The Future of Tahoe Keys Water Company

During July’s Board Meeting Farr West presented the results of their analysis of the long-term operations and maintenance options for our Water Company.

As I’m sure you recall, we faced a crisis last year when one of our three wells was taken offline due to excessive levels of uranium. It was feared a second well would soon meet a similar fate, leaving us with one operating well as we headed into the peak demand of the summer irrigation season. This crisis necessitated an emergency landscape irrigation ban to ensure our limited capacity of safe and uncontaminated drinking water was available for household use. At the same time, we started work on short and intermediate-term mitigation projects to stabilize our water supply.

The good news is that these mitigation projects were a success, with all three wells running again (with reduced capacity) and a new intertie with Lukins Brothers Water Company (LBWC), which has allowed us to restore limited irrigation this summer, per the published schedule. However, while uranium treatment is in place at two of our wells, it is a stop-gap, not a permanent solution.

The short and intermediate-term projects were intended to stabilize our water production and buy us time to identify the long-term direction for our Water Company.

At the end of last year, the Long Term Facilities Plan, commissioned at the beginning of that year, was finally completed. Among many recommendations, it identified several options for the future of our Water Company, from continuing to operate independently to outsourcing its management to consolidating with another water company.

The Board felt that whether we should remain in the water business as an Association or not trumped everything else. Therefore, we engaged Farr West Engineering to research our options, culminating in the presentation of their findings during the last Board meeting.

Farr West developed a non-economic evaluation matrix of the governance alternatives for our Water Company. They created weighted criteria covering technical, managerial, and financial considerations against which they scored each option (putting aside upfront costs on the assumption each option makes the necessary capital investments).

There’s a lot to digest here. If you are interested in more details on Farr West’s criteria, background information is available under the Water Company section of the TKPOA website, and click on the “TKWC Governance Non-Economic Evaluation Matrix” folder.

In short, the matrix identifies five viable alternatives to the governance of our Water Company:

• Remain independent;
• Consolidate with STPUD, our local public utility (who already owns our sewage system);
• Consolidate with Lukins Brothers Water Company (LBWC), a private local water company;
• Consolidate with Golden State Water, a private national water company;
• Consolidate with Liberty Utilities, a private national utility company.

And scores each against the identified technical, managerial, and financial criteria resulting in a final weighted score.

Based on Farr West’s expert opinion, STPUD ranks the highest with a score of 95, followed by the private national companies, Golden State Water and Liberty Utilities, with scores of 74 each, then LBWC with a score of 59, and finally remaining independent with a score of 53.

Our Water Company Committee reviewed this evaluation and recommended a consolidation with STPUD. Then, should this prove uneconomical or infeasible, seek consolidation with LBWC (preferring a local company over a national one). And finally, if consolidation is not feasible, set up TKWC as an independent, wholly owned Water Company, and continue to operate it ourselves.

The Board of Directors will make a final, public decision on the preferred direction for our Water Company during August’s Board Meeting, and we invite homeowner feedback in the meantime.

Whatever decision we make is just the first step in a process that will likely take two or more years to come to fruition (though an administrative takeover could happen sooner). If consolidation is indeed the preferred path, then we need to negotiate the economic realities of this option compared to continuing to operate independently, ultimately bringing it back to homeowners. Unfortunately, I’m afraid our water costs will increase whichever option we all choose as homeowners (and metered usage is coming).

I want to acknowledge our debt of gratitude to Jennifer Lukins and Lukins Brothers Water Company (LBWC). Not only is our intertie with LBWC proving invaluable this summer, seeing us through peak irrigation demands, but Jennifer stepped in at the end of last year as our acting Water Company Manager. She is a big part of why all three of our wells are operational again and why our Water Company operations and staff have stabilized after a year of turmoil.

If you have any concerns, questions, or feedback, please contact Mark Madison, our interim General Manager (mmadison@tahoekeyspoa.org). He has volunteered to talk with homeowners on behalf of the Board about this decision.