Jerry Brown's $17 billion Delta tunnels plan faces new hurdle - a leading taxpayers organization

Article by Paul RogersMarch 27, 2016 http://www.dailydemocrat.com/general-news/20160327/jerry-browns-17-billion-delta-tunnels-plan-faces-new-hurdle-a-leading-taxpayers-organization/2

In a development that casts significant doubt on whether Silicon Valley's largest water district will help pay for Gov. Jerry Brown's $17 billion Delta tunnels plan, a majority of Santa Clara Valley Water District board members now say they want to put the issue to a public vote.

The district, which provides 1.9 million residents of Santa Clara County drinking water and flood protection, has been a key player in Brown's controversial plan. Its share of the tunnels project could cost up to $1.2 billion.

The district's staff has insisted for years that it can raise property taxes on Santa Clara County homeowners without a public vote to help pay for the tunnels because the project is simply an addition to the State Water Project, the series of dams and canals that was authorized by state voters in 1960 at the urging of Brown's father, Gov. Pat Brown.

That vote predated Proposition 13, the 1978 measure that requires most new taxes to be approved by voters. But this month, one of California's leading taxpayer groups waded into the battle, joining environmentalists in raising major questions about the tunnels project.

The Howard Jarvis Taxpayers Association -- founded by the co-author of Proposition 13 -- sent water agencies in Silicon Valley and Alameda County a letter suggesting possible legal action. The letter argued that the tunnels were not part of the original State Water Project plan and that any property tax hike to fund them would be illegal without voter approval.

"What the voters approved in 1960 doesn't say anything about tunnels," said Timothy Bittle, the association's attorney.

If water agencies can raise property taxes to pay for the tunnels without voter approval, homeowners could be on the hook for big tax increases if there are cost overruns, as there were with high-speed rail and the rebuilding of the Bay Bridge, he said.

"Before Proposition 13, you had seniors on fixed incomes who couldn't pay their property taxes, and their homes were going into foreclosure," Bittle said. "Prop. 13 was intended to make your property tax bill predictable so you could budget for it. If these water agencies are given a blank check for the tunnels, then the property tax bill would no longer be predictable, and there might be some people who would lose their homes."

Earlier this month, Bittle sent letters to the Santa Clara Valley Water District and Zone 7 Water Agency, which serves roughly 200,000 residents of Livermore, Pleasanton, Dublin and part of San Ramon, saying that they were being put "on notice."

Contacted by this newspaper, five of the seven members of the Santa Clara Valley Water District board said they favor putting a nonbinding advisory measure on the ballot next year in Santa Clara County asking voters if they would raise property taxes to pay for the project, which could cost the district $470 million to $1.2 billion, although final costs won't be known until state studies are finished this fall.

"I have concerns about the project. As we all know, the record is not good for large-scale public infrastructure projects on cost overruns," said Barbara Keegan, chairwoman of the Santa Clara Valley Water District board.

"If there's a possibility that property taxes could be going up without any sort of cap on them, that's unacceptable to me," she said. "And I would certainly think it would be appropriate for the public to weigh in on that."

The other district board members that say they would support an advisory vote are Dick Santos, Gary Kremen, Tony Estremera and John Varela.

Bittle said an advisory measure would be good for water officials who want to avoid "political suicide," but he added that no money could be committed from property taxes anywhere in the state, including the massive Metropolitan Water District of Southern California, without a binding two-thirds vote.

Nancy Vogel, a spokeswoman for the state Natural Resources Agency, said Friday that a 1983 court case, Goodman v. County of Riverside, provides authority to raise property taxes without a vote for the tunnels project.

If local water agencies decide they want to help pay for the tunnels project and receive its water, she said, they are free to raise the money any way they want, from property tax hikes to water rate hikes.

"It is up to the local water agencies to determine how best to pay for their State Water Project bills," she said.

The whole issue is likely to end up in court.

"This tunnels project is already on financially thin ice at best. Requirements for a two-thirds vote to provide property taxes to pay for it would effectively kill it," said Jonas Minton, a former state Department of Water Resources official who now works with environmental groups.

Brown is proposing to build two tunnels, each 40 feet in diameter and 35 miles long, under the Delta. The idea is to reduce reliance on the massive state and federal pumps at Tracy -- which draw water south to cities and farms -- and are sometimes shut down to protect endangered salmon, smelt and other fish. The environmentally sensitive Delta is the linchpin of the State Water Project, which consists of 34 reservoirs, 20 pumping plants and 701 miles of canals and pipelines from Lake Oroville, in Butte County, through the Delta to the Bay Area and Los Angeles.

But environmentalists, Delta farmers and some Northern California lawmakers call the tunnels project a water grab by Los Angeles and corporate farmers in the Central Valley that would harm the water quality of the San Francisco Bay and the Delta.

So far, the Santa Clara Valley Water District has contributed $13.7 million toward the $250 million the state has spent on reams of studies and analyses of the proposal. Other agencies, including the Metropolitan Water District of Southern California, Westlands Water District in Fresno and the Kern County Water Agency, have contributed most of the rest.

If one pulls out or decides it can't raise property taxes to pay the costs, that means costs for the remaining agencies would go up.

Paul Rogers covers resources and environmental issues. Contact him at 408-920-5045. Follow him at Twitter.com/paulrogerssjmn.