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LA WATCHDOG - The Metropolitan Water District of Southern California is considering a doubling of its tax on real estate that is located within its 5,200 square mile service territory. This additional tax, equal to 0.0035% of the Assessed Value of $3.9 trillion, would provide MWD with an additional $136 million a year. These funds would be used to lower the rate of increase in the cost of water for its 26 member agencies and to maintain its triple A investment bond rating.
This rate increase was concocted behind closed doors by management and the Board of Directors without any outreach to or input from the taxpayers. This lack of transparency and openness is unacceptable, especially since this tax increase is not in the best interests of the residents, taxpayers, and the environment.
When comparing the Assessed Value in each of the 26 agencies to the volumes of water each consumes, 12 agencies whose properties represent over two thirds of the total Assessed Value of $3.9 trillion consume slightly more than half of the delivered water. This disproportionate arrangement means that property owners in these 12 agencies are paying more than their allocation.
For example, the San Diego County Water Authority has 17.5% of the Assessed Value but only consumes 12.9% of MWD’s delivered water. The same applies to the Municipal Water District of Orange County that has 16.7% of the Appraised Value but consumes only 13.7% of the water. Together, taxpayers in these two districts will be hit with a $47 million tax increase.
There are number of smaller agencies who use very little water compared to the value of their real estate. These include Compton (represented by Tan McCoy), Santa Monica (Vice Chair Judy Abdo), San Fernando (Chair Alan Ortega), San Marino (John Morris), the Central Basin MWD (Juan Garcia and Michael Gualtieri), Beverly Hills (Barry Pressman), Santa Ana (Thai Viet Phan), Fullerton (Fred Jung), and Upper San Gabriel Valley MWD (Anthony Fellow), all of whom are represented by “water buffalos” who are in the pocket of MWD management despite the adverse impact on their constituents. The tax increase for these nine agencies is $17.5 million.
There is also the question of whether these Directors have consulted with their cities and water agencies that they represent or are they acting unilaterally.
Mayor Karen Bass has indicated that Los Angeles, the largest agency with over 20% of the Assessed Value, is not in favor of this tax increase because it is being rushed without the proper vetting, it will increase the cost of housing, the “fiscal emergency” provisions have not been met, and the real estate tax hides the true cost of water, hurting conservation. The new tax would cost Angelenos $28 million.
In addition, the City, through its Department of Water and Power, has supplies from the Owens Valley via the Los Angeles Aqueduct, not necessarily a cheap source of water given the billions spent on environmental remediation.
This tax increase is also a bad precedent. What happens when MWD wants to finance its $20 billion Pure Water recycled water facility or its share of the controversial $16 billion Delta Conveyance Project? Will Met decide once again to hit up property owners? But in this case, we are talking billions.
Rather than pushing ahead with this tax increase, MWD needs to take a lesson from DWP and reach out in an open and transparent manner to taxpayers. Otherwise, MWD’s reputation will suffer, and this will be just another example of why we do not trust the political establishment. If no transparency, wait for our reaction in November when tax increases will be on the ballot.
(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee, the Budget and DWP representative for the Greater Wilshire Neighborhood Council, and a Neighborhood Council Budget Advocate. He can be reached at: [email protected].)
