By LOIS HENRY
Californian columnist
July 30, 2016
http://www.bakersfield.com/news/lois-henry-taxpayer-funded-water-deal-that-makes-me-go/article_79f6c1b9-92ed-5b4b-99f6-e2881c1ad25d.html
The Nickel water came to my attention again recently.
Tejon Ranchcorp released its draft environmental impact report for its proposed Grapevine community of 12,000 new houses at the base of the Grapevine.
If the development is approved, it will be Nickel water flowing through the taps and toilets of all those homes.
I like following the Nickel water partly because it’s fascinating to see how many development dreams it continues to fuel.
And also because the Nickel water was part of a deal that cost taxpayers $10 million back in 2000 and I like to see how that investment is working out for us.
First, the background.
The Nickel family owned land up in Kings County that actually got a slug of Kern River water every so often when the river ran high.
After the Isabella Dam was built, George Nickel made a claim that storing water in Isabella Lake would deprive him of that high flow water.
The issue was settled with the other river interests agreeing that Nickel had rights to high flow water — now known as the Lower River right — and he was allowed to rent storage in Isabella.
Fast forward to 2000.
The late Tom Clark, who used to work for Nickel, was general manager of the Kern County Water Agency.
The agency made a deal to buy Nickel’s Lower River right and storage in Isabella for $10 million plus the agency agreed to give Nickel 10,000 acre feet of water every year in perpetuity.
That $10 million was public bond money, by the way.
It was part of Proposition 13 passed in 2000 to support safe drinking water, water quality and water reliability.
The agency’s deal definitely created reliability for the Nickel family, which now has 10,000 acre feet a year, rain or shine, to sell up and down the state. And, boy has it (see sidebar).
As for taxpayers who funded the deal, I’m not so sure how we made out.
The Lower River right has only materialized three times in the last 16 years, yielding about 300,000 acre feet to the agency.
Now that is a load of water. But where’s it all gone?
The agency sold a big chunk, 118,666 acre feet, mostly to its member units, local agricultural water districts.
A little more than 90,000 acre feet have been put into the agency’s Pioneer groundwater bank.
And more than 58,000 acre feet have been used to made good on the agency’s 10,000-acre-foot-a-year obligation to the Nickel Family LLC.
Oh, and a little more than 12,300 acre feet have been sold to the Western Hills Water District to support a swanky golf resort/housing development in the bone dry foothills west of Interstate 5 up near Modesto. (Who on earth thought that was a good use of Kern River water? Sheesh!)
Excluding the water sent to the Nickels and Western Hills, about 230,000 acre feet stayed put and was used here in Kern County, which was Clark’s argument for the deal back in 2000.
If the agency hadn’t bought the Lower River right, Clark told me several times, that water would have barreled down the river channel, gone into the intertie and on to the California Aqueduct where downstream users could lay claim to it. (Yes, but no one ever got extra water. It would just mean less pumping from the Sacramento-San Joaquin delta.)
That’s because the Nickels only had so much storage in Isabella. Once that was full and assuming the family had nowhere else to park it, that water was on the loose.
Okaaaay.
Except, I would argue back with Clark, that meant anyone — including the agency, the Kern Water Bank, Rosedale Rio Bravo Water Storage District, or anyone else with recharge facilities and the ability to divert water off the river — could capture it and use it for free.
I didn’t see the wisdom in the deal but Clark never stopped trying to convince me. I do miss that guy.
Anyhow, remember that the Lower River right was paid for by all Californians via a bond. But it was used mainly by large farming interests, which have made large profits from that water.
And, I would point out, our aquifer didn’t benefit. We are critically overdrafted — meaning more water is being pumped out than put back in.
So, that $10 million Lower River water hasn’t increased the “reliability” of the aquifer, which affects all of us.
Besides all that, the environmental documents the agency used to approve the Lower River deal were based on the premise that some additional bond money obtained by the agency would be used to build wells that would restore the river through Bakersfield at least part-time.
That never happened.
In fact, for the past few years, the agency has pumped the heck out of those wells to meet drinking water demand, which makes zero sense to me if the agency truly is flush with Lower River water stored in its Pioneer groundwater bank.
Some people got rich off this deal, some people got water and some got both.
But I still don’t see what taxpayers got out of it.
Opinions expressed in this column are those of Lois Henry. Her column runs Wednesdays and Sundays. Comment at http://www.bakersfield.com, call her at 395-7373 or email lhenry@bakersfield.com.
LOIS HENRY ONLINE
Read archived columns by Lois Henry at Bakersfield.com/henry.
Related Info
Watering suburbia
The 10,000 acre feet of water provided to the Nickel Family LLC by the Kern County Water Agency has been sold in long-term contracts to various entities intent on using it for development.
Most of these developments haven’t broken ground or been fully built yet so much of this water has been stored in groundwater banks or sold on a one-time basis to farming operations.
Here’s who currently owns the Nickel water:
• 2005, Newhall Land and Farming Co. signed a long-term contract to buy 1,607 acre feet. It plans to use that water to help supply 22,000 homes in the Santa Clarita area.
• 2007, DMB Communities II Inc. signed a long-term contract to buy 8,393 acre feet. DMB had tried to use the water for a controversial development in the northern California community of Redwood. But that met with severe opposition.
• 2013, DMB assigned 1,700 acre feet of its Nickel water to CV Communities and 6,693 acre feet to Tejon Ranchcorp. Tejon plans to use 6,278 acre feet of that water for the proposed 12,000-home Grapevine development. No word on what it plans to do with the remaining 415 acre feet.
• 2016, CV Communities assigned its 1,700 acre feet to Antelope Valley‐East Kern Water Agency. CV Communities plans to use that water for a proposed 758-home development called Avanti North near Lancaster.
Cash cow
The Kern County Water Agency gets 10 percent of what the Nickel Family LLC earns off its water sales.
Here’s how much the agency has made over the years:
LOIS HENRY
Californian columnist
Feb. 26, 2013
http://www.bakersfield.com/columnists/lois_henry/lois-henry-there-goes-more-kern-river-water-over-the/article_4614262e-859f-5d4a-918b-e8d706710f77.html
Keeping track of Kern River water leads to all kinds of interesting little snarls.
For example, our river water has created what could become a major dustup for the Castaic Lake Water Agency.
The agency, just to Kern’s south, is the state water contractor that supplies the Santa Clarita area. That includes Valencia and the controversial 21,000-home Newhall Ranch development.
The dust up involves whether the Castaic agency should have obtained permission from the California Public Utilities Commission before buying Valencia Water Co. for $73 million last December.
This is all in Los Angeles County so you may not think you care, but believe me, you should.
That’s because the Castaic agency bought Valencia Water Co. in order to make sure Newhall Ranch taps and toilets get water — Kern River water.
How’d that happen? Glad you asked.
The water was owned by the Nickel family here in Kern County. It was flood water on the lower river (also known as the Hacienda right) that only materializes in very high water years. The average is figured at 50,000 acre feet a year.
In reality, the Nickels had way too much water some years and didn’t get a drop others.
In 2000, the Kern County Water Agency — using public bond money that the agency had pledged to use for Kern River restoration — paid the Nickel family $10 million for the Hacienda right.
As part of the deal, the Kern agency also promised to give the Nickels 10,000 acre feet of water every year. Hard and fast, drought or no drought, the Nickels get that water.
That gave the Nickel family a huge asset that could be divvied up and sold.
And they sell it they have, about 1,600 acre feet a year to Newhall Ranch and 8,400 acre feet a year to Development company DMB Associates.
DMB had grand plans to use the water, through a series of swaps, for a very controversial development in Redwood City, but those plans appear to be on hold.
Not so with the Newhall Ranch development down south.
Things had been moving along until the Castaic agency bought the Valencia Water Co. (owned by Newhall) in December and got smacked with a legal action by opponents of Newhall Ranch.
Valencia Water Co., is a water retailer governed by the PUC. Hence, the PUC needed to bless the union before the honeymoon. But someone forgot to make that call.
When I first started asking about the legal action against the purchase, Castaic agency General Manager Dan Masnada chalked it up to a paperwork issue that his agency would clear away momentarily.
Not quite.
A PUC administrative law judge ordered Castaic to go through the application process, then denied Castaic’s plea to reconsider that order and most recently denied Castaic’s motion to dismiss the action entirely. (Incidentally, Castaic filed its dismissal motion on Friday and the judge zapped back his denial on Saturday. Yowser.)
There are a ton more details that raise questions about the Castaic/Valencia Water Co. purchase deal — including a proposed 15 percent rate hike, after Valencia ratepayers just had their bills increased by 3 percent last November.
But I was most interested in the Nickel water.
Masnada said Castaic’s acquisition of Valencia Water Co. wouldn’t affect the Nickel water one way or another. Newhall Ranch owns that water (under a 30-plus-year contract) and it will ultimately be used for that development, he said.
Castaic’s role in all this is simply to facilitate movement of the water, via the California aqueduct, Masnada said. Oh, and as part of its purchase deal with Valencia Water Co., Castaic will get whatever Nickel water is deemed surplus after Newhall Ranch is fully built out and all its needs are met.
“We’re hoping to get the District Attorney or Attorney General to look into this,” said Lynne Plambeck, president of Santa Clarita Organization for Planning and the Environment.
Her contention is Newhall Ranch would never have been able to get the Nickel water without the help of Castaic and so they made a deal with Castaic that uses public facilities and public funds for one company’s private gain.
I don’t know about all that, but I have to wonder if our Kern River water had stayed where it belonged, if all this strife might be avoided.
Opinions expressed in this column are those of Lois Henry, not The Bakersfield Californian. Her column appears Wednesdays and Sundays. Comment at http://www.bakersfield.com, call her at 395-7373 or e-mail lhenry@bakersfield.com
VIDEO
http://www.bakersfield.com/columnists/water-shortage-in-california-how-far-will-it-let-us/youtube_d6e5e128-afbd-5251-a205-0620f8778110.html
LOIS HENRY
THE BAKERSFIELD CALIFORNIAN, first ran Feb. 13, 2016
Perhaps it seems crazy that Bakersfield has actually ramped up home construction during one of the worst droughts in California history.
Especially crazy since the city’s river rights dried up last summer, bringing 20,000 residents harrowingly close to running out of water.
Add to that the fact that we have a boatload of development left over from the pre-recession days already approved.
Oh, and we sit atop one of the most over-pumped aquifers in the state, something new law aims to change.
Yet from 2012 through 2015, the drought years, Bakersfield issued a combined 5,139 building permits for new single-family homes.
All of which got me wondering how much more development Bakersfield’s water supplies can sustain.
So I asked around.
I kind of figured there’d be a number. Or a guesstimate. Or someone besides me mulling over the issue considering we actually hit the bottom of the barrel last summer.
Mostly what I heard back was “That’s a really good question.”
Hmph.
To be fair, water and planning agencies do track development and water supplies. To the drop.
But that’s just it. Each entity tracks its own supplies, its own use and its own development plans.
Since all those straws are poked into the same milkshake (nod to “There Will Be Blood”), I thought there must be some way to figure out the cumulative demand versus total supply.
Simple, yes? No.
RABBIT HOLE
No one agency keeps an overall running tally of our water supplies and the impact each new development will have on that supply.
If a development includes more than 500 homes, a full-blown environmental review, including cumulative water impacts, is required. But I noticed a lot of large developments appeared to be done piecemeal, staying under that 500-home trigger.
And urban water reports (required by the state every five years), which are typically used to give developments the OK, contain vague averages in terms of water supplies and the reports aren’t uniform from one purveyor to the next, making it difficult to find definitive numbers for how many more houses our water can support.
New groundwater legislation passed last year by the state will force a much more strict accounting, but not for several years.
Meanwhile, we have about 58,000 housing units either approved or in some stage of construction in and around Bakersfield.
Of those, I counted about 12,500 lots in developments in the city that are in some phase of construction, leaving about 37,500 lots in the approved but holding stage, which could mean they are months, years or forever from being built. About 8,000 lots are in county areas around metro Bakersfield but the county didn’t track which are under construction or in the holding stage.
(By the way, that 58,000 doesn’t include the 12,000 homes proposed by Tejon Ranch at the base of the Grapevine, nor the already approved 3,000 homes in Shafter just over the city line at 7th Standard Road.)
So, if you figure each of those 58,000 homes will hold about three people, that means an increase in population of 174,000 people, assuming it all gets built, of course.
Each of those folks will use, say, 250 (a number that will go down if conservation measures are kept in place) gallons of water per day, which works out to about 16 billion gallons a year, or 52,000 acre-feet.
That would be on top of the 120,000 acre-feet a year that existing residents, businesses, parks and lakes require.
Arguably, that wouldn’t be a huge amount of “new” demand assuming most of that development occurs on existing farmland and ag to urban is considered a wash in terms of water use. A lot of those new homes, though, are slated for the unfarmed northeast.
Either way, such expansion would be more “hard” demand on what has already been deemed a critically overdrafted aquifer.
When I say overdrafted, I mean we pump about 300,000 and 400,000 acre-feet a year more than goes back in. (During the drought, it’s been a million acre-feet). That’s, of course, including the draw from Kern’s 800-pound economic gorilla — agriculture.
When water is short, almond trees can be pulled up and cotton plowed under. Houses can’t go dry.
KERN RIVER, DEVELOPMENT LIFELINE
The City of Bakersfield has always boasted a healthy water supply thanks to its ownership of a large chunk of the Kern River.
That didn’t stop a near catastrophe last summer when the river all but dried up and Cal Water had to do some fast dealmaking to get water to its northeast and northwest treatment plants. (See side box.)
Aside from the river, Bakersfield and Cal Water (the main water purveyors in the city) buy some water from the state through what’s known as Improvement District 4 (ID4).
But, by and large, the main source is groundwater.
The city has long maintained that because of recharge from the Kern River, it has a solid groundwater base.
That’s probably true.
Unless you’re in a severe, sustained drought, as we’ve been.
Even without drought, the days of assuming that groundwater is an unending supply are over.
PLANNING KNOCKED FOR A LOOP
“The whole world’s turned upside down and I honestly don’t know how it will all sort out,” said Kern County Planning Director Lorelei Oviatt.
Land-use planning has become an evolving issue under the state’s new Sustainable Groundwater Management Act (SGMA).
“Because now we have a new regulation over the groundwater that we didn’t have before,” she said. “What if it turns out that things in the General Plan that we said we were going to build, we don’t have the water for? How’s that going to turn out? I don’t know the answer to that.
“Right now, the (ag) water districts are all worried about the new law, but planning seems like an afterthought.”
Under the new state law, everyone with a stake in the aquifer (pretty much everyone) has to agree on how much each entity can pump without creating an overdraft.
We’re a long way from a number, but what if it were only a half acre-foot per acre of land? What would that do to planning? To property rights? Who gets priority for that water?
These are questions the county has been wrestling with in different forms for a number of years in other parts of Kern.
For instance, some developments in outlying areas have been required to provide proof of two water sources, homes have been assigned individual water budgets and anyone seeking a General Plan amendment first has to show the county its water source, Oviatt said.
“Those are some of the ideas we’re going to discuss when we start our General Plan update in a couple of months,” she said. “But for some county areas in the metro Bakersfield area, like western Rosedale, I don’t have any solutions yet.”
For her part, Bakersfield’s chief planner, Jacqui Kitchen, agreed that local land use and water agencies must be on the same page going forward.
Though the planning future is murky for both, Oviatt acknowledged the city is in a better position by virtue of its river ownership.
“It may go down some years, but they still have it.”
Or do they?
WATER ACCOUNTING 101
Even the city’s river rights are getting a critical eye as the deadline for a groundwater plan under SGMA approaches.
What if recharge from Kern River water run down the river channel couldn’t be claimed by any particular entity? What if, once it seeped into the aquifer, it was considered “native water”? How would that affect the city’s water assumptions and its planning?
“In adjudicated basins, native river water is claimed by the entire basin,” said Eric Averett, general manager of the Rosedale-Rio Bravo Water Storage District and director of the Kern Groundwater Authority, which is working to create a Groundwater Sustainability Agency per SGMA rules.
An adjudicated basin means water supplies have been sorted out by a court rather than through mutual agreement. If such adjudications have any kind of precedent, that could change how Kern River recharge is accounted for, according to Averett.
No. No. No. And heck no, was the essence of the response I got from Bakersfield’s water resources manager, Art Chianello. (He’s too nice a guy to say “hell no.”)
There’s nothing “native” about the Kern River. It’s divvied up, spoken for, stored and carefully controlled as to when it comes down the river channel.
“It’s not willy-nilly stream water,” he said. “It has someone’s name on it.”
He noted that ID4 claims losses (recharge, seepage, all the same thing) incurred when it moves water through the unlined portion of the Cross Valley Canal.
The city’s claims on river recharge are no different.
OK, but I recall that the city was extremely watchful when ID4 pumped a load of water from wells near the Cross Valley Canal in 2014 and 2015, saying it hadn’t specifically banked water to those wells.
“Shell game” was a phrase I heard from a number of city officials concerned about that pumping.
Funny, that’s the exact same term I heard in reference to how the city accounts for water as well.
“I think it’s an open question,” Averett said of Kern River water. He said that except under certain very limited circumstances that Rosedale-Rio Bravo can’t run its water down the river channel and call it “banked.”
“Rosedale wouldn’t get credit for that water,” he said. “This is just one of the difficult questions we’re working with in groundwater of who counts what, how’s it counted and who gets credit.”
A longtime water observer told me he could see Averett’s point but predicted if anyone tried to make a serious claim for the city’s (or any Kern River rights holders’) recharged river water, that would provoke a fight with all the river interests.
LIVING IN OUR WATER MEANS
All of which gets me no closer to an answer to my initial question, how much development can our water sustain?
I posed the question to City Councilman and City Water Board Chairman Harold Hanson, whose ward covers the rapidly expanding southwest area of town, and Kern County Supervisor Mike Maggard, whose district encompasses the growing northeast.
Both men agreed it’s a serious question. But neither had an answer.
“In Bakersfield, kind of fortunately and unfortunately, water hasn’t been a real issue up until the last few years so people haven’t really thought about it,” Hanson said. “I think there will come a time when we’ll have to build up, rather than out. And that will be a result of water.”
Maggard said the city and county would have to have a “meeting of the minds” and the place for that is a joint General Plan.
“We need to understand how much water is available to us and figure out how to divvy that up,” he said. “Of course, if there are already thousands and thousands of approved lots, well, the cat’s already out of the bag.”
Don’t worry, but do your planning was the advice I got from Metropolitan Water District Executive Director Jeff Kightlinger.
“If you look at the raw numbers, we are adding people to California and most of that growth is coming from births,” he said. “You can’t forestall it, so we plan for it. We figure that’s our job.”
The giant water district that has kept Southern California watered works on reducing water use and finding new supplies whether that’s recycled water or potentially buying islands in the Sacramento-San Joaquin Delta (another story for another time).
“We use less water now than we did 25 years ago and our planning shows we can do it for the next 25 years,” Kightlinger said.
Well, if anyone knows how to make water magically appear to keep the growth train on track, it would be these guys.
Opinions expressed in this column are those of Lois Henry. Her column runs Wednesdays and Sundays. Comment at http://www.bakersfield.com, call her at 395-7373 or email lhenry@bakersfield.com.
LOIS HENRY ONLINE
Read archived columns by Lois Henry at Bakersfield.com/henry.
Kern River through Bakersfield in 2011, a relatively good water year.
Kern River through Bakersfield in October 2015, the worst year of the recent drought and the driest year in 2,000 years for the Kern, according to tree rings.
ALMOST DRY
So here’s how 20,000 Bakersfield residents were nearly left high and dry in summer of 2015.
The Kern River ran at a historically low 12.3 percent of normal. So low that Bakersfield’s rights to the river dried up.
That doesn’t mean the city ran out of water since it also buys state water and has ample groundwater.
The problem for those 20,000 residents is that the city sells river water to California Water Service Co. for use in its northeast and northwest treatment plants.
The plants were built to take water straight off the river, as in the case of the northeast plant, or have it delivered via the Beardsley Canal, as the northwest plant does.
So, when the city’s river rights stopped, Cal Water could see it was headed for trouble.
The only entity getting any river water was Kern Delta Water District. And even its supply was only a dribble.
“The river almost went dry last year,” said Mark Mulkay, Kern Delta’s general manager
But it agreed to give Cal Water part of its river supply in a four-way swap.
Kern Delta gave Cal Water water, then pumped a like amount to deliver to its farmers. The Kern County Water Agency’s Improvement District 4 pumped water that was previously banked by Cal Water and ran it to the California Aqueduct on Kern Delta’s behalf to repay Metropolitan Water District, which needed its stored water back from Kern Delta.
“Without this program the northeast plant would have stopped,” Mulkay said. “I don’t think residents understood how close they came to having no water.”
Some observers raised an eyebrow at that, saying the city had an obligation to be much more upfront with residents served by those treatment plants.
I agree.
Either way, I note the city has taken last summer’s lessons to heart.
The council voted on Wednesday to spend $3.5 million to bring a handful of old, inactive wells back online as an back up water source to “keep pressure in the system.”
The city took that step because the Kern County Water Agency said it could no longer guarantee the city extra water on a short-term agreement.
The city insists none of this is “emergency water,” that there is no risk of the city going dry.
Hmmm. I’m sure everyone thought that before last summer, too.
The Kern River flowing through the heart of Bakersfield. The river is the city’s main recharge for groundwater, which is its primary source of drinking water.
HOW WATER DEMAND IS MET
This information is contained in the Urban Water Management Plans for the City of Bakersfield and Cal Water systems.
The most recent plans were done in 2010 and 2011, respectively. The state will require updated plans this year.
All numbers are annual averages; afy stands for acre-feet per year.
Cal Water
14,000 afy of state water is bought from Kern County Water Agency’s Improvement District 4 (ID4)
19,000 afy is Kern River water bought from the City of Bakersfield
44,000 afy is pumped groundwater
Total: 77,000 afy
Bakersfield
6,500 afy is state water bought via ID4
38,000 afy is pumped groundwater
Total: 44,500 afy
Both agencies also bank water in wet years
QUOTES
“Everyone can no longer look at groundwater like a free checkbook. They better account for it.”
— Peter Brostrom, with the water use and efficiency branch of the California Department of Water Resources about how new state law will affect groundwater use
“The housing market is probably more in balance today than it has been for 10 years. There’s not a shortage but not an oversupply either.”
— Gary Crabtree, a Bakersfield appraiser who produces a monthly real estate report
“Even if all those homes are built to current (water conservation) standards, that’s still new water. And the rest of us have to cut back 32 or 36 percent? Where’s the water for those new homes coming from?”
— Gordon Nipp, Kern-Kaweah chapter of the Sierra Club
“Less water is used for housing than farming. So if you’re taking ag out of production for houses, it’s better for the basin. But it feels like it doesn’t matter what homeowners do to save water if we continue exporting water out of the basin.”
— Bryan Batey, local developer
“Cumulative water use (by new developments) may come up but we’re not talking about it now.”
— Scott Thayer, Castle & Cooke vice president of operations and development
“The driest year on record occurred in 1961, with a total Kern River runoff of 19 percent of average.”
— Bakersfield’s 2010 Urban Water Management Plan. The river ran at 12.3 percent of normal in 2015.
