1.  Why does the District need a new Headquarters and Corporation Yard?

2.  Is relocation the best choice?

3.  How does the project fit into the long-range capital planning?

4.  How will this project be paid for?

5.  Will rates increase?

6.  When will rates be raised?

7.  Will the project raise taxes?

 

The Board of Directors has taken a long-range planning approach to replacing the District’s aging infrastructure, equipment and buildings. A Headquarters Facility Assessment conducted in 2007 determined that the 15,500 square feet of office space at its headquarters was inadequate and does not meet the District’s anticipated need of approximately 33,000 square feet by the year 2025. In addition, surrounding residential neighborhoods are incompatible with District operations. The hilly topography of the current site makes expansion more costly and difficult.

 

The Board of Directors evaluated various options for renovating, expanding or relocating the Headquarters and Corporation Yard. If the District was to stay at the current site, $5 million worth of remedial work and regulatory compliance measures would be needed without achieving any of the needed expansion. The District would also subject itself to construction cost risks. The most cost-effective option proved to be the purchase of existing office/warehouse buildings and adjacent vacant industrial land. Because of the slow economy and real estate market, the District has been able to negotiate very favorable terms on the buildings, land and improvements. Since this transaction is not dependent on the sale of the District’s existing headquarters, this allows the District to wait until market conditions improve before selling the existing property.

 

As part of the District’s ongoing capital improvement planning, the Headquarters and Corporation Yard have been slated for replacement. The District has also initiated improvements to its operations and delivery systems to improve efficiencies and sustain affordable rates for its customers. Among the projects in the capital planning improvement program:

• Lining irrigation canals

The District is proposing to use existing financial reserves to pay for the new facilities. A portion of the reserves will be repaid from the eventual sale of the existing Elmira Road property. The existing reserves that will be used for the project have accumulated over a number of years from a variety of sources, including water sales and one-time payments under agreements with cities, and other revenues. Therefore, with a project cost of approximately $13.8 million, the funding will be provided through existing financial resources with no debt issuance.

 

There will be a slight increase in water rates for direct customers of the District to recover a portion of the reserves used to pay for the new facilities. Studies indicate that as a result of the relocation project, the District’s water rates may need to increase about 6.5 percent each year rather than an estimated 5 percent without the relocation project. In comparison, rates would need to be raised even higher if the existing Headquarters and Corporation Yard were renovated and expanded to meet the District’s needs. As Dixon Solano Municipal Water Service (DSMWS) and Suisun Solano Water Authority (SSWA) are not direct customers of the Solano Irrigation District, they will not be affected by these rate changes.

The District updates its water rates every three years. The next rate increase is planned for January 2010. Preliminary estimates for water rate increases are approximately 6.5 percent in each of the next three years, of which 1.5 percent will be related to the relocation project and 5 percent for planned operational needs. Only direct water service customers of the District will be affected by these water rate increases.

 

No. The property taxes received by the District are its portion of Solano County’s general property taxes.