The Santa Clara Valley Water District held its board of directors meeting on Tuesday, May 8, 2018 at its San Jose headquarters. The SCVWD has a beautiful facility as one might expect for the water supplier to Silicon Valley. In addition to the large urban population the district’s southern side still has a heavily agricultural. Today’s meeting is scheduled to begin at 9:30 am instead of the usual 1:00 pm to accommodate a large public comment period. The sole item is whether or not the district should support the California Water Fix and its tunnels under the Delta. It’s going to be interesting to see the parade of speakers judging by some of the early arrivals. Most of the pro-enviros in the San Joaquin Valley have a dress code that apparently requires the men wear suit slacks with tennis shoes or the option of sweatpants with dress shoes. I found myself sitting next to Paul Rogers of the San Jose Mercury News and that was fun.

Chairman Richard Santos did kick things off at 9:30 am. A lady who works at the district, Glenna Singer started the meeting on a patriotic note, literally, by singing a wonderful rendition of our National Anthem. Great vibrato. Staff, under direction of Interim CEO Norma Camacho then told the board it has found the California Water Fix as beneficial. Director Tony Estremera was the first board member to speak. He said living in Silicon Valley he believes in science. The science of the tunnels work and he challenged anyone to explain how California could be as great as it is without previous water projects. He said the Delta tunnels can be built on time and on budget. The agenda item had nine   Staff reported the ecological restoration would be funded by other means than just rate payers’ wallets. Prop One funding can be pursued as well as the possibility of federal funds. Santos said the feds are still looking at the project but there doesn’t appear to be any interest from the Department of Interior. SCVWD is both a State Water Project contractor and a Central Valley Project contractor. Garth Hall, Deputy Operating Officer said there are many other factors to restoring the Delta’s ecosystem beyond flows such as predation and water quality. These will be pursued with or without the Cal Water Fix. All of the water users will be funding environmental restoration according to Director Barbara Keegan, not just SCVWD.

Attorney Stan Yamamoto said the concerns of keeping CVP supplies whole has been taken into consideration. SCVWD can spend millions of dollars to purchase capacity in the tunnels. Staff said the board would have to authorize Camacho to negotiate the options to be purchased. At that point the board could choose to agree to the options. Director Nai Hsueh asked if at that time all the costs will be known. The answer was yes. Director John Valera asked Camacho what could be expected from the negotiations. She said there were seven principals already laid out with Metropolitan Water District. SCVWD would be entering into the capacity agreement with Met.

The design and oversight of the project will be overseen by the Design & Construction Authority. Staff needs authorization to negotiate with the financing beyond the DCA although the DCA would be part of it. Estremera and alternate Keegan would be on the DCA board if approved. Santos said there will still be four other seats on the DCA and that concerns him. Also, the DCA is a JPA, just so you’ll know. It will deal with change orders and such as work progresses. Varela wanted to know if there is a safety net to protect from cost-overruns. Nina Hawkes, (sp?) Water Resource Specialist said there could be increased costs above projections and there is a 36 percent contingency fee. Director Gary Kremen said it would be good to have a guarantee for the $600 million or so investment. He’d like to see a cap. Santos said there are multiple state projects such as a High-Speed Rail that can’t get it together on construction costs and deadlines. Estremera said this is a 15-year project and the technology may be quite different in the not too distant future. I believe he said Elon Musk is working on a new drilling system that could cut costs. He said it is every day that materials and procedures change and improve.  

Keegan said there needs to be an offramp to this project. She sees a big difference between HSR and the Cal Water Fix as the EIRs were very different. Kremen asked to see the cost comparison. Compared to desalinization and recycling waste the Cal Water Fix is the best bang per buck by far. Santos said if the cost gets out of hand on a four to one vote there needs to be a cost cap that requires the project comes back to the SCVWD board if it gets bigger than $650 million. He also wanted to know how the district will pay for this; further debt, bond sales, etc. Staff said the JPA would be able to issue bonds that would obligate the district. I learned from Rogers DWR was sued over its ability to issue bonds for Cal Fix due to its lack of any authority to do so. It doesn’t have the collateral for one thing. When the Fix was first peddled to districts in the San Joaquin Valley there was unanimous opposition to spending a penny on any construction under the tender embrace of DWR. I recall someone stating DWR has never, ever brought in a project on time or under budget. That was the first big hiccup the Fix went through. Staff reported the costs to the district will increase with time. There is a current rate projection for the next seven-years that will cost rate payers more. The estimated cost of water will be $600 a/f.

Director Linda LeZotte asked Camacho what she will be negotiating. Camacho said the goal there is the governing mechanism of the JPA. She wants to ensure the district has plenty of say so on the financial and legal decisions. She said there is a legal team in place that includes bond counsel.

There are provisions for a state contractor to pick up the benefits of another state contractor should opt out. Keegan acknowledged there have been more than one up and down to the folks participating and liked this. Santos thanked the board and staff for the work and preparation displayed today.

The public comment began. Attorney Tom Keeling said he represents several land owners and counties in the Delta. He said the project can’t be trusted and facing unlimited litigation. He said no indemnification will protect the district and there is no financial offramp. He said this project is a threat from DWR with the carrot being maybe more water and the stick being lose of water. Dean Ruiz, attorney of the Central and South Delta Water Agencies said the Cal Water Fix proceedings are far from over. The State Board is still supposed to issue a flow criteria and it is uncertain how this will impact the Fix.

The next person to speak had a Mohawk hairdo and played a blues song about how you’ll have to desal the twin tunnels. He played a cool, Gretsch resonator guitar. I’m in the market by the way, for a square neck resonator for the right price. On the support side the Silicon Valley Leadership Group, representing more than 350 businesses in the Santa Clara Valley spoke in favor of the Fix.

Barbara Barrigan-Parrilla, Restore the Delta spoke against the Fix because the financial data is too vague. She said Met and others have been non-transparent. While looking up the correct spelling of Ms. Barrigan-Parrilla’s name on the RTD website I noticed amongst others your old friend Bill Jennings is on the Restore the Delta’s board. Also representing RTD was an attorney from I believe it was the Earth Justice Legal Defense, threatening lawsuits. Also, the first speaker Tom Keeling is on the RTD board. Another representative from the local business community spoke in favor. Followed by a resident who threatened a class action lawsuit by the rate payers and a threat to any board member’s reelection. She said not to worry the state will never take the Silicon Valley’s water away. I guess she never heard of the San Joaquin Valley’s experiences. Reverend Jeff Moore of the Silicon Valley NAACP said he spoke for those without a strong voice. He was soundly in favor of the district investing in the Fix. Next a grandmother who said she had no special knowledge of water or finances was worried about the districts’ rate payers going into poverty and especially her grandchildren due to the extra cost. Another gentleman offered the district at cost software that could cut residential water usage in the district by half. The next lady said the costs are far underestimated. She said tunneling for the subway in Los Angeles costs $1 billion per mile. The public comment portion ended with a slight break.

It was the directors turn to speak and ask staff questions. Kremen asked if the JPA is carefully written. Staff said yes, it is complete. Kremen asked about the state contract amending process. There’s always the possibility of legal headaches. Keegan was next and asked Camacho about the permanence of today’s vote. She wanted to hear about offramps. Camacho said there is a CVP offramp should the feds not get on board. On the state side there has been problems with commitments but in the DCA agreement there is a 60-day notice to bail on the JPA. However, whatever has been invested up to the end of the 60-day notice probably stays with the JPA. Keegan also pointed out while the district has been urged by some to vote down the Fix because they just don’t like the idea of tunnels, the project goes on with or without SCVWD. DWR can call on the district as a SWP contractor to pay for the tunnels whether or not it joins the JPA. She addressed those gathers in the room telling them she doesn’t want the environmental decisions in the Fix dictated by Met. She wants a northern California voice involved. That was pretty good I must admit.

Varela said several of the dams the district relies on are being retrofitted for seismic safety. He’s concerned the folks running for state offices have not spoken in favor but has been spoken against. He’s not received any supportive messages regarding the water fix and he doesn’t want to saddle current and future rate payers with more debt. Hsueh said she shares the concerns the environmental benefits of this project are iffy. She is an engineer and also realizes the need for further water supplies. She said the status quo is not the solution and believes the district needs to be a part of this to help guide it. Estremera thanked everyone for their comments and considerations. He said he believes the district must participate in the Fix or there will be no Northern California interests represented. LeZotte said she has environmental, cost and governance concerns. But mostly the enviro concerns. She asks if she can trust the enviro safeguards should Met’s needs be ruffled and the answer is no. She said there is just too much danger to the environment and she definitely doesn’t trust Met. Santos said he has listened and taken notes for the past year. He said the Fix is a complex project and there are too many red flags. He said if Estremera was running the JPA he’d support it but having one vote to Met’s four doesn’t sit well with him.

The board then prepared to vote. Yamamoto suggested the board vote either by the agenda or the memoranda in the agenda. He said to do a roll call to adopt a resolution about the DCA, if I’m correct. They all agreed. There were several other votes from the memoranda. The board voted four to three to support the tunnels portion of the Water Fix without any financial obligation. The vote on joining the DCA JPA also went four to three. In both votes Santos, Valera and LeZotte voted no. On the vote to appoint Estremera and Keegan as alternate to the DCA JPA Varela asked if supporting his colleagues is the same as supporting the district joining the JPA. Yamamoto said no but Varela should clarify this in his response. The directors all voted for the slate. Once the board established it wasn’t unanimous in joining the Fix the various details were approved unanimously; like directing staff to negotiate in the district’s best interest. The vote for spending $3.5 million in pre-construction design went four to three. Overall there were 14 separate votes and the result is SCVWD is participating in the California Water Fix. The meeting then adjourned for lunch and I left.

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ALL RIGHTS RESERVED.  Copyright 2018 by Don A. Wright   No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of DAW.

SANTA CLARA VALLEY WATER DISTRICT – 5700 Almaden Expressway, San Jose CA 95118   408/265-2600 www.valleywater.org

Directors: John Varela – Chair, Richard Santos – Vice Chair, Barbara Keegan, Linda J. LeZotte, Nai Hsueh, Tony Estremera and Gary Kremen. Norma Camacho – Interim CEO, Stan Yamamoto – Attorney