Heavily in debt because of a state water obligation it does not need, the Carpinteria Valley Water District should stop investing in capital improvements and consider charging growers more for water, the County Grand Jury said this week.

In its final report for the 2006-2007 fiscal year, the jury looked into the reasons why many valley residents are paying a monthly service charge that is more than twice as high as what residents pay elsewhere in the county. The charges, based on meter size, are flat rates designed to help defray the cost of capital projects.

"Recently, everyone in the Carpinteria Valley Water District received a notice of a water bill increase — again," the jury said. “... There have been many community complaints about the water rates and charges.”

The report, in fact, paints a picture of a valley that is awash in water supply and drowning in water debt. The district, it says, owes $80 million for its share of the state water aqueduct from Kern County to Lake Cachuma, in addition to $34 million for local capital projects.

To get out of debt, the jury says, the district should either sell off some of its state water supply or consider raising service charges for agricultural water. The report notes that agricultural users in the valley pay only 15 percent of the total monthly service charge but use nearly half the water.

The district serves 19,000 people in the City of Carpinteria and unincorporated areas. Deep in drought in the early 1990s, residents here voted to import 2,000 acre-feet of state aqueduct water yearly — enough for about 8,000 people — though they already had an ample supply from Lake Cachuma and ground water wells.

Charles Hamilton, the district’s general manager, said Tuesday that the district has a good chance of selling some state water now. At a meeting beginning at 4 p.m. today, he said, the board will consider negotiating the sale of 500 acre-feet, a quarter of its supply, to the City of Guadalupe, where a large housing development has been proposed by DJ Farms.

“There was no market for state water until a couple of years ago,” Hamilton said. “It was like an albatross. We don’t need 2,000 acre-feet. I don’t think we need more than 1,000, and I think we could live with less.”

Two years ago, as noted in the jury report, the Carpinteria water district gave the Plains Exploration and Production Co. an option to buy 400 acre-feet of state water for $600,000 per year. The oil company wants to build a housing project in the Purisima Hills near Lompoc. It is paying the district $300,000 per year, even though it is not yet using any of the water.

In addition to $3 million for state water, the district’s annual expenses today include $1.7 million in debt service and $1 million for several capital projects. These include the recent construction of covers for the Carpinteria and Ortega reservoirs, a project required by the state; and a new water storage tank in the foothills, a project that resulted in a flood of complaints from residents two years ago.

“We don’t really have any money to do any new projects,” Hamilton said. “We’re searching every grant possibility as a source of funds.”

Charging more for agricultural water could backfire as a way to get out of debt because growers can choose to drill wells instead of buying water from the district, Hamilton said. Since 1991, the district has lost 40 percent of its agricultural water sales, he said.

“Once they leave the system, that reduces the water sales that help pay for the state water project,” Hamilton said. “We have to be sensitive to the market on what their costs are.”

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