepayers if they can successfully claim that the state is mandating the chloride limit without An initial staff report doesn’t seem promising for the Sanitation District’s challenge. The report recommended denying the district’s claim.
That means the cost is going to be passed on to residents, regardless of the business they’re in, Bryan said, describing the situation as unique because Santa Clarita businesses are competing with interests in neighboring areas that don’t have the same costs for chloride treatment.
“(The competition’s) cost is going to remain unchanged,” Bryan said. “When you have that type of selective application in that type of enclosed environment – it’s bad for business.”