July 16, 1997

Honorable Judge William L. Gordon

Presiding Judge, Santa Barbara County Superior Court

1100 Anacapa Street

Santa Barbara, CA 93121



The purpose of this letter is to transmit the City of Santa Maria's formal response to subject report dated May 6, 1997. According to Penal Code Section 933, the City has 90 days to reply to the Grand Jury Report. This letter is intended to satisfy that reporting requirement.

The Grand Jury made five findings, all of which affect the City of Santa Maria. Following is the City of Santa Maria's formal response to these findings:

Finding 1: In 1993, the Santa Maria City Council was presented with information when the drought buffer was proposed. The City Council delayed and continued discussion or attention for several meetings, yet took no action. The decision on the drought buffer was made by default.

Recommendation 1: Given the magnitude of the City's obligations, City Council members should place a higher priority on matters regarding CCWA and State Water.

City Response: This recommendation has been implemented. The City Council has and will continue to place a very high priority on matters dealing with CCWA and state water. The topics are considered by the City Council frequently at regular City Council meetings at least on a quarterly basis or more frequently as necessary.

Finding 2: The Santa Maria City Council does not have a written policy which would provide guidelines to any city representative who serves on a board or commission which has the ability to make decisions having an impact on city finances.

Recommendation 2: The Santa Maria City Council should adopt a written policy which provides guidelines for city representatives regarding financial impacts on the city.

City Response: The respondent disagrees with the recommendation. Members of the various boards and commissions in the City of Santa Maria serve at the pleasure of the Mayor and City Council. The current CCWA delegate is Councilmember Joe Centeno. Mr. Centeno reports the actions of CCWA regularly to the City Council. Additionally, the minutes of CCWA meetings are transmitted to City Councilmembers for their information. Mr. Centeno does and has committed to bring all matters dealing with finances of CCWA to the City Council for advice opinions of the various City Councilmembers.

Finding 3: City developer fees are lower than developer fees charged by other State Water contractors in Santa Barbara County.

Recommendation 3: The Santa Maria City Council should review developer fees, and make adjustments so that new development pays for required costs as stated in the Water Management Report adopted by the city.

City Response: This recommendation has been implemented. The City's AB 1600 fees were last updated in January, 1996. The fees are presently under review for updating and are due to go to the City Council for update in August of this year. It is current practice to update those fees at least once every two years.

Finding 4: The City has a line item in the budget that requires and anticipates the sale of $2.5 million to $4 million of water to outside agencies.

Recommendation 4: The Santa Maria City Council should actively pursue outside sales, or seek additional means of generating revenue for the Water Fund.

City Response: This recommendation has been implemented. The City has a memorandum of understanding with a private company called PH Development to possibly purchase 1,000 acre feet of state water per year. Discussions are currently underway to possibly sell to the Orcutt area approximately 1,600 acre feet of state water per year.

Finding 5: The terms of the Water Supply Agreement between the City of Santa Maria and the Central Coast Water Authority have obligated the City to pay CCWA "whether or not water is furnished...at all times or at all."

Recommendation 5: The City should analyze the impact of reduced delivery for water, or of low water consumption, on water costs.

City Response: This recommendation has been implemented. In June 1997, the City completed a financing plan for the Water Resources Fund. That plan was adopted by the City Council and includes projected water use that reflects conservation factors of lower per capita water consumption. The City has also reviewed potential actions which will be taken during years of reduced delivery, but those actions do not significantly impact financing for the State Water Project.