The San Diego County Water Authority has agreed to a settlement with the Rainbow Municipal Water District (RMWD) and Fallbrook Public Utility District (FPUD), allowing both to detach from the Water Authority while dropping all litigation.

In exchange, the two districts agreed to an immediate $25 million payment plus related costs and fees. The settlement minimizes rate impacts on San Diego County’s 3.3 million residents while avoiding expensive litigation. It also provides institutional certainty moving forward.

“While the majority of SDCWA’s remaining 22-district membership remains opposed to detachment, they agree that this settlement makes the best of a bad situation,” said Mel Katz, chairman of the Water Authority Board. “While we continue to believe the detachment award should have been higher, RMWD and FPUD are required to pay all costs above the amount ordered by the Local Agency Formation Commission (LAFCO) in addition to its entire exit fee upfront, meaning there will be no immediate rate impacts for ratepayers.”

Settlement addresses detachment conditions and future claims

As part of the settlement agreement, both RMWD and FPUD have agreed to pay all costs related to the decommissioning of Water Authority facilities not being used post-detachment. The two agencies have agreed to indemnify and hold harmless the Water Authority against any future claims related to detachment. Both will complete all administrative, technical, and infrastructure-related tasks before the facilities can be transferred.

These settlement conditions exceed the conditions prescribed by LAFCO as part of its conditions for detachment.

In response to LAFCO’s July decision to approve RMWD and FPUD’s request for detachment, Assemblymember Tasha Boerner introduced and passed Assembly Bill 399: The Water Ratepayer Protection Act. Mayor Todd Gloria and the City of San Diego supported AB 399.

This legislation was signed into law by Governor Gavin Newsom this fall and will go into effect in January 2024.  It will require a countywide election to be held for a detachment of a local district moving forward. Its provisions protect the long-term integrity of the Water Authority and the San Diego region’s ratepayers.