Why This California Town’s Water Costs Way More Than the National Average

The town of Lucerne in Lake County is tucked between mountains and a lake. When you drive in on the main two-lane highway, the sign that greets you calls it the “Switzerland of America.” But David Cruz has a different nickname for the place.

“Welcome to the most expensive water in the whole United States,” Cruz says. He’s standing in his front yard, wearing a T-shirt that says: “FLAT BROKE -- DAUGHTER IN COLLEGE.”

"She's out, but we're still paying," adds Cruz’s wife, Lorena.

In his 100-day action plan to “Make America Great Again,” President Trump proposed privatization as the best strategy for fixing the country's infrastructure, including roads, bridges and water systems. That's already happened in Lake County's Lucerne and other small towns like it throughout California -- and it's not working out very well for people like the Cruz family.

David Cruz is semi-retired, and says he can’t afford to pay his family’s water bill on his limited income. Lorena shows me their latest one: $712.70 for two months.

Two months of water costs the average U.S. household about $240. The Cruz family is paying three times that, and Lorena says her family of five doesn't waste water. They do dishes only once a day, wash their laundry every two weeks and take short showers.

These habits might sound familiar after a drought that lasted half a decade. But this isn't about the drought. The Cruzes are conserving water because they can’t afford not to, rain or shine.

It hasn’t always been like this. But just over a decade ago, David Cruz says, their water bill started to rise. The high cost of water has impacted the entire town.

“There’s no trees, empty houses, no gardens,” says David Cruz. "Pretty soon it’s going to be a ghost town."

The Cruz family's neighbor, Steve Theodorf, remembers more vibrant times in the area. He’s lived in Lucerne since high school.

"During the summer it was just wall-to-wall tourists," he says.

Theodorf was just doing something he rarely does: washing his car to get ready for a special trip.

"Otherwise we just leave our cars dirty because we can't afford to wash them," he says.

Like a lot of his neighbors, Theodorf is a retired veteran on a fixed income. Lucerne’s population skews mostly older and white, and many people live below the poverty line. The main highway through the town is dotted with shuttered hotels and restaurants.

“I hate to see the town go the way it’s gone,” Theodorf says. “The water is what killed the businesses.”

Like the Thai restaurant that closed up shop and reopened in another town just a couple of miles down the road, where water bills are lower.

So, how does a town get priced out by its water?

Lucerne’s water comes from nearby Clear Lake. But, at least on this visit, it doesn’t quite live up to the name. The lake is teeming with green algae. Water like this needs a lot of treatment. And when the current water company in Lucerne took over about 15 years ago, the health department told them the treatment system they inherited wasn’t up to the job.

“You simply cannot operate a system that does not provide safe drinking water to customers,” says Paul Townsley, vice president of regulatory matters for California Water Services (Cal Water). Townsley says the company had no choice but to upgrade the treatment plant, to the tune of about $7 million.

“You take that cost and you divide it by the number of customers here" -- that's about 1,800 households -- “and you have the issue that we have today,” Townsley says.

Even with two discounts offered by the company, the cost of water in Lucerne remains unaffordable for many customers.

But Townsley says that spending any less on the Lucerne system is not an option. “The alternative is to ignore the infrastructure,” he adds, which is the choice hundreds of small water systems around California are being forced to make because they can’t come up with the money to make improvements. As many as 160,000 Californians get their water from a company that has failed to meet water quality standards in recent years.

But Cal Water was able to secure a zero-interest loan from the state to build the plant, something smaller rural communities often don’t have the capacity to do.  And, as one of the largest private water companies in the West, Cal Water has access to pools of funding for infrastructure from investors. And it’s up to the customers in Lucerne to pay it back.

"An investor in a company like Cal Water is investing in infrastructure," says Townsley. "The money has to come from somewhere."

It might even be coming from you, if you’ve got a retirement fund. Some major mutual funds invest in Cal Water.

If it were a public company, money for big projects would come from bonds, Townsley explains. But people vote on bonds. The residents of Lucerne don’t get a vote. Instead, they get one chance every three years to plead their case at a public hearing with the California Public Utilities Commission (CPUC).

“I took the first damn shower in one month today,” Lucerne resident Samuel Bonaccorso told a CPUC judge in front at the latest packed public hearing in December. “Do you know what that feels like?”

After the hearing, the water company agreed to consolidate Lucerne’s costs with other nearby water districts -- another option that’s only available to a large company like Cal Water.

That brings down the monthly water bill for people like Bonaccorso from three times the national average to double what most Americans pay for their water.

The state of California faces a funding gap of as much as $160 million per year to ensure small, rural communities have access to safe and affordable water. With support from Cal Water, Governor Brown recently signed legislation converting state loans like the one used to build the Lucerne plants into grants.

This story was produced with support from the UC Berkeley 11th-Hour Food and Farming Fellowship.

This story has been updated from its original version to provide more details about Cal Water’s efforts to reduce the cost of water in Lucerne.