In The News
Water transfer a maze of laws
Intricate pacts among utilities would shift supply from Kern County to Redwood City
By Kelly Zito
S.F. Chronicle, 11/21/10
No water pipeline runs between Bakersfield and Redwood City.
But the Central Valley town — about 300 miles away — is the source of drinking water for 12,000 homes proposed on a swath of former salt ponds just south of the Port of Redwood City.
It’s called “paper water,” meaning the water wouldn’t actually flow from the heart of California farm country to the edge of Silicon Valley. Rather, the transfer would occur through an intricate series of water agreements involving at least three water agencies, including the utility serving San Francisco and the Peninsula.
There is growing pressure for a more active, flexible water market in a state of 37 million people and almost $40 billion in agricultural output a year. A vocal group of Bay Area community leaders, legislators and environmentalists say, however, that the multimilliondollar deal for the Redwood City subdivision’s water supply is too convoluted, sets a dangerous precedent and may even violate state laws designed to prevent smaller communities’ water from flowing to the highest bidders in faraway places.
“We’re talking about a permanent transfer of hundreds of millions of gallons of water each year from agriculture to urban (areas) that are hundreds of miles apart,” said state Assemblyman Jared Huffman, D-San Rafael. “That’s a red flag that tells you this project needs to be reconsidered.”
Agribusiness conglomerate Cargill and DMB Associates of Scottsdale, Ariz., are the co-sponsors of the Saltworks housing project, and say it’s the epitome of sustainable development. The housing complex envisioned is dense, located in an urbanized area near existing transit options.
Environmental concerns raised by opponents are overblown, backers say, adding that the water transaction — while out of the ordinary in the Bay Area — happens elsewhere around California and complies with all local, state and federal laws.
“There’s not a long track record of (water transfers) on the Peninsula, but it’s a much more common practice in Southern California,” said DMB Vice President David Smith.
On Nov. 30, the city and developer will host an open house on the water supply component of the plan, originally submitted in early 2009.
The final environmental review on the project probably is more than a year away.
Still, the project has generated so much interest and controversy that Redwood City’s planning department added extra meetings for more public discussion.
Redwood City water taken
Water supply isn’t the only contentious issue surrounding the 1,400-acre neighborhood.
Lead agency DMB also has taken heat for proposing the equivalent of a small city on what many say is a restorable tidal plain and along a shoreline bound to change radically in the face of climate change and rising seas.
It is the project’s unusual water source, however, that has raised some of the most nagging questions.
California law requires developers of 500 homes or more to demonstrate a “reliable water supply.” Because Redwood City’s water is spoken for, an early draft of the Saltworks involved pumping groundwater from below the town. Late last year, DMB shifted gears after it bought rights to 8,400 acre-feet of above-ground water per year — or about 2.7 billion gallons — for up to 70 years.
DMB bought the water from Nickel Family LLC, a Bakersfield farming collective rooted in a 19th century cattle empire.
Shuffle among utilities
George Nickel, the nowdeceased leader of the Nickel firm, was one of the state’s early pioneers in water marketing. Decades ago, Nickel secured water rights from the Kern River for his firm using an 1888 agreement. He then leveraged those rights to other developers in the Bakersfield area, helping to grow swaths of residential housing and resorts.
In 2000, the Nickel family sold its rights to 50,000 acrefeet of less reliable “high flow” water on the Kern River for $6.4 million to the Kern County Water Agency, in exchange for a guaranteed 10,000 acre-feet of water from the State Water Project. The 8,400 acre-feet of water for the Saltworks project comes from that 10,000 acre-feet.
The sum for the Saltworks water wasn’t disclosed but probably ran into tens of millions of dollars. One acrefoot is the volume of water needed to flood one acre to a depth of 1 foot and is equivalent to about 326,000 gallons.
So, how does Kern County water end up in Redwood City? In two words: It doesn’t. The process is more like a giant shuffle, in which three water utilities adjust the amount of water they take from various sources.
‘No demand on the delta’
The Nickel Family water flows from the Sacramento-San Joaquin River Delta through the California State Water Project network. Under the pact with DMB, Nickel would not receive that 8,400acre-feet allotment.
Instead, an intermediary water agency supplied by both the State Water Project and the San Francisco Public Utilities Commission would increase its share from the delta by the 8,400 acre-feet.
The SFPUC, which serves San Francisco and most of the communities on the Peninsula, would then funnel the “extra” water in its system to Saltworks via Redwood City.
Estimated water demand for the development is less than the total 8,400 acre-feet, developers say. One acre-foot typically serves about one to two households per year, depending on the number of people living in each home.
DMB Associates emphasizes that the arrangement doesn’t increase the water siphoned from the delta because that water already flowed to Nickel or earlier buyers of the Nickel water.
“This is absolutely no demand on the delta, so it has no implications for the endangered fish there or the ecosystem,” said DMB’s Smith.
Watchdog groups say that’s not the point. Much of the wrangling over California water policy in recent years has centered on regional selfreliance and discouraging long-distance water exports, which are more costly, require more infrastructure and are at higher risk for legal and physical challenges, said David Lewis, executive director of Save the Bay.
Violation of laws feared
Lewis and other experts also fear California’s snowpack is on the decline, jeopardizing the backbone of the state’s water supply and water abundance in the delta.
The transfer removes another potential cache of water for Kern County farmers, hit hard in recent years by federal orders constricting flows from the delta, and may infringe on state laws aimed at preventing the dewatering of rural communities.
“Kern County is one of the driest counties in California,” Lewis said. “The idea that it would be responsible or realistic for DMB to base a huge development in the Bay Area on an elaborate importing scheme is really offensive. It’s wrong-headed and a vulnerable way to set things up.”