a compelling example of a statewide problem

The Santa Barbara Report

This report examines the deficiencies and cost impacts of Governor Brown's Twin Tunnels/CA WaterFix, illustrating the untenable financial burden these proposals place on local water agencies and ratepayers, highlighting that the Tunnels/CA WaterFix will not provide more water when needed, i.e., during drought.

By showing the exorbitant cost and unreliability of importing water from the State Water Project (SWP) to the communities of Santa Barbara's South Coast, this report explains the unintended consequences of participation in the SWP utilizing the experience of Santa Barbara County as an example of a significant statewide problem.

The report was put into evidence at the State Water Resources Control Board hearings in 2016. Independent studies by UC Davis and Stanford University corroborated C-WINs findings.

EXECUTIVE SUMMARY

Twin Tunnels/CA WaterFix Proposal: Governor Brown has proposed twin trans-Delta tunnels, each 40 feet in diameter, 35 miles long and buried 150 feet deep, running from the lower Sacramento River to Modesto. Bypassing the San Francisco Bay/Delta, they are intended to move water south "more efficiently" to corporate agricultural water districts in the western San Joaquin Valley and urban southern California water agencies who are beneficiaries of and contractors to the State Water Project (SWP) and the Central Valley Project (CVP). This includes the largest SWP contractor, the Metropolitan Water District of Southern California. There is no clear plan for financing the Tunnels. The administration and its supporters intend to build them without a vote of the people who must pay for them, the ratepayers of the State Water Project (SWP) and the Central Valley Project (CVP).

As of the date of this report, DWR has acknowledged that engineering for the project is only 10% complete and that an additional 3 years and $1.2 billion is needed just to complete the planning. On top of what is needed to complete the planning, construction costs are estimated at $20 billion to $38 billion, according to analysis by ECONorthwest (see Appendix A). The annual cost burden to the contractors will reflect the amortization of the construction costs plus annual operations and maintenance, presumably under the terms of the SWP contracts. The project has not defined quantitatively any of the purported benefits in terms of expected additional water deliveries. In fact, if there is to be additional water from the project it is not certain where it is to be delivered.

The water purveyors in Santa Barbara County are concerned about these two aspects of the proposed project: additional costs to SWP contractors and no clear statement as to how they are to be benefited. The microcosm of the Santa Barbara experience serves as a red flag warning for all Southern California SWP contractors and their customers.

Concerning the affordability of the project, the introduction to the section of the Bay Delta Conservation Plan/ CA WaterFix, Economic Benefits and Financing Strategies, (March 2012) [for the CA WaterFix Tunnels], it states:

"California’s investment need is relatively modest compared to the size of the economy. California is the 8th largest economy in the world with an annual Gross Domestic Product of $1.9 trillion. Investments for Ecosystem Restoration and Water Supply Reliability are also relatively small compared to current annual expenditures. Approximately $20 to $30 billion is spent annually for water services and water related programs. Water rates are lower than other household utility costs. Average monthly household water and wastewater rates are less than average costs for other utilities such as electricity, cable/satellite, cell phone…California’s investment need is substantial, but well within the capacity of California.”

The situation in Santa Barbara County in general, and the South Coast of Santa Barbara County in particular, do not fit this rosy picture of affordability. In this report we analyze the current problems with affordability of SWP and what the difficulties would be with the addition of the Twin Tunnels project. We have also analyzed the Sacramento River hydrology to assess the likelihood of more  reliable deliveries from the SWP due to this project. These are our conclusions.

• The Twin Tunnels project promises more debt and no additional water to the South Coast districts.
• The South Coast districts are already at their limits for absorbing new debt and cannot afford more.
• Current South Coast debt burdens are now crowding out budget expenditures for needed infrastructure and maintenance.
• SWP water deliveries have never been reliable for the South Coast, especially in droughts and the Twin Tunnels project promises no relief from that circumstance.

Each of these conclusions follows from the detailed, quantitative analyses in the body of the report. We start with the economic challenges that the water districts presently face with the current SWP debt burdens. We have examined each of the South Coast districts budget details and how they are meeting their financial obligations. We also examined the difficulties of providing water deliveries to their customers with a strong focus on the current drought and the failure of the SWP. The difficulties of the SWP in providing reliable deliveries is revealed in a thorough examination of the Sacramento River hydrology (Appendix B) where it is shown that the droughts are the determining factor in why the SWP demonstrates such poor reliability, while the Bay Delta Conservation Plan/CA WaterFix deals almost entirely with the capability of the Twin Tunnels to capture more water during wet periods. Then we examine the likely cost impacts of the proposed Twin Tunnels project, based on the meager information available on its estimated construction costs, and how those costs when allocated to SWP contractors will affect water district budgets.

We conclude by finding that for Santa Barbara’s South Coast purveyors the cost/benefit analysis cannot justify the Tunnels construction. By analysis, the construction of the Tunnels could result in vast economic hardship and financial turmoil for agencies and ratepayers, financial resources that can be applied to construction and delivery of more reliable sources of water such as treated wastewater and desalination.

RELATED

Santa Barbara continues to have an out-sized role in state water issues. The Santa Barbara Report has circulated through other districts and is helping to shape policy decisions statewide.

Santa Barbara also has a lot invested in alternative water sources, including desalination. Below is an update on the Santa Barbara desalination plant.