It is not perhaps the cleanest and most trumpeting endorsement, but it probably captures a number of people’s feelings as some of them lean toward supporting the project: “Surface water plan in Measure I is filled with flaws, but it’s our best option now.”
The endorsement, and that statement, actually leave room for both sides of the issue to utilize. The Yes on Measure I side can argue that the Enterprise, even with Bob Dunning’s columns and Foy McNaughton’s philosophy, is willing to endorse the project.
The No side can point to the Enterprise concerns and attempt to argue that, while it might be the best option now, that does not mean it will be the best option five or ten years from now, and then attempt to make the case that we can wait.
“No issue that has come before The Davis Enterprise editorial board in the past 30-plus years has been debated as much as Measure I, the proposed Woodland-Davis surface water project,” the Enterprise writes. “But then, no issue has as much long-term importance to our community as this one does – the ability of our city to deliver clean water to our taps for many years to come.”
“We expect these sorts of deliberations to be taking place in every home in Davis, because Measure I comes with an enormous price tag,” they continue.
The critical issues they formulate are ones that the editorial attempts to address: “The question before voters is a simple one – should we move forward with this water project? – but behind it are many complex questions: Is this the correct path for our water needs, now and into the future? Has the decision-making process been fair? Is the rate structure equitable to all residents? Are there better options?”
They argue that these questions have been the subject of hundreds of hours of discussion by the WAC.
“There is no doubt that Davis needs a source of surface water to supplement its deteriorating groundwater wells,” they write in a statement that those opposed to Measure I will undoubtedly disagree with. “In fact, Davis and Woodland are the only two cities with populations greater than 20,000 in the Sacramento Valley region that are still 100 percent dependent on groundwater.”
They note that efforts have been underway to secure rights to the Sacramento River water for twenty years and that the questions become now, as we have secured those rights, “Where do we tap into the river? And where do we have that water treated?”
The Enterprise notes, “Opponents of Measure I fear the cost of the Woodland-Davis project and urge Davis to reconsider a plan to purchase treated water from West Sacramento. They argue that Woodland will not be able to build its plant alone and will come running back to us for help, and that a deal with West Sac will work itself out somehow.”
“Both of these are dangerous conjectures with no proof. Based on these and many other reasons, the WAC and the council discarded the West Sac option as not viable, even though it’s less expensive. We agree,” they respond.
The Enterprise argues that this leaves Davis with no alternative to the Woodland-Davis project. The Davis share comes to around $113 million.
The Enterprise argues, “Although the size of the plant was scaled back thanks to the WAC’s work, Davis’ share of the costs shrank by a less-than-equitable amount. Davis will pay 50 percent of the cost to operate the plant when it will use substantially less water than Woodland.”
They argue, in homage to the opposition, “We think tougher negotiations could have cut our community a better deal.”
The Enterprise then notes that the rates will nearly triple over the next several years.
They write, “A complicated rate structure and stretched-out debt financing will help reduce the sticker shock somewhat, but we remain concerned that higher bills will be an onerous burden for many in these challenging times. Household dollars spent on water are dollars that will not be available to help support the local economy.”
They then repeat the charge leveled in the Michael Harrington lawsuit: “And, thanks to the recent revelation that the city of Davis hasn’t been paying for its own water use, our already-stressed general fund will be further tapped to cover these new expenses. Brace yourself for more budget cuts.”
We do not believe this to be an accurate statement and we believe it irresponsible of the Enterprise to repeat this charge.
The Enterprise continues: “Woodland ratepayers are in a better position than we are, because that community has gradually been ramping up water rates over the past five years.”
They continue, “Past Davis City Councils had that option as well but lacked the courage to start saving, and now we’re in a big hole.”
In this case, we agree and the Enterprise deserves credit for calling out past councils.
They add, “The city has provided plenty of information about how homeowners can calculate their future rates, which are based on an arcane peak summer-use formula that most of us don’t really understand, as well as on our monthly water use.”
The bottom line: “The good news? We’re told that these rates are the most fair for the most number of people. The bad news? They’re going to be high, no matter what. And the worst news? Even if you conserve, your water bill undoubtedly will rise, because the city must raise the money necessary to pay for the plant’s construction.”
That is not necessarily true as the city has factored in a 25% conservation buffer for its rates. That means that some individuals, through water savings, can avoid some of the rate hikes.
For them the core point is this: “We have one shot to partner with Woodland on this project before that community goes forward on its own. We are asked to choose an option filled with flaws, wishing it could be so much more. If we say no, where do we turn for our future water needs?”
It seems that really what their support boils down to is the fact that, flaws and all, they do not see another realistic water option.
Our view on the impact of the editorial is that it is mixed, at best. The Yes side can trumpet the overall endorsement of the Enterprise, the No side can use some of the paper’s statements to foster doubts by those residents on the fence.
As few in the community are likely to be swayed directly by the Davis Enterprise support for the project overall, the editorial itself actually gives both sides considerable ammunition for the last few weeks of this campaign.
The Enterprise did no one in the community a favor by repeating the charge that the city does not pay for its own water use. We do not believe that to be accurate and we believe it irresponsible of the Enterprise to put their official stamp of approval on it.
—David M. Greenwald reporting
The way for each person to decide how to vote is to have their questions answered. I am slowly knocking those down and here is my next one, adding to the debate.
The increases in rates have been been likened to a MORTGAGE to pay for the project and I believe they include the cost to keep our groundwater system up and running along with the river water component. A mortgage has a cost every month that is the same from beginning to end, whatever the term, such as 30 or 40 years. Why are the rates then set to rise and rise and rise year after year when a typical mortgage, once it is incurred, requires the same amount every month to make the payment?
Here’s another one:
Would a storage component abrogate the need for a project of the current size and cost? Would there be an overall cost savings or would they cancel out when the savings from a smaller project and the added costs of storage capacity were considered together? Even if they were to break even it would still be better for
the river ecology since more water would be removed when the river could afford it and less water
removed when the river could ill afford it.
dlemongello
[quote]The increases in rates have been been likened to a MORTGAGE to pay for the project and I believe they include the cost to keep our groundwater system up and running along with the river water component. A mortgage has a cost every month that is the same from beginning to end, whatever the term, such as 30 or 40 years. Why are the rates then set to rise and rise and rise year after year when a typical mortgage, once it is incurred, requires the same amount every month to make the payment?[/quote]
As is abundantly clear from previous posts, I have no expertise in financing of any type. But here is how I see this.
The analogy to a mortgage is incomplete. Any homeowner can tell you that the mortgage is only one of the costs of owning a home. If you buy a house anticipating that the only cost of that house to you will be the fixed mortgage rate, you are sadly delusional. Owning a home also entails insurance, maintenance of the property, plumbing, heating and AC systems, the roof as just a few examples of ongoing costs. These costs may vary widely overtime. Some you can anticipate may go up considerably. With a few others, you may get lucky and be able to contract for a less expensive provider of services. But what you can be guaranteed is that securing a mortgage is only the beginning of what that home will cost you over time.
Medwoman, thank you for a start. Maybe someone can break down what the mortgage in the water project includes and what floating costs are left. I’m guessing actual month to month operations are not mortgaged for example. It is clear by the graphs that estimations of all costs combined are being put forth.
If you take out a mortgage on a rural property, you are going to be buying your water system with the house. Your well is likely to need to have the pump replaced every few years (maintenance). If you try to use a pump appropriate to a house for the purpose of watering your agricultural property, you are likely to burn it out faster (been there, done that). So if you need greater capacity, you will have to pay for a different kind of pump.
If your well gets contaminated or your tests reveal the presence of excess nitrates, you may decide that the water isn’t suitable for drinking. You may then decide you need to dig a deeper well to find cleaner aquifers. You will probably want to consult an hydrologist at that point, just to see if such aquifers exist and how sustainable they are. Because digging a deeper well is much more expensive. You’d probably want to find out if there are local issues with neighboring wells having adverse impacts on each other.
In order to pay for the deeper well, you can refinance your mortgage, or take out a separate loan.
For your farm, it is possible that there is an irrigation district that has surplus capacity from whom you can buy water. You will do so at their rates. You pay on an acre-inch basis, but that has been priced to cover the cost of their infrastructure as well. Because they are paying off their own mortgage.
If you are really lucky and there are surface water rights available nearby, you and your neighboring farmers can join together and form an irrigation district and buy those water rights, build the infrastructure, and share in the water. You will devise a rate structure that covers the cost of the infrastructure and operating costs, and will bill the water by the acre-inch in a manner that reflects that. Examples: Solano Irrigation District, Maine Prairie Water District.
Fortunately for Yolo County, the farmers formed an irrigation district in the 1970’s and get much of their water from Indian Valley Reservoir in northwest Yolo County. If they hadn’t done that, the subsidence from pumping the intermediate and shallower aquifers would be even worse than it is.
Because of prudent behavior by farmers, the only remaining heavy groundwater users in the area are Davis, Woodland, and Dixon. I believe Davis and Woodland are the only two remaining cities of any size that rely entirely on groundwater. We are using a well system that predates our knowledge of the aquifers. We now know that they aren’t sufficient for a town of our size for the indefinite future. Planning a replacement facility takes decades, and that process has been underway since the mid-1980’s.
dlemongello said . . .
[i]”Would a storage component abrogate the need for a project of the current size and cost? Would there be an overall cost savings or would they cancel out when the savings from a smaller project and the added costs of storage capacity were considered together? Even if they were to break even it would still be better for the river ecology since more water would be removed when the river could afford it and less water removed when the river could ill afford it.”[/i]
That is a really good question Donna. One that I have spent a lot of time thinking about, both as part of my WAC deliberations, and on my own since.
At Thursday night’s Prop 218 hearing, Kathleen Groody brought up the storage component (Aquifer Storage and Recharge also known as ASR). I agree with both of you that the topic deserves considerable attention going forward. Kathleen is absolutely right that a robust Davis water source portfolio should include ASR. I strongly support that . . . strongly. However, in my opinion having ASR would not put us in the position to further downsize the water treatment facility. The reason I say that has to do with cost. When we downsized from 40 mgd to 30 mgd there was minimal cost reduction to the following components of the system 1) the intake facility in the Sacramento River, 2) right of way and land aquisition, 3) the raw water pipeline from the river to the treatment plant, 4) the treated water pipelines from the treatment plant to the two cities, and 5) the modifications that each city has to make to their existing distribution systems in order to receive the surface water and effectively blend the surface and groundwater together. From 40 to 30 the cost reduction on those five items was minimal. From 30 to 24 (12 to 6 in the Davis share) the cost reduction on those five items would be zero.
That means that the only place where further cost savings could be obtained would be in the treatment plant itself. The treatment plant costs have three major components, A) the “soft costs” of environmental documents, permitting documents, engineering, design, legal counsel, agency administration and program management, B) the building of the treatment facility’s shell (e.g. walls and roof and heating equipment and light fixtures, etc), and C) the building of the treatment facility’s pipes and tanks and processes. Downsizing from 30 to 24 will not reduce A) especially since the ASR capabilities will require their own share of all the subcomponents of A). Downsizing from 30 to 24 will not reduce B) because it is much cheaper to build an original building a bit larger than it is to modify/expand the building at a later date. So that means the only place that we can reduce the treatment plant costs is in category C).
When going down from 40 to 30 we saw a decrease in treatment plant costs from $123.45 million to $105.03, which is almost exactly 15%. The capacity reduction was 25% in aggregate; however, if you look at just the Davis portion a 33% reduction (from 18 to 12) produced only a 15% savings. Going from 30 to 24 will be lucky to produce much more than a 5% savings in my opinion because we have already squeezed down C) by grabbing the easy savings. Further savings will be much harder. So, Davis would be reducing its portion of the capacity by 50% (from 12 to 6) and only realizing at most a 10% cost savings (double the 5% because the whole 5% aggregate savings would theoretically flow to Davis). Then you would have the ASR development costs as well as an offset to the 10% saved, which probably puts us back at a net 5% savings (or less).
Now let’s look at an alternative scenario. Keep the plant at 12 mgd for Davis and aggressively pursue ASR as an incremental aspect of the project. As Kathleen pointed out on Thursday night, there are changes to the 45,000 acre foot water right that will have to be applied for and approved in order to move forward with ASR. That will take some time, but lets assume that those changes to the water right happen by the time the plant comes live in 2016. If we perfect an ASR storage addition to the then existing system we may well find ourselves with enough summer water that we do not need the Conaway Ranch 10,000 acre foot water right water. If that is the case we can sell that 10,000 acre feet water on the open market to any willing buyer at what amounts to a retail price. So what that means for me is that spending the extra 10% does for us is set up a “buy wholesale, sell retail” situation that we could not take advantage of if we only had 6 mgd of treatment capacity.
Alternatively, we can do as you suggest, and simply not take the Conaway water from the river, but I don’t see how we can do that with only 6 mgd of treatment capacity.
Does that make sense?
dlemongello said . . .
[i]”The way for each person to decide how to vote is to have their questions answered. I am slowly knocking those down and here is my next one, adding to the debate.
The increases in rates have been been likened to a MORTGAGE to pay for the project and I believe they include the cost to keep our groundwater system up and running along with the river water component. A mortgage has a cost every month that is the same from beginning to end, whatever the term, such as 30 or 40 years. Why are the rates then set to rise and rise and rise year after year when a typical mortgage, once it is incurred, requires the same amount every month to make the payment?”[/i]
Another excellent question Donna. The answer is that the way the revenue requirement that went into the rate model was created was by issuing bonds each year only for the amount of the actual construction completed that year. Therefore, the total amount of the bonds increases year by year over the four years 2013, 2014, 2015 and 2016 of the construction. In the pay as you go scenario approved by Council on 12/18/2012, the interest on the bonds issued appears in the expenses in the year following the issuance of the bonds, so the revenue requirement associated with the conjunctive use system as planned reaches an apex of $28,269,000 in Fiscal Year 2017/18 and then stays level at that $28,269,000 for a period of five years. After that inflation impacts both the variable costs and salaries enough to begin an annual CPI increase.
DV wrote: “The Enterprise did no one in the community a favor by repeating the charge that the city does not pay for its own water use. We do not believe that to be accurate and we believe it irresponsible of the Enterprise to put their official stamp of approval on it.”
David: the City has already admitted they dont pay for water. That admission shows that the City is in clear violation of Prop 218.
Stop being political and sucking up to the city elites, and just look at the facts and law.
The Enterprise also said to expect severe cuts in personnel and services due to the potential huge hit to the City’s budget, Mike. Thanks a bunch, Mike. I’ll take any reasonable explanation to prevent that from happening.
MH
[quote]Stop being political and sucking up to the city elites, and just look at the facts and law.[/quote]
I think that it would be difficult for anyone to accuse me of being particularly political, or of “sucking up to the city elites”. Yet when I asked you to post specifics about this statement, who said what and when, as well as the exact quote, not your interpretation of it, you remained silent. It is very hard to “just look at the facts”
when the facts are not presented, but rather some vague reference to what an unnamed source may have said, let alone what they may have meant when they said it. This is theater, not fact. So please, why should we favor your theater, over that of the city, since as you said, it is important to look at the underlying assumptions, not just the fancy presentation.