Panel discusses how California’s water storage and management systems can evolve to meet the challenges of the future
With the passage of Proposition 1 last November, $2.7 billion was allocated for water storage, setting the stage for significant investments to be made in both surface water and groundwater storage projects.
At the spring conference, ACWA held a town hall on the future of water storage, featuring panelists Dr. Jay Lund, Director of the UC Davis Center for Watershed Sciences and Professor of Civil and Environmental Engineering; Bill Swanson, Water Resources Practice Leader with MWH Americas Region; and Jerry Brown, General Manager of the Contra Costa Water District.
“It’s no secret that ACWA believes in comprehensive solutions, check the box next to ‘all-of-the-above,’ but storage is one of those boxes that we have to check if we’re going to have a secure future,” began Tim Quinn, Executive Director of the Association of California Water Agencies and the moderator of the panel. “We also believe that Delta conveyance is a box that we have to find a way to check, one way or another, before we can have a secure water future. Today, we’re asking a panel of experts here to share their views about where do we need to and how do we get there to make storage actually successful in the current realm.”
Before getting to the panelists, Tim Quinn first gave some background information. In the early part of the 20th century, both northern and southern Californians were looking to higher elevations in the Sierra and building projects where the water was to ship it to where their economy was, and the water wasn’t, he said. “In the early part of the 20th century, water storage was almost exclusively a local affair. Around the state, local agencies were building surface storage primarily to augment their groundwater resources and meet the needs of their growing economies.”
By the middle of the 20th century, the story had changed. “The state and federal government had stepped in. Almost all major storage projects in that era were being built by the state and federal governments for a period of 25 or 30 years,” he said. “During the last quarter of the 20th century, that activity had pretty much stopped and once again the locals started to step in. Oftentimes say we haven’t added to the system for the last 25 years, but that’s not really true. It’s true of the big state and federal systems, but it’s not true of the local systems; they’ve added more than 4 million acre-feet of new storage capacity. That is a Shasta Reservoir-plus that has been added to the system in the last 20 years, and almost exclusively by local agencies who are thinking of their local supply concerns.”
“We are ready to move to a new era of storage, and as it turns out, even though we’ve done a lot in the last 20 years, virtually every region of California reports that they need to invest in storage, both surface and groundwater,” he said. “One of the most frustrating things I hear in the world is which one is better than the other one. That’s like asking if your left foot is better than your right foot; you need both of them to move forward, we need both surface and groundwater to move forward in this state.”
Integration needs to mean more and more powerful things to us over time, Tim Quinn said. “Any new infrastructure that is added into this system, we need to be asking how is it connected, how is it operated with other new additions to the system, and how are they in turn operated with the management of the existing assets that are in the system,” he said. “It’s not like we have not integrated in the past; we have, big time. But I think we are in an era where integration is becoming more and more important.”
“A study that Jay Lund did with the Nature Conservancy showed surface storage alone doesn’t do much, groundwater storage alone doesn’t do much, both of them together do more, but not very much until you had conveyance solutions. The integration of those three elements produces a lot of benefit for the state of California. I think we need to learn from that study and use it as a place to move forward.”
To prepare for this, ACWA formed a task force whose purpose was to articulate a clearer vision of what storage means for 21st century California, and in particular, to provide some recommendations for the California Water Commission that has the task of allocating bond funds, and in early 2015, the task force released a set of recommendations for water storage.
“There are some fairly important visioning going on in the document; it’s a strong statement of what we think the world needs to look like in 2040 from a storage perspective,” said Mr. Quinn. “We have to have additional surface storage, we have to have additional groundwater storage, and we need to enhance the flexibility in which we operate all of the above, implemented with integrated regional water management – that’s code words for ‘get your demands down.’ Those people who think that if you get your demands down, you don’t need storage, couldn’t be more wrong. Get your demands down and you’ve got a bulk of water to store to save for drier period. That’s been a remarkably successful strategy in Southern California that needs to catch on north of the Tehachapi Mountains. We’re looking for newer and more flexible regulatory approaches which may be one of the bigger challenges.”
The $2.7 billion in Proposition 1 funds is not for water supply benefits but for the public benefits of storage. “This is a radical change in policy direction for how you think about infrastructure, and I don’t think many of us understand that yet,” he said. “The successful projects are going to be those that integrate public goals with your private water supply goals, and that is the way that Proposition 1 was structured.”
“That $2.7 billion was intentionally routed around the legislature as a direct appropriation, called continuous appropriation to the California Water Commission, and they’ve got a big job to do,” he said. “They are creating a competitive process as we speak. They are planning to do draft regulations which would go to the OAL in 2015 and they can’t start allocating funds by law until December of 2016, but that’s when the money should start to flow if projects are ready to flow to it.”
“One of the things we wanted to do was give the benefit of our very diverse membership, some advice to the California Water Commission, and in this in summary form, is what we have sent the Commission,” Mr. Quinn said, presenting a slide of the recommendations of ACWA’s Water Storage Policy Task Force. “We want them to reserve their authority and discretion. There are a lot of people, including us, that want to tell them what to do. We need to them to figure out for themselves through their process what to do, and we’re hopeful they will listen to us and others and be able to formulate a sensible path for moving forward.”
“We want to make sure that their actions are aligned with the goals of the project that ‘improve operations of the state’s water system’” he said. “I was one of the people in the room, shedding the blood and negotiating the words for this which really dates back to 2009. The storage provisions in Prop 1 didn’t change much from what we’ve negotiated in 2009, and it was the intent of the negotiators – environmental, urban, ag, everybody – to give the CalFed projects, the water surface storage projects along with groundwater storage projects a chance to compete for funds. That’s why this is good, so Chapter 8 was built around improving operations of the state’s water system, and we wanted to command the Commission to pay attention to that.”
“We also wanted to recognize the diverse storage needs and the diverse opportunities; this is more than just a couple of big projects, in our view, which is another way of saying have a vision,” he said. “We want to encourage integration … we think the system has to be more integrated. A hundred years ago, it was little isolated silos all around the state of California, not communicating with others. The state and federal projects took a step in the direction of connecting people. We need to do that big time if we’re going to rise to the challenge of coequal goals as defined in the 2009 legislation.”
“Allocate funds wisely, leverage dollars and cost shares means don’t give a project a 50% unless it’s really important and it can’t happen without that 50%,” he said. “There’s $2.7 billion of bond money; we want to get a lot more than $5.4 billion worth of infrastructure. We’d like to stretch it to 8 or 10 or 12 billion. If we can motivate cost-sharing amongst the non-state cost sharing participants, we’d like to generate more of that, rather than less.”
Mr. Quinn said the last dot is what they argued most about. “The final report says that we fully support a substantial amount of those funds going for the CalFEd storage projects because we think they were worthy projects, BUT those projects are not blessed, they’ve got to compete,” he said. “We are strongly urging they move forward and compete for funds, and we thought a substantial portion of funds should go to the CalFed projects. That said, we thought there should be in reserve for other projects around the state because we have a lot greater needs for storage.”
“We’re looking for more integration, support for coequal goals, demonstration of broad benefits, and you have to have other cost sharing partners,” he said. “Some of you can carry the cost sharing in your own backyard, most of you can’t, so you need to demonstrate why your project in fact has statewide benefits to secure funds; if you can’t do that, you’re not going to be very successful. You have to be able to get permits from federal and state regulatory agencies, they don’t care that a bond was passed. That’s going to be a tough job, and you need to start thinking about it right now.”
He then turned it over to the panelists.
JAY LUND, Director of the Center for Watershed Sciences and Professor of Civil and Environmental Engineering at UC Davis
“There are some big changes in the way we’re going to be looking at storage in the future,” began Professor Jay Lund. “The primary function of storage is to move water in time, such as take it from flood and move it to after a flood, or take it from a wet year and move it to a dry year, and that’s not going to change, but the way we use it is going to be much more integrated. We’re seeing this over time already with most of the newer projects being groundwater and surface water projects.”
The funds that are available from Proposition 1 for extending storage may sound like a lot, but it’s not in comparison to all of the demands for storage in the system, he pointed out. “I think it’s going to have to be used in a strategic and very definite way among all the different projects and opportunities,” he said. “To make it competitive in that sense, it’s going to have to be leveraged by packaging it not just as a storage project on its own, but it might be packaged with other storage projects, groundwater and surface water, conjunctively, and perhaps also with conveyance aspects and the kind of institutional agreements that are going to be needed to make those things work, because in this state, typically the groundwater and surface water and the conveyance are all controlled by different agencies, so I think that’s going to be a really interesting aspect,” noting that the public benefits will be controlled by other agencies, too.
Storage is used to move water in time, he said, pointing out the groundwater plot and the flood control plot and noting that it goes up and down. “It’s not always full, it’s not always empty,” he said. “You have to have water to make storage work.”
Storage works as far as part of an engineered, semi-engineered statewide network, and we have to convince people how this is going to work, he said. He noted that most people’s knowledge of the water system is represented by the cartoon in the middle of his slide. “There’s a cloud and rain coming out of it and there’s a spigot that has water coming out of it, and in the middle there’s a big empty box saying, “I don’t know anything about this”. And if we were wastewater people, they’d say ‘I don’t want to know anything about this – that’s your job.’ So we have to be very convincing to people about this … “
He then presented a chart showing the relative contribution of surface water and groundwater storage in California today and the total capacity of the proposed expansions. “This is not going to be a completely new era in terms of storage,” he said. “It will really only have a transformative effect if it goes together with other things, such as reoperation of the existing system, some water transfers, some conveyance, and lots of other things that are going to make this work, but it’s going to have to fit in largely with the existing groundwater and surface water storage.”
“Another point I want to make is that not all storage is equal,” he said. “When you start doing the modeling studies, you will see this. The first unit of storage you build on a river gives you the most water delivery. After you’ve already have a million acre-feet of storage on a river that has a million acre-feet of mean annual flow, you get less and less water out of it for additional storage capacity.”
“It’s not just storage, not just surface and groundwater, it has to fit in with everything,” he said. “It has a bit of water conservation and water markets and wastewater reuse – how are we going to do all that integration? Integration is an easy word to say, and we say it a lot. But how do you actually do it? I have hard time just integrating faculty into a department; you’ve got real people that have even more sovereignty than academic professors. How do you get them to agree?”
Storage is going to be used differently, he said. Storage is used not only for water supply, but also for flood control. “We’re relying on it, particularly with climate warming, to provide cold water and pulse flows for fish habitat. We have all kinds of really interesting conjunctive use projects already existing in this state, so we’re going to be looking to leverage those kinds of ideas. We have statewide conjunctive use activities go on and I think we’ll want to see more of that take place.”
“How do you get all these people to cooperate and actually integrate?,” Dr. Lund said. “You have to give them some incentives. My colleague Richard Howitt, Professor of Agricultural Resource Economics, and I talk about there being three markets around water: a market for the purpose of the water itself and a market for the storage of that water between wet times and dry times, and a market for the conveyance of that water from where it is to where you want it to be. At different places and times we can see markets in all of those.”
This is a scary story,” Dr. Lund said. “We have this new Sustainable Groundwater Management Act to end overdraft in many of our aquifers and address some of our other groundwater problems. We did a computer model run or CALVIN model a couple of years ago where we ended all the overdraft in California. We wanted to see what would the system want to do if you ended overdraft. What it wanted to do was, it fallowed some acres as a way of reducing that groundwater pumping, but only about a third of that reduction in groundwater overdraft came out of reduced water use; two-thirds of it came out of additional Delta pumping. Well, you can’t get that Delta pumping every year and maybe not at all, but if you can get it, it’s going to be in the wet times, and how do you move that water from a wet years to dry years? What the model did was a lot more additional aquifer recharge … It’s like my old environmental engineering professor said, ‘Environmental engineers never solve problems, we just move them.” So if we’re going to solve part of this groundwater problem, we’re going to move it into a Delta problem and a storage problem, and that will be true with everything.”
He then wrapped up with his conclusions. “Storage is part of a system with inflows, conveyance, and demands. Not all storage is equal, and so we need to be careful about that. Storage will be used differently and as part of a network. My favorite line here is ‘storage decisions should be cold and calculating.’ We’re dealing with two and a half million dollars of public money, we should spent that wisely and set a good precedent, and I think in order to do that cold calculation, the state needs a common water accounting system. It currently has about six of them.”
BILL SWANSON, Water Resources Practices Leader, MWH Americas Region
Bill Swanson began by noting that he’s been involved with water storage for some time, trying to work through some of the issues, concepts, and challenges of looking at the role of storage in California from how it is used today to how it might be used it in the future.
“With the passage of the water bond last year, in comparison to where we’ve began the work on the storage projects, it’s almost like we’re playing a football game, and we begin the fourth quarter, and suddenly, the referees come on the field and say we’ve got a whole new set of rules we want you to begin to consider,” he said. “So what I’m going to walk you through is the thought process that we’ve been applying to these studies in the CalFed program, and how the role of the water bond is beginning to shift that thinking into how these projects might be actually implemented.”
“When the process began about 20 years ago, a very broad net was cast around the Central Valley looking for what would be good opportunities for large-scale storage development to enhance the operation of the water system in California – not the CVP, not the SWP, but the system as a whole,” he said. “How do we think about capturing additional water, moving additional water, and managing that water in such a way that it’s available when we need it and where we need it in the quantities in a way that is environmentally beneficial? Remember the whole premise of the CalFed program was founded on these coequal goals that are brought forward in this water bond.”
Five major storage projects were initiated in the early 2000s, four of which are still ongoing today, he said. They are all being led by different entities, he noted. “Where we stand today is there are actually five projects being looked at – those four projects plus an expansion of San Luis Reservoir, which is opportunistically looking at a safety of dams project that could be coupled with a storage enlargement,” he said.
Mr. Swanson noted that four of the five projects are actually expansions of existing projects. “Shasta enlargement would be raising Shasta Dam; Los Vaqueros would be the expansion of an existing off-channel reservoir project; San Luis, enlargement, same thing, and Temperance Flat is functionally no different than raising Friant Dam, the other major reservoir,” he said. “The only true new location that’s being contemplated in this whole program is Sites Reservoir, an off-channel reservoir in Sacramento Valley.”
“What’s noble about this is that we’re looking at adapting the way we use storage and focusing largely on the storage we already have and how can we make greater utility of the storage facility in the era of changing our priorities for the use of that water,” he said.
Mr. Swanson then discussed how he sees the role of storage. “Jay Lund told you right, the function of storage is to move water in time, but it’s also to move water in space,” he said. “And so when I think about storage projects that we have here in California, there are four major surface storage types that I can think of. The first is the snowpack in the Sierra Nevada, which our largest reservoir, and most of our infrastructure was built to take advantage of the pattern of runoff that emanates from that snowpack. That flows into what I call source area reservoirs, the big line of reservoirs that we have along the western side of the Sierra Nevada mountain range. On most major rivers, we have a large reservoir that captures that inflow.”
“We then transfer a good portion of that water to what I call interim storage reservoirs, either groundwater basins or San Luis Reservoir, or Sites Reservoir would be another example, and then ultimately from that to reservoirs in the customer service areas,” he said. “So we have this bucket to bucket to bucket concept of how we move water, and as we think about the system of storage, we should think about any activity we take in the context of where it fits both in space and in time.”
Storage can provide a number of benefits for a number of users, he said. “There are water supply benefits for agriculture and municipal users; there are hydropower benefits which traditionally and in the future will continue to be paid for by the direct beneficiaries of those outputs, and those are the private beneficiaries,” he said. “When we deliver water to a customer, that customers pays for the cost of receiving that water. We sell electricity to a customer, that customer pays for the cost of generating and transmitting that electricity. Pretty simple.”
There are also a number of public benefits, most of these are already provided by the major water projects that exist today, he said. “The Central Valley Project, the State Water Project, and many of the local projects that were developed by San Francisco, LA DWP, EBMUD, Contra Costa – many of these public benefits are provided by those projects. What the water bond did is it said there’s a funding source that is eligible to pay for just those kinds of benefits. So it introduces a challenge to us about how we identify and quantify these types of benefits, and ultimately, how do we certify that they will be available and provided into perpetuity when the investment is made.”
Our expectations of our infrastructure have changed over time, he said. He then gave what he called an ‘oversimplistic’ example of how a non-technical person might think about a reservoir, such as Shasta. “For every major reservoir, I would say there are four major divisions of space,” he said. “At the very bottom, there’s a dead pool that is effectively the portion of the topography that water can’t be removed from that is just part of the cost of building the site. Above that is what we call the variable cold water storage, and this is water that’s in reservation for releases to the river so it’s protecting downstream fish. The big chunk in the center is what we call conservation storage which is where the water that will be delivered to people comes from. At the top of the reservoir there is a variable space for flood control and during the flood control season, we keep that space open for floods so we can provide that protection.”
What’s happened to our water storage infrastructure is that we’ve asked it to do different things mainly through environmental regulation, Mr. Swanson said. “First in the early 1990s, the Chinook biological opinion, one of the things that it did in Shasta Reservoir is it raised the level of the minimum cold water storage; that can only take out conservation space. Six years ago, we did it again. The reservoir isn’t getting any bigger or smaller, but what is changing is the functional space that we can use to develop water and move it in time, so the concept of raising the dam is really to help restore some of that conservation space, and how do we share the private and the public benefits the project can provide.”
A similar concept applies to the Temperance Flat reservoir, Mr. Swanson said. “Millerton Lake is not a large reservoir; it’s relatively pretty small in comparison to its watershed,” he said. “But what we’ve asked this reservoir to do is quite remarkable. We’ve asked it to manage a water supply that is almost four times its storage capacity and deliver it for agricultural uses; recently we’ve also added the obligation to provide reliable flows for the river downstream for restoration. When you add these numbers up, they get pretty large. If you add up the water supply contracts and the river restoration obligations, the obligations out of the reservoir can be five times its storage capacity in one year. That tells me we have a mismatch in the size of storage versus what we’re expecting of this infrastructure today.”
“What Friant does and what Temperance Flat would also do is enable the storage of water and moving in time and manage it conjunctively with the groundwater basin that underlies the area that it serves,” he added.
He recalled how Jay Lund talked about the concept of diminishing returns – the larger the reservoir gets, the smaller the increment of water that’s available. “This is clearly the case on the San Joaquin River, and it’s the case on the Sacramento River as well,” he said. “If you look at the historical record for the San Joaquin River at the top part of the chart, the green bars on the bottom are water deliveries for the firm yield type contracts; the variable yellow bars are the Class 2 contractors which is the conjunctive use of the water; and the big blue bars are the flood flows. So what we’re really doing here is we’re targeting how do we capture these highly variable flood flows, and transfer them in time from the large flood occurrences that can’t be stored today to a managed water supply that can be used in successive years.”
He noted that the bars with stars on top are the years in which the flood releases from Friant Dam exceeded 1 million acre-feet. “There were flood releases that exceeded twice the capacity of the existing reservoir, and that’s the reason why we’re looking at this as an option for new storage.”
What Friant Dam has done since the day it was built is serve water to agricultural lands on the east side of the San Joaquin Valley, and that’s all it’s been asked to do until recently; it’s now releasing water for its water rights obligation downstream, he said. “But as we also ask it to now deliver water to the river for restoration, with a storage capability that carries water from year to year, or take Friant and make it more like Shasta, it allows us to change its role in integration quite broadly. We can deliver water to the same customers that received it, we can manage water down the river, we can exchange water across the valley, we can connect it with the operations of the Delta, and we can connect it with the coordinated operations of other watersheds, so it creates a many layered opportunity for system integration. The question is, how precise does that need to be before a decision can be made.”
When we make decisions about whether or not a project is good, we should anticipate uncertainty as there is no perfect prediction on how these projects are going to look, he said. “The ongoing CalFed studies are being evaluated on what we know today. We’ve been evaluating these projects based on historical hydrology, the infrastructure that exists today, and the water demands that exist today or might be projected to the future, so there’s a lot of other uncertainty that swirls out there, and it’s one of the challenges that the Water Commission will have when they look at these projects.”
Mr. Swanson noted that back when the CVP was constructed in the 1930s and 1940s, it was the first major water project in the Central Valley. “It didn’t have too many components,” he said. “It had Shasta Dam, Friant Dam, Contra Costa Canal, Delta Mendota Canal, and the Friant-Madera Canal and that was it. Two reservoirs, three major canals. But once that infrastructure was in place, it became a backbone or foundation that all we recognized we could add to, and by adding the Trinity River division, the Sacramento River division, the American River division, the Westside, San Luis Reservoir, and the integration of the State Water Project, the benefits of that project grew. The original beneficiaries, those benefits were not taken away, but they became additive through integration, and so our challenge today is how do we look at the system that we have that’s has some degree of integration already, and see what incremental integration is beneficial on top of that.”
In order to make that happen, we’ll need decision making at all levels, he said. “One of the challenges that applicants will need to begin thinking about is how they understand the decision making process itself,” he said. “The Bureau of Reclamation or the federal government makes a decision on what a project would be by going through a very structured process that begins locally in Sacramento and works its way incrementally through a series of levels back to DC and ultimately … the president signs, effectively, and then Congress has to intervene. That’s one decision model.”
“That has to match up with what the Water Commission is doing with Prop 1 funds, and they have a competitive process they have established and they will be looking at the benefits the projects provide both directly and indirectly,” he said. “And then lastly, every local entity is going to have their own decision making process, so understanding the relationship between the processes of decision making will be crucial in allocating these funds and prioritizing the best investments.”
And lastly, the whole question of who pays. “Begin thinking about the relationship of who pays versus who owns versus who operates versus who benefits,” he said. “There are a variety of sources of funding that might be out there between federal appropriations, the water bond, and of course the water and power users themselves. Who owns and operates? If these projects become an extension of the CVP, then probably the federal government, or if not, maybe an existing water agency like Contra Costa or others that can serve existing and new customers, or an existing or new JPA or a whole variety of other ownership and operational arrangements.”
“Most importantly, when we look at these projects, we shouldn’t only be looking at them as individual projects, we should be seeing what bundling opportunities exist,” he said. “Can multiple storage projects be combined where the whole of the benefits is greater than the sum of the parts? Is that possible? Can we find related projects that are auxiliary or ancillary or adjacent to the benefits of storage that provide additional funding opportunities? All of these are challenges that the applicants for this funding need to be thinking about.”
Mr. Swanson then concluded with his view of why this is so hard today. “When the Central Valley Project was built, it was constructed and financed by a single entity, the US government, and so the US government controlled everything – they owned the land, they issued the construction contracts, and they metered out the money at the pace Congress wanted to appropriate funds, and so they could build it as fast or as slowly as they wanted to, and it was no harm, no foul to anybody else,” he said. “Once the project was brought into service then, the portion of the benefits that were tied to the project beneficiaries, water and power users, was paid through the collection of rates, and paid back through the repayment on the project, so a simple financing entity has been the traditional model of how we built these projects.”
“But what we’re moving toward now with the water bond is a multiple entity model where the public funds from the water bond – the benefits paid by Prop 1 could be a down payment that becomes cash available the day construction begins, but that may not be all the money that is needed – clearly it won’t be,” he said. “So where does the other funding come from and what kind of commitments are needed? The water and power users will need to come forward with their financing before construction begins, and there may be other public benefits that could be paid for from other sources, either other state funds or other federal funds if the federal government is involved, or maybe a hybrid of these two models.”
“So as I’ve been thinking about the storage program, the hard part to me is that it’s not a civil engineering challenge, it’s a permitting challenge and it’s a financing challenge to make these projects work,” he said. “So we need to think more broadly than about the concrete and the steel that goes through a dam, or only about the direct beneficiaries that one project would provide; we should be thinking about the interrelationship of the projects and the interrelationship of the partners who would finance it, own it, and operate it.”
JERRY BROWN, General Manager of the Contra Costa Water District
Jerry Brown started by describing the Contra Costa Water District. “We are a retailer and a wholesaler in the San Francisco Bay Area serving about 500,000 people in the eastern and central Contra Costa County area,” he said. “We are actually in-Delta, which makes us rather unique. We are the largest M&I CVP contractor with a contract for 195,000 acre-feet.
He noted that the yellow line on the map indicates the statutory Delta, and the green indicates their service area, a large portion of which actually lies in the Delta. “We have a fairly diverse customer base between residential and commercial, industrial, and we have several municipal cities that we serve: Pittsburg, Antioch, Oakley, Brentwood, Martinez, and Bay Point. “
He said that there are three things that really are required for any of these projects to move forward: public acceptance, permits and approvals, and funding.
1-Public acceptance
Mr. Brown held up a bumper sticker that said, ‘Stop Los Vaqueros,’ and said, “I will tell you that if you have a bumper sticker out there or a yard sign or a lawsuit, it probably means you don’t have public acceptance, so what did it take to turn that around for us? Well, first it took getting out into the community, reaching out, educating, and making the interest groups aware of what we were trying to do; we worked to fill the void of information and communication that if left unfilled, will be filled by someone else, and probably somebody who is opposed to what you’re trying to do.”
The other thing we did was to modify the project as they worked with stakeholder interests. “We understood that if we went through the process, it was iterative to the point where it was only until we got to a place where we had a project that we thought we could actually get built that we sat down and said to ourselves, does this make sense? Is this still an adequate level of benefit for us to continue to make the investment? That’s where we got to, finally.”
Some could look at this and say the deal is stacked against us, he said. “We have a very educated populace that has access to a lot of information very quickly, and so it’s very critical to get out there and be the face of the project and not let somebody else define you,” he said. “We have communities in a lot of cases that are distrusting of government and public agencies, and that leads to difficulties in achieving public acceptance of some of these projects, so that’s something we have to address. Quite frankly as engineers, we’re not very good at selling ourselves or our projects and we have to integrate other professions and other parties to help us do that.”
2-Permits and approvals
“It really is a permitting project,” Mr. Brown said. “There’s a rule of thumb that we use that is for every year of construction it takes about 3 years of permitting, and that’s just the way it is. It took more than a dozen different permits to actually get the approvals we needed to construct the project, and that was no small feat. It took a lot of creativity and innovative thinking on the part of some really smart people.”
The permitting agencies are doing good work, doing their job and protecting their interests, he said. “They tend to work together, some of them are sequential, some of them work collaboratively, and all of them are understaffed and resource limited. Your priority is not necessarily their priority, so you have to find a way to actually light a fire to move things forward. We were able to do that on the expansion project primarily just pushing very hard and being creative at finding solutions.”
“While there are these fairly difficult challenges, they can be overcome,” he said. “But the one thing that everybody should expect as they go forward to build the next generation of storage projects is that the mitigation that is required is probably factors in more than what we’ve seen in the past. The habitat values for the lands that are impacted are significant, and be prepared to replace those at multiples plus endow them forever.”
3-Funding
Funding is a very important area, Mr. Brown said. “I’m reminded of the Jerry McGuire movie where Cuba Gooding Jr. is talking on the phone to Tom Cruise and says, ‘Show me the money!’ and that’s what it’s all about, really. It’s all about where’s the money going to come from.”
He noted that for Los Vaqueros, there was 100% local commitment so it was fairly straightforward, but wasn’t easy to get that. “Going forward, it’s going to take a substantial amount of local funding, and while $2.7 billion sounds like a lot, in reality, we as water agencies collect and use through the year on an annual basis, $30 billion in the state of California. So there’s a lot of money that’s generated by our business, probably about a third to a half of that is going to capital investment, so on the order of 5 to 7x of the Prop 1 money that’s available for storage every year is spent on capital investment in the state of California. There is money available to do this, it’s just taking the initiative and making it a priority.”
“As we go forward, we’re going to have to look at our funding in a different way because of the fact that there are multiple parties involved, and I think it’s’ important that we recognize a couple of things,” he said. “First, the geographical nature and economic nature of our state creates a lot of disparities … those disparities exist for all of us and we’re going to have to find ways, in terms of our funding mechanisms, to work through that. We can’t leave the Central Valley areas behind and just take care of the cities. That’s not what’s going to work for us.”
“Secondly, in terms of funding, we need revenue reform, and what I mean by that is there’s a lot of work we need to do to redefine water service and water rates,” he said. “We need to have our authorities that were given under government code and the water code changed to allow us to collaborate and integrate in a more effective way. You might think that means Prop 218 reform, but not necessarily, because there are things we can do ourselves as water agencies to restructure how we price and make that part of our business.”
“We need to redefine the state’s role, quite frankly,” Mr. Brown said. “The fact that there’s $2.7 billion in Prop 1 doesn’t mean there’s going to be a next roll of funds. In fact, it may mean we may not get any more, and so in that way, we need to redefine what the state is doing. Are they the funder? I say probably not. Maybe in the future they are more of the partner and the facilitator … “
“Finally, as we look at integrating more of our services between stormwater, wastewater, and domestic water, we need to look at the funding mechanisms that exists within each of those pockets and identify ways that we can achieve more cost effective solutions but also take advantage of the bigger rate base that exists with all three integrated, as opposed to each individually doing their part and doing what they need to do,” he said.
And so with that, the floor was opened up for questions.
Discussion highlights
Question: There are a number of projects that have been in the mill for a long time. Are any of those being considered to be dusted off and looked at? For example, when Cottonwood Creek was a hot topic for a long time. Haven’t heard of it. …
Bill Swanson: “There are a lot of great locations throughout the state where from a hydrologic point of view, it might make a lot of sense to build a reservoir. The challenge that we get into kind of goes to what Jerry was talking about, the balance of the mitigation requirements. So when we look at sites like Cottonwood Creek, or Marysville Dam, or even sites on the American River, Auburn for example, there’s a lot of controversy that is automatic just by touching that location. So when the process began looking at locations around the state that might be the most achievable for building new storage, one of the big considerations that was put into it was what kind of environmental commitments would need to be made and what kind of kind of environmental barriers might need to be confronted in order to build the project. So when the sorting went through, started with 52 projects that got down to 5, Cottonwood Creek was on that list, so was Auburn. So was Marysville Dam, so was a lot of other locations that were considered to be maybe a bridge too far when it came to the environmental requirements and the potential that the project could successfully be built.”
Question: My background is that I’m a retired air force officer and a small business owner, and what I’m used to when problems have to be addressed, an initial direction is presented and then we go get it done …. In my opinion, nobody seems to have the courage necessary to do what really needs to be done, because if the environmental movement which seems to have been directing all of the initiatives and the policies, if they were right, we wouldn’t have this problem, but it seems to me they were wrong, because we’ve had plenty of water that has flowed that hasn’t been stored and been made available for times such as these, and I’m not very encouraged at all.
Tim Quinn: “A lot of this falls on the shoulders of the people who want to build projects around California. I’ve been a part of successful storage projects. I’ve been a part of building lots of storage in California, so it can be done if you approach it the right way … My mom raised me to be an optimist, and she did a heck of a job, but the fact is these projects are buildable, but we have got to take the responsibility of figuring out what does it actually take to get a project built, and Proposition 1 will help. Wherever I’m going, I’m asking my membership to look at the opportunities that are here with this bond, and figure out what can they do to propose projects that would fit the mold. Our policy that I summarized for you at the beginning of the session is clearly designed for a multiplicity of projects, not just one or two. That’s where we want to go … “
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