Delta Twin Tunnels Plan Impacting California’s Gold Coast by Gene Beley, Delta Correspondent

SANTA BARBARA November 10, 2013 9:00pm

Santa Barbara County Supervisors wrestle with demands from the state and possible ties to tunnels.

Santa Barbara County, home to California’s “Gold Coast” with its pristine beaches and hill top mansions for millionaires and perhaps a billionaire or three, is more than 350 miles from the heart of the state’s Delta.

But as a meeting last week shows, it’s being tied tightly to a push by the governor to build massive water tunnels beneath the Delta.

The California Department of Water Resources wants its contract to supply water to the Central Coast Water Authority in Santa Barbara County to be extended for 40 years. The current contract doesn’t expire for another 22 years – in 2035.

But that contract could be the legal key to getting customers of the Central Coast Water Authority to ante up a portion of the cost of the tunnels.

The Santa Barbara County Board of Supervisors has questions about the Bay Delta Conservation Plan and the plan’s proposed twin tunnels, so heavily touted by the governor, and which could cost as much as $54 billion, once interest on bonds needed to get the construction money is added in.

The Santa Barbara County Board of Supervisors held an information session Nov. 5th on whether or not to extend the Central Coast Water Authority’s contract with the state and they also got some input on the pros and cons of the BDCP twin tunnel project.

After CCWA Executive Director Ray Stokes explained how the state’s Department of Water Resources wants them to extend their contract 40 more years beyond their current expiration date of 2035, there were a lot of questions as to why. And that’s where it becomes educational to all citizens in California on how local water districts can feel they have a gun to their head with limited choices if they want water.

One elegantly dressed woman during the audience participation session said she and her husband came to be informed. “I know more now than I ever wanted to know,” Kay Peterson said, “and I still don’t know anything about it.” But she thanked the supervisors for “taking the time to inform yourselves. I appreciate that as a citizen,” she said. “I wish you a lot of luck.”

Board of Supervisors Chairman Salud Carbajal at one point asked if the DWR contract being able to continue even if they did not renew it bordered on extortion. Another Supervisor, Peter Adam, a farmer relatively new to politics, representing the Lompoc and Santa Maria areas, asked Mr. Stokes point blank, “Are we stuck?”

Supervisors seemed nervous that the renewal of the contract so far in advance might be tied to the twin tunnels. Supervisor Doreen Farr, representing Santa Ynez and Isla Vista (UCSB area), asked Mr. Stokes how he calculated the estimated cost of the BDCP twin tunnel project.

“The current estimate of cost is about $25 billion,” said Mr. Stokes. “Of that about $17 billion would be paid by the state and federal contractors. Of that $17 billion allocated between the state and federal contractors, that percentage is currently being negotiated. Right now it looks like it will b e a 60/40 split with 60 percent by state water contractors and 40 percent by federal contractors. So out of the $17 billion to be paid by state and federal contractors, approximately $10 billion would be paid by the state contractors. The negotiations, as far as how those costs will be allocated amongst state contractors, is not fully decided, but it is anticipated that those costs would be allocated in proportions to the contractor’s percentage amount (of water used). We would be liable for about $100 million or one percent of the state contractors construction costs.”

Mr. Stokes told the Supervisors that his CCWA agency in Buellton is trying to negotiate a 75-year extension to 2110 to avoid “not having to go through another amendment in 40 years.”

Supervisor Farr asked Mr. Stokes, “If the BDCP twin tunnels was not being discussed, would we still be talking bout a contract extension 20 years ahead of time?”

“Yes, because the DWR is going to incur large capital expenditures even without the BDCP (twin tunnels) between now and 2035,” said Mr. Stokes.

Supervisor Peter Adams asked why the interest rates would be higher if they signed up later?

“Under the existing contract, we, as a contractor, don’t actually pay debt service that DWR issues. We repay the costs at a different rate of 4.61 percent, regardless of what DWR’s bond costs are. So if the DWR would issue revenue bonds at, say 3 percent, we would still be paying the higher interest rate and not enjoy the benefits.

Supervisor Farr jumped in to ask, “If the state would issue bonds that were above the 4.61 percent, would we have to pay the higher rate, or are we protected?”

“True, we would pay the same rate as now,” Mr. Stokes replied. “We don’t understand all the details of the ‘evergreen clause’ and how it will operate, but we believe that’s the way those costs work.”

When Supervisor Adam asked if they were stuck in the deal, Mr. Stokes said, “You could choose to say we choose not to execute the evergreen clause. However, if DWR exercises to issue revenue bonds, it is an automatic extension to the contract,” he repeated. “That is a provision of the contract. It is there no matter what.”

Mr. Stokes closed by saying “The Central Valley Water Authority Board of Directors is in favor of the extension and feel it is important.” The County’s Assistant County Counselor Michael Ghizzoni added his opinion that, “We are talking hypothetically of what you’re stuck with” and hinted there are protections in the state’s 1963 water code that would have to be looked at more closely.

Audience participation

The first speaker spoke remotely and was broadcast from a TV screen on the wall. He said they are not exactly excited about how much money is being spent on Delta restoration and all the experts.

“We’re not as big an entity as Los Angeles County but the flip side is we don’t have any other supplemental choices for water here. We believe that South Santa Barbara County is even more vulnerable — the north county especially. Santa Ynez has a huge aquifer. We think they have been wise to use state water. It’s the South County that is more dependent. The final point is we think this has much to do about nothing financially. As staff indicated, it spent a billion dollars on these projects to date. This thing will raise the costs by $5-$10 million a year which is really a pittance literally and figuratively a drop in the bucket compared to how much you have spent. Secondly, once these costs go away, we will see a reduction to about $10-$20 million a year. You shouldn’t think the sticker shock should be a stumbling point.

A CCWA Board of Directors member said it is a class act and working well. “If it ain’t broke, don’t fix it.”

The next speaker told the Board, “Any time you have a long term contract, that provides reliability and stability in our water supply, it’s very important to look out to future years, not for our generation, but for our children’s children.”

Another speaker representing Goleta said he felt any action by the Board about BDCP would be premature at this time.

Robert Field, a resident of Santa Ynez, said it is clear there are risks in the BDCP proposal. “I think the one thing missing from all this is to sort out the County versus the purveyors. Who takes the risks and who gets the rewards? The County (of Santa Barbara) has a few check marks on the risk side and none on the benefit side. I don’t represent everyone here, but I’m a resident of the unincorporated county and you are exposing me to risks from individual purveyors who are receiving the benefits. It’s not just me. There are 150,000 of us who will not receive any of the benefits.”

Mike Jackson, a Northern California water attorney, said he was there representing the farmers in the Delta, fishermen offshore and a large portion of the environmental movement. “The BDCP doesn’t fix it,” Mr. Jackson began. “The restoration they are talking about — the $8 billion was imposed by the environmental movement was green washing — does not fix the problem. It’s clear that there is no new water. I had the opportunity to sit on a panel with the Los Angeles Metropolitan and Westlands water districts last week. There will be no additional water. The BDCP program sets up a water supply that does not come when you’re in a draught. It has water in it when it is wet but you don’t need it in those years so it doesn’t solve the problems for south of the Delta people.”

Mr. Jackson told the Supervisors that Los Angeles Metropolitan Water District water sales are plunging downward. He said the people are finding other sources of water. “You should read the Urban Water Management Plan for the Department of Water and Power for the City of Los Angeles. Take a look at what San Diego is trying to do. They expect to be off State water within the time we are talking about in terms of extending your contract. So the numbers we are hearing now will not be true for a long period of time. The biggest thrust is the taxing authority.”

Carolee Krieger, a resident of Montecito and executive director of the California Water Impact Network (C-Win), is one of the area’s strongest lobbyists against the BDCP twin tunnels. She thanked the Board for previous one-on-one meetings with her and studying her twin tunnels information.

“The mountain of material is an indication of the thorough study C-Win has done to review the complex twin tunnels proposal,” Ms. Krieger said. “It also explains the profound flaws in this project. This county should be wary of any claims of DWR on the costs of construction for these tunnels.”

Ms. Krieger cited a previous local case where they were told the cost for a DWR project would be $271 million, and then skyrocketed to $1.76 billion. “We ask the Board of Supervisors and City Council to stop this boondoggle. Do not renegotiate the existing contract now that are set to 2035. Don’t let DWR snooker us again. Water will always be an issue in Santa Barbara County but here are ways to deal with our water problems like conservation, recycling, ground water, desalinization, and green water harvest. These will all cost money, but not nearly as much as the tunnel scheme.”

Nick Di Croce, co-facilitator for the Environmental Water Caucus, said his organization is comprised of 30 grassroots environmental organizations all with common features around California water issues.

“We have intensely studied all the Delta plans,” he said. “We have gone on public record as opposing the BDCP for two main reasons: The fiction of the benefits they claim [and] the fiction of the recovery of 140,000 acres in the Delta, which is costly and probably not effective or practical.

“I am a Solvang resident. We have some experience of being snookered in the DWR contracts. Please don’t let that happen again,” he said

Jack Boysen, a member of the Santa Maria City Council, told how important the State Water Project is to Santa Maria and Santa Barbara County. “Water is responsible for allowing a much higher quality recharge for the groundwater basin,” he said. “More important, it improves the quality of our ground water.”

Mr. Boysen ended by saying, “The city of Santa Maria begs you to consider the catastrophic economic and environmental impacts by not renewing the State Water contract that we have.”

Joan Wells, a former member of the Santa Barbara Planning Commission for 12 years and a member of the Central Coast Regional Water Quality Control Board, said she came to ask the Supervisors to “please put off any contract negotiations that will tie the BDCP tunnels into what you do. I cannot believe there is not some way to continue our current water system supply and our current input into this county without having to tie ourselves going along with the tunnels. Every day I read blogs how the DWR is changing where these tunnels are going to be built and what the problems will be. Get us out of the twin tunnels.”

A representative of the Central Coast Water District said she realizes they are at the end of the pipeline and need State Water. “It has this huge system around the state that allows us to bank water. They give it back and sell it to Guadalupe. So without the system, you can’t do that.”

Thomas Mosby, general manager of the Montecito Water District, gave a quick summary of the history of water in his area. He said the Cachuma Lake project was built in 1958. In 1973 there was a water emergency. 1987 brought the next drought years until 14” of rain fell in 1990. Today, he said they haven’t had water shortages for 22 years. He recognized the importance of State Water as a supplemental source because he was sending out a letter this week saying they are possibly going into another water shortage this year. “Look at new supplies, as well as the State Water,” advised Mr. Mosby.

Darlene Bierig, a member of the Montecito Water District Board of Directors, said people should adopt a more regional concept. “It’s a shame that a county that sits next to the ocean with the resources we have has all their eggs in one basket. I’m asking you to be visionary.”

Supervisors’ concluding remarks:

Doreen Farr: “It is clear to me that the BDCP project is extremely controversial. There is a lot of opposition to it in Northern California and with their counties’ Boards of Supervisors. “I approve of decoupling BDCP discussions from the State Water contract. I think we need to undertake this long term forecast and analysis.”

Janet Wolf: “There’s been some discussion of decoupling the BDCP, but it looks like in this contract that it is inherent that any capital costs, whatever it is, becomes a part of the contract. When this ultimately comes back to us, I would assure that we are going to have some decision on the twin tunnels. Otherwise how would we deal with the contract that talks about capital expenditures?”

Assistant County Counsel Ghizzoni said the definitions in the water code “are pretty broad. A lot of activities are included in it, but it does not take off the county’s ability to disagree that the project is not within the state water contract you’re in. We will have to take a hard look at it.”

Ms. Wolf concluded by asking, “Where do we come in on this train moving down the track?” referring to the 40 years or 75 year contract.

Attorney Ghizzoni said the “real elephant in the room is keeping track of the BDCP.”

“That’s something staff has to keep an eye on. Everything is negotiable. If I had a crystal ball, I’d say decision on the extending the 1963 agreement is several months down the road and heavily impacted by the BDCP EIS [environmental impact statement] draft. You have some time to bring it back to the Board.

Peter Adam: “We need to terminate the ability of the state to stick us with bond sales or capital improvements. That provision is pretty onerous, open ended, and offensive. Maybe we have to go on with State Water but maybe we can get some concessions, too."

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