Water Rate Changes Will Add New Fee To Tax Bills

Although bi-monthly water bills are the most visible evidence of what it costs to turn on the kitchen faucet or fill a bathtub, homeowners in Dublin and San Ramon also pay a portion of the cost for their water service through assessments on annual property tax bills.

If directors of the Dublin-San Ramon Services District (DSRSD) approve proposed changes in water rates during their regular meeting Tuesday evening, residential customers in the Dougherty Valley section of San Ramon are likely to see their tax bills go up during the next five years because one of the rate adjustments being considered could result in significant increases to cover the areas proportionate share of SWP costs that are passed through by the Zone 7 Water Agency, the Alameda County special district that provides wholesale water to DSRSD. The full magnitude of the increases will depend on the accuracy of DSRSD’s long-term estimates of what state water costs will be.

As one of 29 State Water Contractors buying water directly from California’s State Water Project (SWP), Zone 7 will use the additional tax revenue to help cover the cost of its own operations and pay its share of SWP expenses.

In Alameda County Zone 7 directly levies assessments based on the assessed value of individual parcels. Last year $21.4 million collected by the Agency from Alameda property owners went into its State Water Facilities Fund. An additional $1.6 million came from San Ramon homeowners, but was collected in a different manner.

That’s because Zone 7 can’t recover SWP costs in Contra Costa County so DSRSD collects the assessments on its behalf through a special assessment placed on the property tax bills of San Ramon homeowners by another special district, the Dougherty Valley Standby Charge District, whose directors are the same as those of DSRSD. After the Dougherty Valley Standby District collects the revenue it is given directly to Zone 7.

San Ramon homeowners receiving DSRSD water service are now paying an annual flat rate charge of $170.75 that can be found in the Special Taxes & Assessments section of Contra Costa County property tax bills sent to some 7,000 single-family homeowners and identified in a non-consumer-way as “DSRSD-DRTY VLY01-1.”

The Dougherty Valley Standby District was created nearly 20 years ago to provide potable water to the developing Dougherty Valley area of San Ramon and to collectand serve as the vehicle to collect from San Ramon water customers their share of Zone 7’s SWP costs.

Even though the agreement establishing the Dougherty Valley Standby District limited the total amount that could be collected from San Ramon homeowners to $1.56 million annually, Zone 7’s share of SWP costs kept rising, forcing an increase in the assessment.

The new service fee will be separately identified on Contra Costa Tax bills mailed out this fall to San Ramon homeowners in the DSRSD service area.

The current $170.75 flat rate will continue to be collected, but the amount of the new service fee will vary each year because it will be calculated as a specific amount per unit of water used.

Preliminary DSRSD estimates contained in a notice recently sent to water customers reflect a potential overall 665 percent increase in new Dougherty Valley Standby District service fee charges between 2020 and 2024. DSRSD estimates the fee for the coming fiscal year beginning July 1 will be $2.55 bi-monthly per unit of water, and could reach $19.51 per unit in 2024. While assessments will be reviewed annually, and depend upon actual SWP costs billed to Zone 7, the impact on homeowners could be substantial.

Based on current DSRSD estimates, a single-family San Ramon residential customer consuming the typical 18 units of water bi-monthly would see an additional $275.40 on their 2020 property tax bill in addition to the $170.75 already being collected. If DSRSD estimates continue to be accurate for future years, in 2025, this same homeowner could see the new fee reach $2,107.