A potential rise in the price of untreated water for agriculture next year could hurt small vineyards in the South Livermore Valley Specific Plan, and in turn affect the area’s wine tourism, said Sandy Figuers, Zone 7 Water Agency’s board president.
The Agency is considering hiking untreated water rates for agricultural uses by about 50% over the next three years.
If that happens, the increased costs might force grape growers to let their land go fallow or switch to other crops, such as pistachios, which are more profitable. The area could go into decline as a wine region, impacting the tourism industry which is built around tasting rooms, tour buses, and wine country weekends, Figuers said.
Figuers attended a meeting of the Tri-Valley Conservancy, which raises money to buy development rights from farmers in order to preserve open space in perpetuity. Figuers said he attended as an unidentified guest in the audience. He was convinced that he heard real concerns by growers. “I’m not saying that (a decline in grape growing) will happen in a year or two, but in the long run, it could happen,” Figuers explained in an interview.
The South Livermore Valley Specific Plan was formed in 1993 to protect rural land south of Livermore from urban sprawl. It has worked to restore Livermore agriculture back up to about 2800 acres. However, the South Livermore Valley is still short of the 5,000 acres that were involved decades ago, before urban growth started nipping away at it.
“We would like to see it larger,” said Laura Mercier, TVC’s executive director.
The Zone 7 Finance Committee, which Figuers chairs, looked at a staff proposal on Oct. 1 to raise rates for the untreated water that agriculture uses.
The staff report recommended a 30% increase in the current $167 per acre foot, bringing the price to $217 in 2020. Subsequent raises would lift rates further, to $243 in 2021 and $257 in 2022. Compounding the increase over a three-year period, would amount to about 50%.
The rationale for the increase was that those who use untreated water should pay the associated costs, just as those who use treated water. The rates need to go up to pay for the capital costs associated with Zone 7’s moving all the water it takes from the Delta.
Treated water customers also pay for water reliability. Zone 7 guarantees 100% of treated water customer demands 90% of the time, and meets 85% of demands 99% of the time.
But there is no reliability policy for untreated water, commented all three members of the Finance Committee: Figuers, Dick Quigley and Angela Ramirez Holmes. Therefore, how can Zone 7 charge for untreated water reliability when there is no policy for it, Figuers said.
The three members each had their own positions on a rate increase. Figuers said Zone 7 should not raise the rates in 2020, because the small growers are being pinched by many factors.
According to Mercier, who spoke at the Finance Committee meeting, and Mark Triska, owner of Triska Crane Ridge Winery, the stresses on growers include such things as competitors in Northern California who obtain much cheaper water, higher labor costs than in other areas, and having to plant new vines to replace other grape varieties that have fallen out of favor with the public, and slowed sales. Most small growers sign contracts with wineries, so they compete against growers all over the state.
Quigley said that he simply would like more information before he could set any policy for untreated water rates. He wants to see the growers involved more in the dialogue with the Zone 7 board, when the board meets Oct. 16 to discuss the issue.
Quigley later said he does not want to subsidize agriculture, but he needs more precision about the facts to see what is justifiable.
Ramirez Holmes said that the board should pass some kind of rate increase for 2020, but not the 30% proposed in the staff report. Untreated water rates have fluctuated from year to year, so the board should set some kind of new rate for 2020. She suggested the board use the same methodology as last year, which set the current rate. Staff said that if that is done, it would work out to an 11% increase for 2020.
The matter will be discussed at the next Zone 7 board meeting, set for 7 p.m. Wednesday, Oct. 16, in the board room, 100 North Canyons Drive, Livermore.