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Trying to sort out public and private

Case in point: the Kern Water Bank.

The California Farm Water Coalition has taken issue with our statement in our last newsletter that the Kern Water Bank was developed with state money and taxpayer approved bonds.

“The Kern Water Bank property,” they say, “was originally acquired by the California Department of Water Resources through the use of funds provided by the 29 water districts that participate in the State Water Project.”

And according to the Kern Water Bank Authority (KWBA), “For decades prior to the Kern Water Bank’s development by KWBA, most of the 20,000 acres was used for farming. In 1988, the property was acquired by the California Department of Water Resources (DWR) on behalf of the State Water Project (SWP) contractors, which planned to develop a functioning water bank on the property known as the Kern Fan Element of the Kern Water Bank (KFE).”

When an agency of the State of California acquires property on behalf of water contractors, even if the contractors are public agencies, it kind of blurs any distinction between state (presumably tax) funds and local (presumably ratepayer) funds.

KWBA says that SWP contractors “paid all the costs of DWR’s efforts to develop a water bank on the KFE property,” reinforcing the impression that in matters relating to the Kern Water Bank, DWR was operating on behalf of the water contractors. Tens of millions of dollars were spent, but “DWR ultimately concluded that development of [a] water bank on the KFE property by DWR as part of the SWP was not feasible and halted all work on the KFE project.”

In the early ‘90s, with San Joaquin Valley runoff below 50% of average due to drought, SWP deliveries to the Kern County Water Agency dropped, and agricultural lenders became unwilling to extend credit to growers because of the low reliability of state supplies. Agricultural water districts faced defaulting on water payments to the state, threatening the rating of SWP bonds.

The stage was set for a series of secret meetings in 1994 in Monterey between DWR and five SWP contractors, plus the Central Coast Water Authority. (The five SWP contractors were Kern County Water Agency and Tulare Lake Basin Water Storage District, both in the southern San Joaquin Valley; Metropolitan Water District of Southern California; Solano County Water Agency; and Coachella Valley Water District in California’s southeastern desert region.) One result of the meetings in Monterey was that in 1996, DWR deeded the Kern Fan Element lands to the Kern County Water Agency.

The Kern County Water Agency says that it relinquished 45,000 acre feet of its contracted right to State Water Project (SWP) supplies in return for acquiring the Kern Fan Element from DWR. However, this 45,000 acre feet was “paper water” – a contracted amount that could never actually be delivered because 5,000 million acre feet of SWP water was never developed. So Kern County Water Agency actually exchanged “unfillable” contract amounts for property and a water bank worth millions of dollars.

When the Kern County Water Agency acquired the Kern Water Bank lands, it deeded them immediately to the Kern Water Bank Authority. At that point, a facility developed with public money came under private control; a public resource became a private commodity. The KWBA is a joint powers authority. The Westside Mutual Water Company, owned by Stewart Resnick’s Paramount Farming Company, holds 48.06% of the Kern Water Bank, according to the water bank’s 2011 financial statement. Resnick also controls a board majority on the Dudley Ridge Water District, which in turn controls 9.62% of the Kern Water Bank.

It’s a good idea to bank surplus water in wet years in the southern San Joaquin Valley so that it can be available to water contractors in dry years. That will decrease dry-year demands for Delta water. But any surplus water available for banking comes from the State Water Project, and any income from its sale should go to the state, not to private entities.

Given the arid conditions in the southern San Joaquin Valley, it is easy to understand why agricultural water users there would want access to banked water in dry years. But it looks like less water will be available for agriculture in that region as development proceeds at Tejon Ranch at the south end of the San Joaquin Valley.

Planned development in the Tejon Ranch includes:

• Tejon Mountain Village, which would include homes, commercial buildings, hotels, and golf courses

• Centennial, a proposed new town

• Tejon Industrial Complex

Where will the water come from? It isn’t clear. But one of the members of the Kern Water Banking Authority is Tejon-Castac Water District, which supplies water to Tejon Ranch. And Tejon Ranch is a majority landowner in the Wheeler Ridge-Maricopa Water District, which controls 24% of the Kern Water Bank.

The California Farm Water Coalition didn’t contest our statement that the Kern Water Bank is controlled by billionaires who are selling the water back to the state at a profit and making it available for developments like the luxury Tejon Ranch.

That’s because it’s true.

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{ 2 comments… add one }
  • September 22, 2012, 5:04 pm

    This nicely illustrates how water agencies like Kern that were once administering water for largely agricultural areas and the towns and cities within them are gradually seeing demands for that water be shifted to new and extensive development on the outskirts of the LA Metro area. It’s not clear that water agencies like Kern becoming brokers in water markets was ever an idea that was debated, but it certainly is one that is well within the traditions of greed and development at the heart of California water.

    What is maddening is that this process wlll of course result in ever greater demands for more water. One way to deal with this is to cap the amount of water an agency can receive, and letting Kern sell/trade/commodify their water within their jurisdiction only, as they see fit. More regulation, perhaps – but one person’s government regulation is another’s equitable balancing of interest.

  • savage
    September 22, 2012, 9:27 pm

    How many acre feet is this actually? …”5,000 million acre feet of SWP water was never developed…”