Supervisors Weigh State Water Contract

Santa Barbara News Press

Zach Noble November 6, 2013 5:51 AM Santa Barbara County may be hamstrung in contract negotiations for state water, the Board of Supervisors learned Tuesday.

The board discussed a report on a proposed extension of its contract with the state Department of Water Resources.

The county's contract for state water is not set to expire until 2038. But most of the capital costs associated with the development and upkeep of the project are financed using 30-year revenue bonds, and renewing early could allow the county to benefit from lower bond interest rates, said Tom Fayram, deputy director of the Public Works Department.

The board may not have much of a choice, however, due to the language in the original contract and the county's reliance on state water. Ray Stokes, executive director of the Central Coast Water Authority, told the board that if the Department of Water Resources issues new revenue bonds past the contract expiration date, the bond issuance would automatically renew the contract.

The board questioned Mr. Stokes and received mixed answers.

"Am I correct that we have no choice?" asked 1st District Supervisor and board chairman Salud Carbajal.

"No, well, if we don't do anything there will be negative financial consequences," Mr. Stokes responded.

"Are we stuck in this deal?" asked 4th District Supervisor Peter Adam shortly thereafter, requesting that Mr. Stokes respond using the "layman's definition" of "stuck."

If the Department of Water Resources issues revenue bonds, the contract is automatically extended, Mr. Stokes explained again, concluding, "so in that sense we're stuck."

In addition to the contractual hurdle, the board may also be limited by the county's reliance on state water.

According to Mr. Fayram's report, the State Water Project supplies 86 percent of Santa Maria's water and significantly supplements water supplies throughout the rest of the county, and after a spate of exceptionally dry years, local reservoirs are low.

"(Lake) Cachuma is the flagship water supply," Mr. Fayram said, "and it's now under 50 percent capacity."

Jameson Lake and Gibraltar Reservoir are both under 33 percent capacity, Mr. Fayram noted, saying that state water supplies could help reduce the drawing down of local water.

Further complicating the looming decision is the fact that the state is linking State Water Project contract renewal with funding of the Bay Delta Conservation Plan, a controversial and still-evolving project to shore up levees and build water-transporting tunnels beneath the Sacramento Delta.

Santa Barbara County could be on the hook for about $100 million in Bay Delta Conservation Plan funding, Mr. Stokes reported, but members of the public questioned that figure.

"It is very possible that the numbers that you're hearing may not be true for a long time," said environmental lawyer Michael B. Jackson, questioning the lack of detail provided in the Delta plan.

Carolee Krieger, president of California Water Impact Network, echoed Mr. Jackson's questions, saying that "profound flaws" in the tunnel concept and a lack of realistic budget projections make the plan a bad investment.

"It is noteworthy that the engineering and actual placement of the tunnels have yet to be determined," Ms. Krieger said.

She noted that the plan does not generate any new water supply, but merely seeks to make existing supplies more reliable.

"What are we buying here?" she queried.

A number of city officials from throughout Santa Barbara County urged the board to renew the state water contract, sidestepping the Delta plan controversy and focusing on the needs of their communities.

"We won't meet our full needs without state water," said Bill Rosen, president of the Goleta Water District, whose request for renewal was echoed by representatives from Santa Barbara, Montecito and Santa Maria.

"The BDCP project is extremely controversial," noted 3rd District Supervisor Doreen Farr, who recommended "decoupling that discussion from an extension of the State Water Project."

"We need to terminate the ability of the state to stick us with bond sales or capital expenditures," Mr. Adam said.

The board took no action Tuesday, with staff advising that the entire process could take many months.

In other business, the supervisors heard a fiscal outlook report for 2014-16 by budget director Tom Alvarez, indicating that the county's fiscal year 2014-15 general fund deficit will be about $7.9 million.

"But if revenues continue to grow and county expenses are able to be limited then there may be a surplus of $6.8 million in five years," he noted in his report for the board.

Mr. Alvarez said the county "is in a better position than it has been for the better part of the past decade as departments and employees have delivered beyond expectations."