Oakdale wants more in return for hidden tax to OID

Everyone with property in Oakdale pays taxes to the Oakdale Irrigation District, which delivers no water to any property in the city.

The fact that city dwellers are subsidizing outlying farms – at more than $1 million a year – goes largely unnoticed. It’s rolled into property tax and doesn’t show up as a separate item on tax bills.

Every so often, people question whether the arrangement is fair.

“It really disturbs me that we’re paying something for nothing. That should come to a stop,” said Oakdale’s Alice Garcia, widow of a former mayor, in a June interview.

“What are (city folk) getting? Nothing. So they have subsidized the district for years and years,” said then-OID board member Frank Clark in 2005. He represented more city people than others on the board and frequently supported various urban groups, like school organizations, when they approached OID with requests for money, saying that was one way to show appreciation for the mostly hidden tax.

For months, officials with the city and the water district have been talking privately about such questions. A few days ago, both agencies unveiled what they’ve come up with so far, and got unanimous direction from the City Council and the OID board to continue the potentially promising effort.

They’re not talking about canceling the tax. It amounted to nearly 8 percent of OID’s 2015 income.

Instead, they’re exploring ways of bringing city people more return on their investment. And some ideas could bring value to OID as well.

For example, what if part of OID’s share of the Stanislaus River were used to water some or even all of the 143 acres in 24 city parks? That would reduce the groundwater the city currently pumps for that purpose.

If anyone can shop water to outsiders, OID can

Or, what if the city provided its treated sewer water to OID? With its reputation as a wheeler and dealer of surplus water, the district could market the recycled water to high bidders, bringing money to City Hall and OID.

“I see it as a funding mechanism,” OID General Manager Steve Knell told his board Tuesday. The city produces about 4,000 acre-feet of wastewater during OID’s water season; treating and selling that at $200 an acre-foot could fetch $800,000 a year, Knell told the City Council last Monday.

Also, the two agencies might find ways to share heavy equipment and their operators in a mutual-aid agreement, a common partnership among neighboring fire departments and law enforcement units.

“I think it’s an awesome plan,” OID board member Herman Doornenbal said. “We should push this thing as soon as we can.”

In presenting a draft “cooperative action plan,” both agencies acknowledged a perception that the “return on city tax dollars paid to OID was lagging behind the services and benefits received.” At Tuesday’s council meeting, Oakdale resident Chuck Shetron noted OID’s $1.07 million annual windfall and asked, “What did we get for that?”

It’s not exactly a one-way street, both agencies say.

OID pipe drains and canals, for instance, carry a portion of rain water away from Oakdale neighborhoods, with no compensation.

The value to Modesto from a similar arrangement with the Modesto Irrigation District has been disputed for years, with no resolution. It’s likely to figure in a class-action lawsuit facing MID over its longstanding practice of overcharging electricity customers to subsidize growers’ water prices.

Oakdale City Manager Bryan Whitemyer on Friday said he’s not sure how much city stormwater OID handles, but engineers expect to get a better idea in an upcoming analysis.

Also, OID every year sets aside, on paper, 10,000 acre-feet of river water in case the city ever wants to buy and treat it for city taps, just like Modesto does with Tuolumne River water bought from MID. The water earmarked for Oakdale is “quite coveted” by other cities with no such nongroundwater source, Whitemyer said.

Hidden tax, or misperception?

So Job 1 will be “to determine if that condition exists,” an OID report says of the apparent subsidy, followed by “a plan on how best to close that gap.”

People rarely used to question the OID tax, which always has been part of people’s property tax, which of course varies by parcel size and by assessed value. The formula for charging it is complex; it depends on when the property was bought and which of the Oakdale area’s 159 taxing districts the land is in, said Stanislaus County Auditor-Controller Lauren Klein.

In short, everyone pays a different amount, and most don’t know what that is. Part might show up on a tax bill if it’s delinquent, but another portion never will, county Treasurer-Tax Collector Gordon Ford said.

“It seems like a hidden tax,” Garcia said in June. She declined a recent request to talk about the issue.

At Tuesday’s council meeting, Shetron indicated surprise at learning that OID reaps $1.07 million each year from city folk. “In my mind, I said, `Well, gee whiz, what have they been doing?’ Especially since they’re raising our water rates.”

That’s a separate issue. In a nutshell, the city must spent $4.5 million replacing three old wells and an additional $8.1 million replacing 13 miles of aging pipes, so staff proposes raising city water prices about 37 percent for the average family. A public hearing is scheduled for 7 p.m. March 20 at 277 N. Second Ave., Oakdale.

Others over the years may have seen some benefit from OID to a relatively small portion of the city where a handful of lots tapped into an underground pipe to flood yards and gardens.

“My orange trees loved it,” said Sid Lieb, 78, who for decades hooked a 4-inch hose to a standpipe in his backyard when water rolled through every other weekend. He and about 500 others with so-called “town water service” from OID comprised about 3 percent of lots in the city.

Demise of gardenheads

But 13 years ago, state public health officials warned OID of “potential (for) illness or death” if that untreated water were to contaminate Oakdale’s otherwise pristine tap water from wells. That could happen because people with access to both OID water and city water didn’t use special equipment to prevent crossflow, which would cost at least $4,000 per home.

So OID canceled that service in Riverbank, which had only a handful of such customers, and in Oakdale.

Meanwhile, owners of several thousand parcels in Oakdale continue paying a tax that few know about. It could be that in olden days, people knew that farming success was crucial to everyone’s well being and didn’t mind the expense.

“In theory, every landowner in this community is part owner of water rights in OID,” Councilman Tom Dunlop said.

This story was originally published March 12, 2017 at 2:50 PM with the headline "Oakdale wants more in return for hidden tax to OID."