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Don Reynolds has often shared the story of walking into his office on the first day of his new job as City Manager of San Juan Bautista on July 2, 2019. There, he discovered a letter on his desk from the Central Coast Regional Water Quality Control Board informing him of a fine of more than $870,000 for pollutants discharged from the city’s waste treatment plant.
Following a decade of failed city leadership on the issue, as documented in a series of BenitoLink Special Reports, Reynolds devised a three-pronged approach to the problem: installing a nitrate- and chloride-reducing Microvi plant at one of the city’s wells; building a pipeline to send waste to Hollister’s treatment plant; and building another pipeline to bring in water from the San Benito County Water District. He was also able to get the EPA to allow the city to roll $750,000 of the fine into the costs of the projects.
Five years later, on July 1, 2024, the city’s residents felt the impact of these long-range solutions when the third of five annual increases in water rates to cover the projects became effective. The monthly rate increased to $85.68, a $10.53 increase, and the price per 1,000 gallons increased to $9.17, a $1.13 increase. The remaining increases will bring water rates up to a monthly charge of $94.47 and a price per 1,000 gallons of $10.12 by July 1, 2026.
BenitoLink sat down with Reynolds to discuss the current funding status for these projects and the progress made to address the city’s water and waste needs.
BenitoLink: There are many things going on simultaneously—where do you want to start?
San Juan Bautista City Manager Don Reynolds: Let’s start with the easy one. We broke ground last fall on the wastewater project. We have the money to pay for that project but have to raise the rates to pay for the debt service. Of the $25 million needed for the projects, $10 million will be a loan from the USDA with an annual debt service for 40 years. That’s $350,000 a year in addition to our regular expenses, which we can now absorb thanks to the rate increases for water and sewer.
We must spend all the loan money before we can dip into our $6 million grant. We’ve spent about half of the funds we’ve collected, but we have contracts and all the cards are arranged to help that funding fall into place. I have talked to many people about their water bills, and I know they are generally high, but, right now, everything is paid for.
When can we expect the wastewater services to start?
In the latest status report that I shared with the EPA and the Water Board, we are looking at substantial completion by February 2026, and our contracts with them are for June 2026. We were shocked to discover we had an 18-month lead time on electronics. And so those were ordered in December, putting us into summer 2025. Then you can share your equipment with PG&E and figure out how to install it. So that’s the process that needs to occur between a year from now and the spring of 2026.
What is the status of the water project?
There have been some leadership changes in the water district that complicated things. We had one plan and one route, then [District Manager] Jeff Cattaneo retired and Steve Wittry came on board. He suggested we change the route to something quite different but logical, as he wanted to use the right-of-way from San Juan Hollister Road and Highway 156.
Initially, that wasn’t feasible when we started because it wouldn’t happen soon enough with the highway construction, but now Caltrans has actually caught up to us. Okay. So the 18 months needed to complete the sewer project has benefited the water project, and that is a cost saver to put the pipe in the old right-of-way. Then Cattaneo came back and shared with me that he wants to run a large pipe from the West Hills Treatment Plant on Union Road out to 156 because he wants to share water from that point with Hollister as well as send water to San Juan Batista.
We’ve had conversations about who should own the pipe. The water district wanted to own the pipe because they didn’t trust the city to maintain it. I’m indifferent about it, but to finance the pipe, we have to own it. Within the last two months, we agreed that the city would own the pipe until it was built and then deed the right-of-way and easements to the water district to own in perpetuity. While that seems oddly technical, it’s critical because we’re returning to some of the same funding sources.
What are those funding sources?
We went to Congresswoman Zoe Lofgren, and we said, “You know, back in the day, Congressman Jimmy Panetta came up with a million bucks for our wastewater project,” and she was very generous. Recently, the House of Representatives passed an appropriations bill for our project. There are two different sources that she’s earmarked. One is a million dollars from the same EPA funds at Panetta used, and then she’s got a larger package for $10 million. If she’s successful and we get Senate support, the federal government could finance this project entirely with grants.
But we have to have an asset to show Washington, DC: “Hey, we got this pipe, and we got this great drinking water,” and then they send the check. The construction costs are estimated at between $7 [million] and $15 million, so we’ll probably end up with another loan from the USDA. They’re anxious to support us because we’ve been successful with this project.
How will this impact water rates in the future?
Last week I spoke with our advisor at Ridgeline Municipal Strategies, and he was concerned that we would need to start another rate increase within the next six months. I was very disturbed to hear that. I thought we would get a break for five to 10 years because we’ve suffered through this five-year period now, and I’m gonna hold my breath and see if that’s necessary. I think we can keep the cost down enough to avoid another significant rate increase.
What do you say to people when it doesn’t look like there will be any decrease and the increases will keep coming?
If increases are recommended, the citizens will have an opportunity to participate in that decision. We have a five-year agreement with these incremental changes, and they should end then unless the policy changes. And right now, the policy has not changed. July 2025 should be the last increase. So there is an end in sight and it will be a community decision whether or not there is a need for additional steps.
Water districts are famous for not repairing their systems and deferring maintenance to avoid cost increases. San Juan fell into that in the early 2000s. We have pipes from Third Street with half an inch of calcium carbonate. That’s what you end up with—you can defer maintenance for only so long.
But we got to the heart of the matter, getting out of the wastewater treatment plant business and sending it to Hollister. That’s good. There will be no more capital improvements, no more expensive treatment plants, and we will have better water quality with less of this calcium carbonate in the pipes. And I think the sooner we import better water, the more relaxed people will be about the cost of their water.
Can you get more funding to help drop the rates?
We’re going to try to get as much as we can. The city’s average income level disqualifies us from being a disadvantaged community. That doesn’t put us in line for grant funding as much as it does for the low-interest loans that we can get. So we can get more funding, but probably not in the form of a grant. I think we would be in the form of a more lenient loan—a more favorable term at a more favorable interest rate.
The project that I’m most interested in breaking ground right now is the gas station on 156. At one point, it was estimated that would bring in as much as $100,000 a year in sales tax. That’s the brightest star on the horizon for the city’s revenue.
What’s been the most complicated part of these projects?
Leadership changes. We’ve gone through three city managers in Hollister, two District Managers at the Water District, and I’m working on our second city engineer. But we now have a leadership team that we can work with. I don’t want the city to spend money on another city engineer and another design review of projects that aren’t going to come to fruition. I think we’re in better shape than we were when the project first began, and we have a better, stronger, deeper bench of water experts.
Where do things stand with the installation of a full Microvi plant?
It is out to bid right now. When we tested a small system, it successfully removed nitrates from about 100 gallons per minute from a well that can provide up to 500 gallons per minute. It’s about a $200,000 effort, so while we are looking for bids, we are looking for grants as well. There are several programs for drinking water, both state and federal, that specifically address nitrates in the water. So we’re pretty confident we’ll be able to pay for that.
Obviously, that’ll save us money on the water we’re getting from Hollister. We’ve looked at different scenarios, from well water with no blending to 100 percent Hollister water, and it will vary with demand and with the season. We need to blend more during the dry seasons and less during the winter season. The engineering study talks about probably a 60-40 blend.
Using blended sources gives us flexibility because we have more control over the source and are not reliant on Hollister’s rates.
What happens to the old sewage treatment plant?
We have budgeted for sludge removal and refurbishment of the ponds to return them to full capacity. We would use them if there is a catastrophic failure between here and Hollister, like a flood. It would give us an emergency place to put wastewater until we can ship it to Hollister.
What has been the public response to your efforts on these projects?
The community has become a lot more trusting than when I first got here. I feel like I’m growing, and they have allowed me to grow. When I make mistakes, they are more apt to give me the benefit of the doubt. Best intentions don’t always result in the best results, but I’m trying, and I think I have been pretty transparent with what we’re doing. I love the community, and I have received a lot of gratitude for the work. My contract ends in December, but hope that they keep me for a little longer.
Documents relating to the water and wastewater programs can be found on the City of San Juan Bautista’s website.
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