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Utility Alternatives Study

Update March 11, 20019

On March 3, 2015, the City Council authorized a study to evaluate whether there may be a viable alternative to the City's continued ownership, operation and maintenance of water and sewer utility services. The study effort was geared toward determining whether the reliability, cost and efficiency of water and sewer service could be improved by transferring the utility to a neighboring special district whose sole focus is the provision of these services. 


The City Council established four goals to guide the consideration of a change in organization for the City's utilities:


1. Bring rate stability or rate relief to utility customers.

2. Continue high levels of customer service

3. Continue representation for San Juan Capistrano residents, and

4. Protect the City's substantial investment in utility infrastructure.


On October 10, 2018, after numerous expert studies, reviews and assessments, the Orange County Local Agency Formation Commission (LAFCO) received and filed the final Municipal Services Review (MSR) report, which concluded that all three of the interested special districts [South Coast Water District, Santa Margarita Water District (SMWD) and Moulton Niguel Water District] are qualified and eligible for consideration by the City to annex the water and sewer utility system.  The MSR also concluded that resulting efficiencies and cost savings could help address the capital replacement needs of the utility system and fund the system's share of regional sewage treatment capital costs, which are significant and must be funded over the next three years.  After receiving presentations on February 5, 2019, from the three water districts, the Council voted unanimously on February 19, 2019, to negotiate an agreement with SMWD whereby SMWD would assume ownership and operations of the City’s water and wastewater utilities.  This next phase involves detailed technical and financial analysis - conducted jointly by the City and SMWD – and will culminate in the specific terms and conditions of the proposed transfer of the utility system.


Click HERE to view the City Council agenda report from February 19, 2019, which further details the transfer process.



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