In California, the only thing that seems to match the massive body of ocean it borders is the controversy involving water.
On Nov. 5, the Santa Barbara County Board of Supervisors discussed extending the county’s contract with the California State Water Project, the infrastructure that allows water to flow from Northern California all the way down to Southern California.
At the surface, there seems to be no problem with extending the water deal. With all of the county’s cities and unincorporated areas lauding support of the contract extension, it sounds like the contract will be extended. Ray Stokes, director of the Central Coast Water Agency (CCWA), said the general notion among the Board of Supervisors is that the contract would get extended—though none of the supervisors has officially supported it.
The lonely voice of opposition in all this is the California Water Impact Network, an organization that advocates for environmentally sensitive use of California’s water resources. The current contract doesn’t expire until 2038, and the organization has been working to halt an early contract extension. Carolee Krieger, president of the organization, told the Sun that the contract extension is about more than just securing water for Californians.
“The contract is about building the Twin Tunnels and the Bay Delta Conservation Plan,” Krieger said. “Why else would they be trying to extend the contract 20 years before it expires?”
Gov. Jerry Brown, whose father played a significant role in the creation of the State Water Project, is pushing for the implementation of the Bay Delta Conservation Plan. The current plan is focused on using two underground tunnels below the delta to ostensibly deliver water more efficiently.
CCWA’s Stokes said the extension is needed, not just for the Bay Delta Conservation Plan— which has created controversy due to the Twin Tunnels plan—but also because the project needs to ensure future capital for water infrastructure upkeep.
Rick Sweet, Santa Maria’s director of utilities, said the contract extension is not meant to directly finance the Bay Delta Conservation Plan.
“That will be a whole other issue later down the road. This extension is about financing improvements in the State Water Project,” Sweet said. “If you don’t renew the contract, when the contract expires, you’ve paid for the facilities, but you’re not going to get the water. Or, in other terms, you’ve paid for the house, but you burned it down.”
Sweet explained that ignoring the contract extension would defeat the mission of the project. The debt incurred from the cost of the state project’s facilities would be paid off, but he said without water flowing through it, there would be no purpose for having it.
Stokes estimated that the plan would cost about $25 billion, with $100 million coming from the CCWA, which is funded by Santa Barbara County. During Stokes’ presentation to the supervisors, he explained that by the time the contract would expire in 2035, the expenses paid for the water imported by the State Water Project would decrease exponentially. Stokes added during the meeting that with the Bay Delta Conservation Plan, prices for water would increase to a higher rate in order to pay off the new facilities.
Krieger said it’s not worth the cost “since there isn’t even enough water as it is.”
“[California Water Impact Network] did some research: We sent a FOIA [Freedom of Information Act] request on all of the water data on the State Water Project and we found that for every one gallon, it has been bought five and a half times,” Krieger said. “What this deal will bring is the same amount of water for more debt.”
Mayor Alice Patino sent a blessing for the contract extension in a letter to the Board of Supervisors, calling the State Water Project an essential element to the health of the Santa Maria economy.
Krieger, however, sees the contract extension as a threat to the economic stability of the city.
“I’d be angry if I were living in Santa Maria,” Krieger said. “If Santa Maria signs on for [the contract extension], they’ll be on the hook for the biggest share of the debt since it takes in most of the water.”
Santa Maria uses about 32 percent of the county’s share of the State Water Project, which means the city is paying for 32 percent of the CCWA budget. In Santa Maria’s proposed budget, water from the project accounts for more than $19 million. The price tag isn’t just for water though; it also includes part of the city’s dues for maintaining the State Water Project’s infrastructure. Sweet said that cost is still cheaper than using Santa Maria water, because groundwater needs to be treated, which is expensive.
Right now, the project’s interest rates are at 4.6 percent. Though nothing is set in stone yet, Sweet said renewing a contract extension would save the city money in the long run because today’s interest rates vary from 2 to 3 percent.
Krieger disagrees.
“Nothing is certain in our economy today. Interest rates may be low today, but who knows what they’ll be when the contract expires in 20 years,” she said.
Stokes said he adopted his recommendation to fit a realistic view. Instead of trying to fight the California Department of Water Resources and the contract extension, he told the Board of Supervisors it would be better to try to sign with a lower interest rate.
There is an “evergreen clause” that can protect the county and CCWA from extending the contract. But, the clause’s catch is that if the Department of Water Resources decides to issue long-term bonds—in order to fund projects—the contract will be extended anyway. And those interest rates will more than likely be higher than they are now.
During the meeting, First District Supervisor Salud Carbajal called the catch “extortion.”
Fifth District Supervisor Steve Lavagnino was unable to comment on contract extension, but Krieger said she spoke with him, and said he was still educating himself on the issue.
Krieger hopes that Lavagnino, who she said ran for supervisor on the platform of cutting county expenses, will not support the contract extension.
“If [Lavignino] wanted to cut expenses, he should start with the contract extension,” Krieger said.
Henry Houston is a contributing writer. He can be contacted through Managing Editor Amy Asman at aasman@santamariasun.com.
This article appears in Nov 14-21, 2013.