Jul 3, 2025
Residents of the Diablo Grande community in Central California have seemingly made a deal with the devil: they've voted to increase their water bill by nearly $600 a month.
But the alternative might have been worse worse.
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Last week, the residents of this planned community faced an unenviable dilemma: approve a massive 300% water rate hike or allow authorities to shut off its water.
The increase to $568 per month, from $145, took effect July 1 and is expected to appear on bills in late July, according to the Modesto Bee.
Water shutoff narrowly avoided
The rate hike comes as the Kern County Water Agency, located some 200 miles away, had threatened to stop water deliveries to the 600-home community if the financially troubled Western Hills district didn’t resume payments for an annual 8,000-acre-feet allocation.
Diablo Grande (which translates to "Big Devil") was originally planned as a 10,000-home retirement resort and community in the early 90s. By 2008 financial woes led developers to file for bankruptcy. A new owner, World International LLC, purchased Diablo Grande for $20 million; however, the financial issues have persisted.
A previous developer of Diablo Grande made the last payment for Kern water deliveries in 2019. Residents took over management of the water service in 2020, along with its mountain of debt, which has risen to over $13 million.
Last week, Kern’s board took action to extend the deadline related to the potential water shutoff to Sept. 30. KCWA has indicated it would continue deliveries through December 31 if Western Hills could come up with money to make monthly payments.
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Few protests
Despite the substantial rate increase, the district reported receiving only 14 valid protests during the Proposition 218 process — far less than the majority needed to block the rate hike.
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Despite that, residents remain skeptical of the price hike and wary of its impact on their finances. One resident who spoke at the meeting demanded monthly accounting of the district’s expenditures to show “where you spend every penny,” according to the Modesto Bee.
Not all board members supported the full increase. Board member Mary Davies proposed a $450 monthly base rate, but her motion quickly died without a second.
Still other board members expressed concern that a lower rate might not cover expenses, potentially forcing the district to initiate another Proposition 218 process to raise rates again.
The increase to $568 was based on a rate study accounting for the district’s costs for operations and infrastructure.
Renegotiation attempts
Western Hills would like to renegotiate its 2000 contract with KCWA to reduce the annual allocation to an affordable 2,500 acre-feet, which officials say is necessary to complete the first phase of Diablo Grande’s development.
By completing the first phase, Diablo Grande would have 2,200 homes, which district officials believe would be enough for self-supporting water service. However, it’s uncertain whether KCWA is willing to renegotiate the contract, under which about $13.5 million is currently owed.
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The water is conveyed in the California Aqueduct to Diablo Grande through exchange agreements involving state water contractors.
Western Hills is also investigating an agreement with the Patterson Irrigation District to deliver river water to Diablo Grande’s treatment facilities through a 5,000-foot pipeline that would need to be constructed.
Additionally, the district also approved items for testing water from a private well that could serve as a backup supply, as well as test well drilling on property at Western Hills’ two lift stations, which pump the California Aqueduct deliveries to Diablo Grande.
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Potential hardships for residents
The district now faces the prospect that some homeowners may be unable or unwilling to pay $568 a month for water, including those on fixed incomes and owners of weekend homes.
“We only have a certain income. That's why we picked up here, because we could afford just that,” resident Lydia Stewart told ABC 10 reporters in the weeks leading up to the vote. “We didn’t expect this big lump sum to be dumped on us.”
Board members stated that the rate will be adjusted downward once the crisis passes and an affordable water supply is secured. But just what happens if the community defaults again is unclear.
The district stated that it will utilize the increased revenue to make monthly payments to KCWA for water deliveries and investigate the costs associated with securing an alternative water source beyond December 31.
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Cory Santos is a finance writer, editor and credit card expert with over seven years of experience in personal finance. Having lived and worked worldwide, Cory now calls South Florida home, helping consumers find their ideal credit card and offering impartial and approachable advice to help them navigate their best financial lives. Cory joined Wise Publishing from BestCards, with bylines in numerous digital publications across North America, including AOL, MSN, Yahoo Finance, the Miami Herald, St. Louis Post-Dispatch, and more. When he isn't scouring for the latest credit card deals and offers, Cory can be found working on his various historical research projects, jogging, or hanging out with his cats, Bentley, Cougar, and Pumpkin.
