Fair Oaks Water District Celebrates a Century of Service

Fair Oaks, CA (MPG) - As the Fair Oaks Water District (FOWD) celebrates its 100^th year of service, the agency also is enjoying a pre- and post-drought fiscal report card worthy of the envy of any water municipality in the county.

Even through one of the worst droughts on record that forced many water districts, the FOWD included, across the state to reduce water sales, hence, reduce their revenues, the agency managed to avoid passing on those losses via rate hikes to its customers, unlike many sister agencies statewide.  As it entered into its 100^th year in operation in January (The official birthday is in March), the FOWD also marked its thirteenth year with zero rate increases, and it did so carrying zero existing debt for the 10^th year in a row.

Fiscal belt-tightening, staff reductions and taking the DYI approach to some development programs, have collectively served to keep the FOWD on budget.  But customers played a key role in the process, specifically during the drought, even if they don’t know it.

In 2015, California, Gov. Jerry Brown ordered unprecedented water conservation policies across the state, including a 36% water reduction mandate for the FOWD and other agencies. To meet the challenge, management and rank and file staff members alike walked the Fair Oaks district, which includes some 37,000 residents and encompasses   approximately 6,000 acres.  They went out door-to-door delivering some 15,000 conservation information packets to its roughly 14,000 customers in as little as three days.

The grass-roots approach to water conservation also included night patrols to ensure watering rules were not being broken in the cover of darkness. They conducted person-to-person outreach, at doorsteps, on lawns, at local schools and across the community, anywhere it was vital and possible to educate members of the community about conservation and how critical their part in the process was.  A Blue Man Water Drop became the FOWD’s official water conservation mascot.

“Our approach was to encourage our customers and show them how to conserve, not punish them for not conserving or assuming they wouldn’t by imposing rate increases,” said FOWD General Manager Tom Gray who has led the agency since 2004.

According to Gray, the FOWD’s conservation budget was roughly $6,000 in 2015 during the height of the drought and the imposed mandates, a paltry figure compared to surrounding districts, which spent thousands for their programs and outreach and, in many cases, took a more punitive approach via fines and rate hikes.

“During 2015 and 2016 our neighboring water districts spent about $50,000 to $60,000 getting their message out,” Gray said. “We met the mandate by spending 10 percent of what they spent. We didn’t just throw money at it. We helped to empower our customers. But across most districts in California, how they responded was to employ punitive measures and rate increases, and then they said to their customers, ‘OK, we’ll use that money to tell you all about it.”’

The FOWD reported a 35% reduction in water 2015, down from the previous annual averages of roughly 11,380 acre feet of water to 8,130 acres, all without rate increases or reduced watering days.

“It represented the lowest annual water usage total ever recorded,” Gray said.  “We met the mandate and our customers are to be praised for their efforts.  We believe in them. Instead of charging them more, we wanted to challenge them. We simply said to them ‘You know your yards better than we do. Water wisely. We challenge you.  It was incredible.”’

Even without rate increases, the FOWD has managed to also reinvest approximately 40 cents on every dollar from water sales revenues back into its budget for capital improvements for more than a decade, paving the way for several key projects including the installation of three new ground water wells, construction of a new administrative building, the conversion from a flat-rate system to metered service, implementation of an in-house billing system and the replacement of thousands of feet of water lines across the service area.

 “We run a darn good business,” said Gray.  “Why have we been able to run the business through a drought and all kinds of things, and still have a prudent reserve? It’s because we have 100% full accountability here. We run a hard line with development, customers and everything else. If a dollar is owed we get a dollar, we don’t right off anything.”

There are currently 30 full-time employees on the roster, down from roughly 40 in 2004.  Staff parties are rarely catered, but involve pot-lucks and home-cooked meals. FOWD board members, says Gray, go to JC Penny for their portraits, and consultants are shunned if in-house know-how can do the job for less.  Case in point: when crafting the FOWD’s “Five-Year Financial and Water Rate Development Plan” in 2011, instead of paying thousands of dollars to an outside source, board members rolled up their sleeves and did it themselves.

This year, the FOWD is again debt-free and enjoying annual revenues of $8.25 million.  After expenses, the agency is projecting cash reserve of $7.4 million. It has again absorbed rate hikes imposed by the SJWD, from which it buys 90 percent of its surface water, but it did so at a cost of roughly $400,000. Still, no rate increases.

It would not be too far off the mark to say the district has a rich heritage of accountability. Originally founded as the North Fork Ditch Company in the late 1800s, the area’s water was delivered via wooden water tanks carried into the agriculturally dominated farms of the community by horses.  When North Fork notified its customers it had applied for a rate increase, angry Fair Oaks residents put their foot down and, in 1917 new management assumed leadership and changed the agency’s name to the Fair Oaks Irrigation District.

Inherent in Gray’s management approach is the same degree of community accountability.  To best serve the constituents, the play book must often be reexamined and, if necessary, rules will be broken.

“I say this all the time: ‘Our policies and procedures are a cookbook.’ We are using them as a guide and it’s my job to help steer my team using the cookbook with variances.  If we go by the cookbook every time and not give ourselves the room to vary our approach based on the human element in the situation, then we are failing to abide by our mission.”

Even with the drought now doused by one of the wettest and coldest winters on record, the fees for buying water are again rising.  Earlier this year, the SJWD notified the district that, over the next five years, the annual price tag for its water will be climbing to as high as $3,027,400, representing a 182% jump or a cumulative annual increase of $1,950,000 for the FOWD from 2006 to 2021.  2017 increases are already paid for, but what happens next year remains unclear.

“I’m not saying there are going to be increases or not,” says Gray, adding that the board of directors will be conducting an “accelerated budget process” for 2018, which it expects to be completed in October.

“We let our customers know this is what we are up against and we will see,” Gray said. “But, I know that I can’t cut another position.”