C-WIN joins coalition letter with concerns about State Water Project Contract Renewals

January 29, 2014

Carl Torgersen

Deputy Director of the State Water Project

California Department of Water Resources Contract Extension

1416 9th Street, Room 1640-H4

Sacramento, CA 95814

Via email:  watercontractextension@water.ca.gov

Subject: State Water Project Water Supply Contract Extension Project—Project scope & financial risk to retail ratepayers and taxpayers needs to be disclosed, expansion of scope needs to be clearly prohibited, contracts in default should return water to the public and the urban preference reinstated.

 

Dear Mr. Torgersen:

 

The undersigned respectfully submit the following comments regarding the SWP water supply contract extension negotiation project.

 

As you reported at the last negotiation session, failure to be transparent “makes the hair on the back of State DWR Director Cowin’s neck stand up.”  This alarm expressed by Director Cowin is shared by ratepayers and taxpayers who will be the ones on the hook for the unspecified scope of allowable costs, unspecified legislative changes, and the increased risk to bondholders and the public from excessive debt needed to fund this blank check of unspecified costs.  We have carefully monitored the negotiations and herein argue for both improved transparency AND improved protection of public interests.

 

A.  Ratepayer and Taxpayers Threatened by Unspecified SWP Capital Costs.

 

The retail SWP customer—ratepayers and taxpayers—are on the hook to pay sufficient revenues to the Contractors to fund the operations, maintenance, replacement reserve, and emergency costs of the State Water Project.  If one contractor cannot pay under contract provisions, the remaining contractors must pick up that financial burden, even if it means increasing both property taxes and water rates.  As mentioned in previous comments, the original cost promise of $1.75 Billion has more than quadrupled under the present 75—year contracts, which are set to expire around 2035 for most contractors.

 

B.  Scope of Allowable Capital Costs must be clearly defined:  If the Peripheral Tunnels (BDCP-DHCCP) are excluded, as has been claimed during negotiations, then the contract should clearly prohibit such financing under the Water Supply Contract Extension.  

 

It remains unclear what will be financed under the water supply contract renewals for another 40 to 75 years.  Mr. Torgersen and Metropolitan Water District chief negotiator, Deven Upadhyay, have said the financing of the peripheral tunnels—the Bay Delta Conservation Plan (BDCP) and Delta Habitat Conservation and Conveyance Program (DHCCP)—are “not part of this negotiation.” [1]   To back up these public statements, any extension of the water supply contracts should clearly state that any new Delta conveyance or Peripheral Tunnels planning, construction, and associated mitigation costs are not allowable charges under the contract extension.  This water supply contract extension needs to be transparent on this and other potential expansions of scope—and should not hide financing of the Peripheral Tunnels or any other new conveyance project in the Delta Estuary.  A clear cut statement is needed that the various new funding pots, supplemental billings, emergencies,  expenditures,  and the “new” chartered financing committee (led by DWR and Contractors) is not intended to fund, without public review, expensive new capital projects or any planning for such projects.  As we have stated before, the public has a right to know what their ratepayer charges and property taxes will fund.[2]  They took on debt and paid increased property taxes believing the project would be paid for by 2035.  Now, some 65 years later, we are told more debt must be issued that they need to spread out payments for another 75 years.

 

C.  As a “Package” Deal, all Elements of the Package Needs to be disclosed for Public Comment and Review Pursuant the Monterey Settlement Agreement.

At the last negotiation session, final touches on the charter for the Finance Policy Committee were set for review by department and water contractor lawyers.  Ratepayers and California State Legislative representatives are absent from this high level “finance policy” committee, which has uniquely influential “direct” access to the DWR Director to ‘assist’ in financial decision making with regard to funding for the SWP.

Negotiations have clearly stated that the term of the contract extension, the formation of various funding pots—supplemental billings, cash reserves and ‘emergency’ funding—and this new Finance Committee are a “package deal.”  The claim is that this “Finance Policy Committee” can be formed by charter and implemented outside of the contract extension approval process. [3]  By definition, however, it is part of the State and inseparable from the contractors’ actions and the water supply contract extension. Thus, there is a need for full environmental and fiscal review by the public through disclosure in CEQA documents prior to implementation and approvals of such a major State and water contractor action.

MWD’s chief negotiator, at the last negotiation session, referenced the need for some legislative changes that would be outside of the contract extension negotiations.  Any such contemplated changes need to be disclosed for public review and comment.  The State Water Project, pursuant to the Burns Porter Act, authorized $1.75 million in general obligation bonds to fund capital costs of the State Water Project.[4]   “An additional $510 million for Project construction came from the California Water Fund which was created using Tidelands Oil revenues.  Since the Tidelands funds were an interest free loan, taxpayers have had to make up for the money that the state declined to charge in interest.”[5]  Pursuant to the State of California Central Valley Project Act, additional capital costs of some $7 billion have been funded with the issuance of revenue bonds.[6]   One of the main rationales given for this contract extension beyond the existing repayment term is that the Department of Water Resources cannot sell revenue bonds whose maturity dates extend past the contract end date of 2035—and that all project costs have a revenue source including recreation costs and mitigation costs.  Thus, the proposed strategy contends that issuing more debt to finance the necessary capital expenditures would be more affordable if bonds with longer terms could be sold.  But, there is no specific plan provided of the amounts of money needed and “necessary” capital expenditures.  Ratepayers, taxpayers and the public at large, all of whom thought the debt already issued would fund the capital expenditures and be paid off in 2035, have a right to know why more debt is needed, how much is needed, when it will be needed, and for what it will be spent.

Federal and state water contractors are also seeking additional SWP financing authority to fund the $51 to $67 billion peripheral tunnels delta conveyance that proposes to divert water directly from the Sacramento River bypassing the Delta Estuary.[7]  Water Code §85089 requires the beneficiaries to enter contracts to pay these costs.[8]  Under current law authorizing the State Water Project, there is no clear DWR authority to accept and spend state and federal contractor moneys for pre-construction activities and, in the case of state water contractors, collect revenues and repay debt service on the statement of charges.[9]    Perhaps this is the change referenced in the negotiations.  The public has no way of knowing because, thus far, there has been only passing reference without disclosure.  Any such “package deal” of anticipated legislative or contract changes to allow such activities should be publicly disclosed.

D.  Increased Risks to Ratepayers, Taxpayers and Bondholders Need Greater Transparency.

1. Debt Reserves Reduced By 50% & Riskier Investments Authorized.

The lower reserve requirement and reliance on reserve investments outside of cash can be viewed as risky or a negative credit event for the bond holders. The counterclaim contends that relying on MWD’s property taxpayers and ratepayers is sufficient to avoid this risk and provides an opportunity to return more cash to the contractors and to ‘reimburse’ costs needed to fund the planning and engineering costs of the new water tunnels under the delta conveyance strategy.[10]  These would be exceptional and unreasonable burdens on MWD ratepayers, and is highly unlikely to be simple to implement.  The reduced reserve cash is substantial and most likely being used to pay off contractors and other expenses, but the amounts are not disclosed in one location.   This concentrated reliance on MWD ratepayers and taxpayers is also a risk to other smaller or less ‘wealthy’ SWP contractors, who may lose their water in the process.  Contractors who have paid into the project for years may not be able to afford these massive increased costs.  Requests for an “opt out” option have thus far been ignored.[11]

2. Any Payment Defaults Require the Rest of the SWP Contractors to Step Up and Pay More, Therefore Increasing Costs to Retail Customers.

In 2000, DWR and the SWC started a process to reduce the maximum annual debt service (MADS) level by 50% and authorize riskier investments for reserve funds.[12]   This below average reserve is brushed aside by those who proposed it and benefit, but over the next 75 years, given climate changes, droughts and increased energy pumping costs, ratepayers and taxpayers in Southern California (who now provide the bulk of the SWP revenue that services the debt), could balk at ever increasing water rate and property tax rates.[13]  Some MWD customers, such as San Diego Water Authority, have filed suit over the rate increases and property tax charges.[14]  Additionally, default provisions in the existing water contracts require the other SWP contractors to pick up these defaulting contractors and to pay regardless of whether they receive water. [15]  And, in the event of a contractor’s operating revenues being less than required to make its fixed contract payment, the contractor has an obligation to levy a property tax assessment in an amount to make up the shortfall (this supplemental levy falls outside of the Proposition 13’s 1% property tax limit).

3.  The Risk of Partnering with Federal Contractors Needs to Be Disclosed.

Westlands Water District (WWD) is likely to issue debt to pay up to 90% of the federal half-share of the DHCCP-BDCP additional planning costs of $1.2 billion due this year.  State Water Project contractors need to raise the other $600 million.[16]  Retail irrigators, like Mark Borba of WWD, recently rang the alarm bell because of rising costs of water and the fear of losing his land.   Mark Borba stated, “With regard to the $1.2 billion, and I guess our share is just about half—that’s roughly $1,100 an acre debt on every acre in the Westlands Water District just to prepare the documents, get the engineering done, and we haven’t turned a teaspoon of dirt… If the District goes broke, will the bondholders not come back [and go after the Westlands landowners]? [17]   In reply, Westlands’ General Manager Tom Birmingham reassured Borba that Westlands landowners are not at risk.   Birmingham, reported WWD would just declare bankruptcy in the event of the inability to meet its debt obligations:

The security on the bonds is the [Westlands] District’s revenue, not the landowner’s land.  In a worst case, we file for bankruptcy. That’s what the District could do. The landowners’ land is not security.”[18]

In 2009, at the time WWD became the obligator for the federal share of debt for the Delta Conveyance facility planning and engineering costs, bond rating agencies, based on WWD documents, assured bondholders that it could sell water to Southern California or the Bay Area, even though the water rights are held by the federal taxpayers and WWD does not have long term contracts for the water.[19]   Note that the United States holds the water right, that this water is supplemental and available only when there is water that is surplus to other higher priority water right holders.  This raises a fundamental question for state contractors and their retail customers—will the new contract being negotiated require them to pay the costs of any as yet undisclosed additional SWP capital facilities if a federal contracting partner defaults?  Again, if the SWP contract extension does not anticipate how the costs of new capital facilities will be charged under the proposed contract extension, then a strict prohibition against such charges needs to be included.  A clear-cut statement is needed to protect retail customers, ratepayers and taxpayers from potential “liar loans” based on paper water.

4.  Water from Any Defaulting Contractor Should Be Used to Reduce “Paper Water” Promises.

As stated under existing state water supply contracts, any default requires the other contractors who have not defaulted to pay the bills; the allocation of water supplies is then adjusted among the remaining contractors. It is likely that only the large irrigators under federal water contracts or mammoth urban contractors under the state contracts are favored under such a reallocation.  It is likely that small retailers will be priced out of the market.  Most important, however, nothing is done to reduce the unrealistically large quantity of “Paper Water”—it’s just reallocated!  Instead, since the public has paid a substantial portion of the State Water Project (about $2 billion), any failure to pay should be viewed as an opportunity to reduce the paper water promises and dedicate this “freed-up” water to public trust values. Rather than allow a contractor to remarket and sell these precious, over-allocated water supplies, the inflated yield of the project needs to be reduced.

E.  In Times of Drought and Shortages the Urban Preference—Drinking Water Over Irrigation—Needs to be Reinstated.

 

The present drought reminds us that the urban ratepayer who has paid a disproportionate amount of the costs for the SWP needs the reliability that, during times of shortage, drinking water will receive priority over irrigation of crops.  Many have criticized the export of so much water for supplemental irrigators.  University of California Professor Emeritus, Dr. Richard Walker recently remarked, “I have a better solution. Instead of building the Delta Drains, use the money to buy out Westlands, about $9 billion at current land prices.  This would be cheaper and have the added benefit of saving 1 million acre-feet a year (average) now going to Westlands, leaving that water for other farmers and urban users.”[20]   It bears repeating for decades, urban ratepayers invested millions of dollars to ensure an urban preference during times of shortages.[21]   Others note that drinking water, domestic supplies and irreplaceable public trust values threatened with extinction should have priority over irrigators.   “I understand that almonds garner high prices worldwide and are profitable for Californian farmers. But maybe in an extreme drought, the governor could decide that he wants to spend our limited water on preserving our native species, and not providing Chinese people with pleasant snacks.”[22]

 

The urban preference was an insurance policy whereby these municipal water users would receive water on a priority basis during times of water shortages.   In closed door SWP contractor sessions, without ratepayer or public participation, this preference was removed in 1995.  Given droughts, climate extremes, and uncertainty of State Water Project water supplies, any contract extension must include this preference and reinstate these contract provisions that were removed without ratepayer notice or participation.   This urban preference requirement would ensure that decades of promises, contract obligations, and ratepayer investments by these users, who pay the bulk of the project costs, would not be abrogated.  “It is one of the many ironies of the SWP that those who get the most water pay the least, while those who get the least pay the bulk of the costs.” [23]

 

Thank you for consideration of these views from groups representing hundreds of thousands of ratepayers and taxpayers throughout the State of California.

 

                                                               

Bruce Reznik                                                                                               Kathryn Phillips

Executive Director                                                                                   Director

Planning and Conservation League                                               Sierra Club California

breznik@pcl.org                                                                                      kathryn.phillips@sierraclub.org

 

 

                                               

Nick Di Croce                                                                                               Carolee Krieger

Co-Facilitator                                                                                              Executive Director

Environmental Water Caucus                                                          California Water Impact Network

troutnk@aol.com                                                                                     caroleekrieger@cox.net

 

 

 

                                         

Conner Everts                                                                                             Zeke Grader

Executive Director                                                       Executive Director

Southern California Watershed Alliance                                    Pacific Coast Federation of Fisherman’s Asso.

connere@gmail.com                                                                               zgrader@ifrfish.org

 

C:\Users\Owner\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.Outlook\K4FGJ1DQ\Lloyd Carter signature 001.jpg

Lloyd G. Carter                                                                                           Bill Jennings

President, Board of Directors                                                          Executive Director

California Save Our Streams Council                                            California Sportfishing Protection Alliance

lcarter0i@comcast.net                                                                                           deltakeep@me.com

 

cc:  Interested Parties

 

Attachments:

A:  Gary Lasky, Transcription of Westlands Water District Board Meeting 1-15-2014, Harris Ranch, Ca.

 

B:  26th Supplemental May 1, 2002 No DWR-WS-49 Amending1986 DWR Bond Resolution Central Valley Project Water System Revenue Bonds General Bond Resolution No DWR-WS-1

 

C: 25th Supplemental May 1, 2002 No DWR-WS-48 Amending1986 DWR Bond Resolution Central Valley Project Water System Revenue Bonds General Bond Resolution No DWR-WS-1

 

 

ENDNOTES

 


[2] This includes seismic retrofit costs of existing facilities, FERC relicensing costs and required mitigation measures, along with changes to debt financing resolutions that would use debt to amortize and fund operations and maintenance, and the added debt costs of “capitalizing” interest costs if included in the financing proposals.

 

[4] Under State statute issuance of Revenue Bonds by the Department of Water Resources [DWR] to fund the SWP automatically requires or places a lien on property taxes from the contracting water districts to repay for the revenue bond debt obligations.  To date water districts have utilized a combination of water rate increases and property tax assessments to cover the costs of the SWP.  In adopting a bond funding resolution DWR typically relies on the Central Valley Project Act (Water Code, § 11100 et seq.), enacted in 1933 as amended.  Under the act the department is empowered to construct and operate various water facilities, among which are those authorized by section 11260 of the Water Code. The act further empowers the department to issue revenue bonds to carry out the objects of the act and provides that the bonds shall not be obligations of the state but shall constitute a first lien on revenues. (Water Code, §§ 11700, 11705, 11720-11722.)

Some mistakenly believe that DWRs authority to issue the revenue bonds was superseded by the California Water Resources Development Bond Act [the Burns-Porter Act Water. Code, § 12930 et seq.].  This was passed by the Legislature in 1959 & approved by the voters in 1960.   The Burns-Porter Act authorizes the department to construct and operate the State Water Resources Development System, and provides for the issuance, in an aggregate amount not to exceed $1,750,000,000 of general obligation bonds. (Water Code, §§ 12931, 12935, 12938.)

The courts have ruled otherwise. see http://scocal.stanford.edu/opinion/warne-v-harkness-32852

There is wide discretion for DWR to issue revenue bonds for the construction, operation and maintenance of the Central Valley Project and State Water Project as defined under state law.  Once issued water districts have the authority, without a vote of property taxpayers, to raise property taxes to pay for the principal and interest.  In a general provision the Burns-Porter Act declares that the facilities authorized as part of the Central Valley Project “or facilities which are acquired or constructed … with funds made available hereunder” shall be “acquired, constructed, operated, and maintained pursuant to the provisions of the code governing the Central Valley Project.” (Water Code, § 12931.)

 

[5] http://www.citizen.org/documents/SWPreport05.pdf  Mismanaging the California State Water Project 2005 @ pg 2

 

[6] Ibid.  pg 2

 

[7] See  Bay_Delta_Westlands_BDCP_DWR_Workshop_11-20-13_Powerpoint  Also See the 2011 LAO Report:http://www.lao.ca.gov/handouts/resources/2011/BDCP_Planning_process_10_19_11.pdf   @ pg 5Implications for BDCP Implementation Funding.  The voluntary aspect of planning phase funding also has implications for future funding of BDCP implementation, namely the construction and operation of an alternative system of conveyance that is being evaluated under the planning process. Costs of such conveyance have been estimated at $12 billion or higher. Funding BDCP implementation therefore cannot rely on voluntary contributions and will require amendment of long-term water supply contracts between DWR, the Bureau of Reclamation, and the contractors in order to provide the funding mechanism.

 

[8] Water Code §85089.  Construction of a new Delta conveyance facility shall not be initiated until the persons or entities that contract to receive water from the State Water Project and the federal Central Valley Project or a joint powers authority representing those entities have made arrangements or entered into contracts to pay for both of the following:  (a) The costs of the environmental review, planning, design, construction, and mitigation, including mitigation required pursuant to Division 13 (commencing with Section 21000 of the Public Resources Code), required for the construction, operation, and maintenance of any new Delta water conveyance facility.  (b) Full mitigation of property tax or assessments levied by local governments or special districts for land used in the construction, location, mitigation, or operation of new Delta conveyance facilities.

 

[10]http://www.water.ca.gov/publications/financials/docs/dwr12fn.pdf  State Water Resources Development System

Management’s Discussion and Analysis (Unaudited)For the years ended June 30, 2012 and 2011. Pgs 16, 18 & 28.

 

Also See State Water Project Contractors Authority letter Subject: BDCP Environmental Analysis and Preliminary Engineering Funding, October 30, 2008. “Funding of the DHCCP will be by advance payments by Participating Contractors.   SWP contractors may become Participating Contractors by signing a DHCCP Funding Agreement with DWR. Funding for 2008 will be accomplished through a DWR rebill and a credit equal to the DHCCP funding amount on the rebill from the bond funds released by the Springing Amendment. Funding for 2009 and 2010 will be on the DWR bills and collected in the same manner as the Transportation Minimum Component. Attached is a draft DHCCP Funding Agreement. Also attached is a breakdown of SWP Participating contractors cost share assuming three different participation levels.”

http://cf.valleywater.org/About_Us/Board_of_directors/Board_meetings/_2009_Published_Meetings/MG37438/AS37448/AI37602/DO37898/DO_37898.pdf  Santa Clara Water District 10-13-09 Workshop: “The District along with other CVP contractors provided amount on the rebill from the bond funds released by the Springing. Amendment Funding for 2009 and 2010 will be on the DWR bills and the Delta Habitat Conservation and Conveyance Program (DHCCP). See also- San Gorgonio Pass Water Agency Nov 10, 2008 – become Participating Contractors by signing a DHCCP Funding … rebill from the bond funds released by the Springing Amendment. http://sgpwa.com/pdfs/Agenda-2008-Nov-10-900.pdf

 

[12] The reserve account provides for the purchase of riskier investments including purchase letters of credit, surety bonds, or other higher rated (AA) or better credit facilities – these are cheaper for the issuer to fund the reserve account.    The 1986 Bond Resolution and Attachments B&C: Amendments 25 & 26 to the1986 Resolution dated May 1, 2002 and April 1, 2002.   Common debt service reserve fund levels are 1x MADS.   Moody’s made the following comment in their review of the 50% reduction under the amendment, “The debt service reserve requirement is also weaker than for the typical municipal water enterprise at only 50% of maximum annual debt service. Given the Department’s other credit strengths, however, this below average reserve is not heavily weighted in our analysis.”

 

[13] On June 11, 2013 a majority of the MWD Board of Directors voted to suspend these limits on property tax rate increases despite protests from the Southeast Water Coalition representing various cities, San Diego Water Authority and some 20 different community leaders and groups.  [http://www.citywatchla.com/lead-stories-hidden/5221-will-angelinos-be-submerged-in-a-new-water-tunnel-tax  “Despite efforts by business groups, community activists, mayors and several Southern California water agencies to stop  unnecessary rate hikes and increased property tax collection by the Los Angeles-based Metropolitan Water District of Southern California, the board voted to increase spending by $75 million instead of returning the money or rolling back rate increases.”http://www.mwdfacts.com/momentum-builds-to-halt-mwds-over-collection/Proposition 218, known as the Right to Vote on Taxes Act, added Article XIII D.  Metropolitan Water District and other wholesalers of water argue that Article XIIIC and XIIID do not apply to MWD’s rates because they are not “imposed”; they are voluntary charges for property owned by MWD; and in any event the rates and property tax increases are approved by a 2/3s vote of the “electorate”—in this case the “electorate” is the MWD Board.

 

[14] http://www.sdcwa.org/mwdrate-challenge  Limits on tax rate increases for the reasonable cost of service and debt are routinely suspended by the MWD BoardSection 124.5 of the MWD Act places limits on property tax rate increases.  Section 124.5 permits Metropolitan to suspend the restriction if, following a public hearing, the Board finds that such revenue is essential to the fiscal integrity of the District.  http://ronkayela.com/wordpress/wp-content/uploads/2013/06/06112013-BOD-8-2-B-L-1.pdf

 

[15] Metropolitan Water District of Southern CA (who makes up 46% of water entitlements) and more than three quarters of the combined contract revenue pledged to the water revenue bonds are rated Aa3 or better.  Under existing contracts with DWR the contracts are take or pay contracts, this means certain payments are due regardless of the actual water delivery levels.   The Department has a rate covenant of “1.25x”  that they charge the contractors and there is a step up provision in the contracts (non-defaulting contractors are generally required to make an additional step up payment of up to 25% of their own contract payment if needed to cure defaults by other contractors).  In the event of contractors operating revenues being less than required to make its fixed contract payment, the contractor has an obligation to levy a property tax assessment in an amount to make up the shortfall (this levy falls outside of the state’s 1% property tax limit).

[16] http://www.sacbee.com/2013/12/07/5978184/delta-water-tunnel-project-needs.html  Delta water tunnel project needs $1.2 billion more for planning By Matt Weiser  Dec. 7, 2013, “Copyright 2014 The Sacramento Bee. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. The giant Delta water-diversion tunnels proposed by Gov. Jerry Brown need $1.2 billion more spent on planning and design before construction starts or is even assured.”

[17] See Attachment A: Transcript and Notes from WWD November 2013 Board Meeting @ pg 7.

 

[18] See Attachment A: Transcript and Notes from WWD November 2013 Board Meeting @ pg 7.

 

[19] See Fitch Bond Rating 2009, San Luis and Delta-Mendota Water Authority, California Delta Habitat Conservation and Conveyance Program Development Project. “There is concentration amongst WWD water purchasers. But offsetting this risk somewhat is the value of the cash crops farmed in the district (about $1.3 billion in fiscal 2008) and the absence of alternative/equivalent supplies or infrastructure to deliver water. In addition, WWD potentially has the ability to sell and transfer water rights outside the district should agriculture cease to be economic, as the demand for water in southern California and the San Francisco Bay area by users with connectivity to the CVP is very high.”

 

[20] http://www.sfgate.com/opinion/article/Away-go-our-dollars-down-the-delta-drains-5132228.php

“Away go our dollars down the delta drains” Richard Walker, SF Chronicle Friday, January 10, 2014.

 

In all this, Westlands is the tail wagging the water dog. The district has the lowest priority water rights and can’t get enough water in dry years. The district wants more water diverted from the Sacramento and the North Coast, not less. They don’t give a fig for the fish, having sued to stop water releases for salmon in the San Joaquin and Trinity rivers. I have a better solution. Instead of building the Delta Drains, use the money to buy out Westlands, about $9 billion at current land prices. This would be cheaper and have the added benefit of saving 1 million acre-feet a year (average) now going to Westlands, leaving that water for other farmers and urban users.”

 

[21] http://www.citizen.org/documents/SWPreport05.pdf  “To date, the North of Delta and Delta regions have born the near entirety of the direct negative environmental and economic impacts of the project and reaped scant amounts of the economic benefits. Kern County agribusiness, other the other hand, has secured the lion’s share of the economic benefits, and has distributed those benefits in a highly inequitable manner. Since the State Water Project began pumping subsidized water to Kern County agribusinesses, the concentration of landownership has steadily increased, numbers of farms have decreased and rural poverty indicators have increased….. The Kern water agency contracts for 24 percent of the State Water Project’s water. The Agency has actually received, however, 42 percent of the water and paid for only 13 percent of the costs of the project …. The Metropolitan Water District of Southern California contracts for 48 percent of the water, but has received only 31 percent while paying for 62 percent.” Pg 4

 

[22] Also see http://onthepublicrecord.org/2014/01/16/manage-what-exactly/

http://onthepublicrecord.org/2014/01/page/2/  “Nut crop growers put a whole lot of capital into their orchards, then point to their orchards as hostages in drought time. “But we must get water, or our trees will die!” I’ve never understood why the public at large should be the backstop for the bad choice to plant crops with a constant water demand in a variable climate. If there is a state interest in growing nuts and grapes in particular, it hasn’t been explained… I understand the grower’s interest in growing a valuable crop, but since the profits from that aren’t returned to the state, I don’t see why the risk should be.”

[23] https://www.callawyer.com/clstory.cfm?eid=919370  A Run on the Water Bank –A determined investigator pursues a Los Angeles billionaire for allegedly seizing control of the state’s water supply. It’s Chinatown again, Jake. by Bill Blum | December 2011

Also see: http://www.citizen.org/documents/Water_Heist_lo-res.pdf  “Don Villarejo writes that from the first SWP water deliveries in 1968 through to 1980, San Joaquin Valley contractors received 63% of the water delivered—almost entirely for agricultural irrigation—while mostly residential Southern California water users paid 70% of the costs of the project. “It is one of the many ironies of the SWP that those who get the most water pay the least, while those who get the least pay the bulk of the costs.”  Pg 28

Leave a Reply