Earlier today, the Senate Committee on Natural Resources and Water held an informational hearing on proposed amendments to the State Water Project contracts. In advance of the hearing, a coalition of interest groups submitted a letter and supporting memo outlining their concerns in detail, and afterwards, the Delta Counties Coalition issued a statement calling for a halt to the process.
Background
As part of the construction of the State Water Project, the Department of Water Resources (DWR) in the 1960s entered into water supply contracts with public water agencies located in northern California, the Bay Area, San Joaquin Valley, Central Coast and Southern California to provide water service to the contractors in exchange for payments that recover the water supply cost of providing the service. There are 29 contractors for water from the State Water Project who hold contracts with expiration dates that range from 2035 to 2042.
With most contracts expiring in 17 years, financing for California Water Fix and other capital upgrades and repairs to SWP facilities cannot be financed by issuing 30-year revenue bonds, resulting in shorter-term bonds which increases annual repayment costs to the contractors.
In 2013, the Department of Water Resources began the contract extension process, holding 23 negotiation sessions over a one year period that resulted in a set of Agreements In Principle for the contract extension which was signed by 25 of the 29 contractors. The Agreements in Principle provides for the extension of the expiration dates on all contracts to December 31, 2085; makes changes to billing procedures, reserves and other financial changes; and establishes a finance committee of both DWR staff and contractors. An Environmental Impact Report was then prepared from the Agreements In Principle and released on August 17, 2016. The draft EIR determined that the extension amendment to the contracts would not result in any physical environmental impacts since it addresses only the financial provisions of the contract.
In May, DWR Director Karla Nemeth sent a letter to Senator Holly Mitchell requesting that an Informational Hearing be scheduled before the Joint Legislative Budget Committee regarding the SWP Water Supply Contract Extension. Water Code Section 147.5 requires an informational hearing with the legislature at least 60 days prior to final approval of the contract extension. The request was accompanied by the Proposed Contract Extension Amendment, dated February 13, 2018.
- Director Nemeth’s letter, the Proposed Contract Extension Amendment and the other related documents are posted on DWR’s Contract Extension website.
- Click here to watch today’s hearing before the Senate Committee on Natural Resources and Water.
Groups send letter to Senator Hertzberg outlining their concerns
C-WIN, the Planning and Conservation League, Restore the Delta, CSPA, and AquAlliance (among others) have sent a letter to Senator Hertzberg outlining their concerns regarding the State Water Project contract extension amendments.
They write:”On behalf of the ratepayers and taxpayers represented by the undersigned, we write to request greater transparency and reliable answers regarding the impacts of proposed State Water Project (SWP) Contract amendments, including the proposed 50-year SWP Contract Extension amendments and other as-yet-unspecified Delta Tunnels (California Water Fix) Contract amendments. At present, the proposed amendments are poorly defined and explained and have potential adverse impacts far beyond their apparent scope. We urge your Committee to request that the Joint Legislative Budget Committee not schedule its hearing on the SWP Extension Contract Amendments while major questions noted below remain unanswered.”
Their concerns include:
- DWR has not completed CEQA requirements;
- The amendment would obligate taxpayers and ratepayers without a vote;
- Basic planning and financial feasibility analyses required by California and federal
engineering guidelines are not provided; and- There is no viable plan for financing the Delta tunnels project.
You can read the full text of the letter here: PCL et. al._SWP Contract Amds_ July 3rd Senate Nat. Res. Info Hearing
Additional information supporting the above letter are available in this memo: RBM Letter Re SWP contract extension hg
Delta County leaders ask legislators to halt DWR contract extension for tunnels financing
From the Delta Counties Coalition:
In response to a state legislative informational hearing regarding extension of State Water Project (SWP) contracts requested by the Department of Water Resources (DWR), the Delta Counties Coalition (DCC) issued through Don Nottoli, DCC Chair and Sacramento County Supervisor, the following statement:
“There is little question that DWR is calling for this contract extension as a pretext for California WaterFix, which is estimated to cost SWP contractors tens of billions of dollars in the coming decades. DWR wants to characterize this as a routine course of doing business. It is not.
“As Delta area leaders, we request that the Legislature demand accountability and transparency from DWR before even considering their request. DWR is legally obligated to provide important information (required by Section 147 of the Water Code) that will shed light on this process, which right now is veiled in secrecy. As a part of today’s hearing, we ask that legislators require that all legally obligated information be forwarded to the appropriate legislators and their staffs without delay.
“The consequences of legislative rubberstamping of these contracts would be harmful for generations of Californians. That is why major statewide environmental groups, Delta businesses and residents, and elected officials oppose this underhanded attempt to subvert the process. We respectfully ask legislators to apply the strictest oversight possible over DWR’s requested action.”
UPDATE: State Water Contractors post fact sheet on the contract extension
The State Water Contractors has released a fact sheet on the contract extension, noting the benefits which includes obtaining a commitment for continued service and provide capital financing beyond 2035, ease financial compression on water rates statewide, and enhance financial management and transparency
FOR MORE INFORMATION …
- Director Nemeth’s letter, the Proposed Contract Extension Amendment and the other related documents are posted on DWR’s Contract Extension website.
- Click here to watch today’s hearing before the Senate Committee on Natural Resources and Water.
- Read the full text of the interest groups’ letter here: PCL et. al._SWP Contract Amds_ July 3rd Senate Nat. Res. Info Hearing
- Additional information supporting the above letter are available in this memo: RBM Letter Re SWP contract extension hg
- Click here for the State Water Contractors fact sheet.
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