This is normally the time of year I am scrambling to find new stories and spending most of my time resting and writing up a few year-in-reviews to fill space and bide my time until January when the world restarts.
But that is not the case this year, as last week we suddenly learned that the water process which had been moving slowly for years was suddenly rushing in a torrent. The Board of Supervisors rammed through an agreement with Angelo Tsakopoulos, a person I would not trust with someone else’s money, let alone taxpayer money.
Truth be told, I do not agree with the Mayor Pro Tem on this issue, but I do appreciate his attempts to make this process more transparent. But come on folks, it is December 20 today. People are not worrying about city business, they are on vacation skiing or with their families.
The Yolo County Board of Supervisors passed what I would consider to be a complicated agreement, negotiated in closed sessions, with insufficient time for residents, many of whom are on vacation, to weigh in.
Supervisor Matt Rexroad is normally very sensitive to public process and transparency. And he was uncomfortable with the timing issue.
On his blog on Saturday he wrote, “The real issue for me was timing. I did not like the way the timing worked out. The harder vote for me was to vote against Supervisor Provenza’s motion to delay the vote in order to give people time to look at the language.”
He continued, “So I voted against delaying the vote. It was hard for me as someone that values transparency but felt we had compelling reasons to act.”
His reasoning was as follows:
1) The agreement was 16 pages. I spent plenty of time studying it and felt I had a clear understanding of the provisions.
2) I think delaying the agreement put the favorable terms contained in it at risk. We needed to act before the Woodland and Davis City Council meetings on Tuesday.
3) So far this issue has not been the subject of a single e-mail or call from one of my constituents other than Woodland City Councilman Bill Marble. I wish Woodland cared more about this but they just don’t seem to.
However, while he may have been comfortable, residents in this county, I do not think are.
He argues that we gave up nothing, Jim Provenza, whose views are more in line with mine on environmental and land use matters, disagrees. To me this is about process and the process here stinks to high heaven, even though I do not believe Mr. Rexroad would try to pull one over on the voters. I just do not think this was his best moment and unfortunately he is a swing vote, ironically enough on issues of this sort.
Back to Davis and tonight’s meeting.
Again while I disagree with Mr. Krovoza on this matter, I do appreciate his willingness to get on the Vanguard last night and discuss some people’s concerns.
“Neither the timing nor the time for comment are as hoped or planned,” he wrote, “Sooner just wasn’t possible. We’ll keep doing all we can.”
He continued, “I believe this should move forward deliberately. Everything is out there. Tomorrow night will be good – though not perfect, as I wish it could be. If there are key reasons to delay, we’ll consider the pros and cons of such. I have heard of multiple deadlines during this process, several of which have passed. So, honestly, I don’t know what’s real and what’s not. If there are issues, I’d rather spot them sooner rather [sic] than later.”
I have a few disagreements with the Mayor Pro Tem here.
First, no one who is giving you feedback has really read these agreements. So when he says the comments are “largely positive” – I question that. Most people are not paying attention and that is unfortunate and would be true – in fairness – whether this were December 20 or January 20.
Still I have to say, pushing through this project and these agreements in mid-to-late December is not a good idea. I got criticized when I argued this project has been rushed through, but it has. Yes, it has taken twenty years of planning to get to this point, but the actionable items have been pushed through like this.
Whether you are comfortable with this process or not, we need a pause switch to figure out what we are agreeing to.
Democracy is a process, it is not an outcome. It is a slow and deliberative process. If you wish to push something through, you invite skepticism and distrust.
Nevertheless, tonight there will be a roughly two-hour Question and Answer session that Mayor Pro Tem Joe Krovoza and Councilmember Stephen Souza will be putting on. Again, I commend them doing this, they certainly did not have to. But I wish someone would push the pause button for about two weeks and let the world reset from the holidays.
My biggest question is what about this cannot wait until January 3?
As Sue Greenwald put it in an interview with the Sacramento Bee, “I haven’t had time to analyze this and no one else has either. Who’s going to be able to come during Christmas vacation?”
So if I ask a question, it will be, why does this have to be approved tomorrow night rather than January 3 or 4?
On December 21, the Council is having a special meeting with one item on the agenda. It needs to receive the report and approve it to “execute Installment Purchase Agreement between the City of Davis and the Woodland-Davis Clean Water Agency, to related to the above agreements.”
Writes the staff report, “The fiscal impact of these agreements would be significant. The Water Agreement and related Installment Purchase Agreement(s) would obligate the Woodland-Davis Clean Water Agency and the cities of Davis and Woodland to make 24 annual installment payments to Conaway Preservation Group (“CPG”) commencing in 2016. The annual payment would be $2,600,000/year with a fixed 2% annual increase. The total payment over 24 years would be $79,096,842. The City of Davis’ proportionate share (46.1%) of these payments would be $1,198,600 commencing in 2016, with total payments over the 24 years of $36,463,644.28.”
So does the 208-page staff report get at the “why now?”
It is not clear “why now.” This is a time-sensitive matter, but the deadline is March 31, 2011, otherwise the agreement with Tri-City, a company affiliated with Tsakopoulos, would fail and become null and void.
The staff report explains, “These agreements are very significant and important for the Agency and its member cities. The various transactions constitute a major investment in and commitment to the Project. The package of agreements achieves important Project milestones and substantially moves the Project forward.”
There does not appear to be any other deadline that would necessitate this agreement to be completed on Tuesday. If my read of this is incorrect, it would be appreciated if someone could cite another source.
I also see nothing in the county agreement that would specify a date for certain.
So, unless I am misreading this, we do not have to act yet and if that is the case, then for the sake of process and transparency we should not act yet. If Mr. Krovoza believes he is right, then he will be just as right in January, except the public will have had time to digest this and determine whether they agree with you.
—David M. Greenwald reporting
I have a couple of observations:
1. Most of us in the general population do not have the experience or technical knowledge to analyze whether or not the county and city are getting “a good or reasonable” deal on the purchase of water from Conaway. It would also be a waste of our collective time for all of us to attempt to read, understand and form a reasonable opinion about this. While Joe Krovoza may have some water experience, I am unaware that the rest of the council does. Perhaps someone from the City Council or staff could explain what experts/consultants are involved in the negotiation and analysis of the opportunity and contracts. I would feel better about all of this if I knew that we have appropriate help for our council.
2. While much of the focus here is on the Conaway purchase, 10,000 acre feet is relatively small compared to Davis’ total water usage. I believe that Davis will be purchasing much more water from other sources. Can someone in an official capacity please provide some information about the status and cost of the rest of the water we plan to purchase?
3. What vote is needed to pass this by the city council. Could it be that part of the “hurry” may be Don Saylor’s departure from the city council in early January?
“Most of us in the general population do not have the experience or technical knowledge to analyze whether or not the county and city are getting “a good or reasonable” deal on the purchase of water from Conaway.”
While not entirely disagreeing on this point, I don’t think it’s the only issue here. Moreover, do we eschew process when we fail to understand it?
The core issue — among many interesting issues and aspects to this — is whether the proposed summer water the Woodland-Davis Clean Water Agency has negotiated to purchase is a good deal for Davis. Next, we are acquiring all land rights related to Conaway that are needed to implement a surface water supply for Davis. Finally, we would be agreeing to how intake management and costs are shared with Reclamation District 2035 — if we use Conaway for our intake site (there is another option under consideration, so this part of the deal just sets up the CWA for one of two intake options). The next issue that’s far broader is whether the overall strategy of Woodland and Davis is correct. That has been vetted for years and a joint meeting of the Woodland and Davis city councils in Sept. 2009 formally set the strategy in place, following years of studies. I commend the staff reports that are linked to my last comment on the Op-Ed posted yesterday on this site.
Davis City Council agendas will show that this issue was discussed in our closed sessions on November 16, 30, and on December 7th. On December 14th we had something real to share, and on December 15th it all went public. Stephen and I got tired of waiting for news to get public, and so we published our Op-Ed stripped of any confidential facts on 12/12 in The Enterprise. The revised version that ties in the Conaway facts was posted on this site yesterday. The County began moving to protect its land interests in late October, and in November adopted their moratorium on use of county land for mitigation. At the final hearing on the County’s moratorium, Mr. Tsakopoulos’ attorney spoke to his clients interest in buying Conaway.
In a complex negotiation with many parties, one party adding 2-3 weeks may or may not be possible without being detrimental to its interests. I believe Matt Rexroad’s difficult position at the County meeting Friday recognized this. I believe this is a time to dig deep on the substance and see where we really are before potentially prejudicing our current position.
I hope to see folks tonight at 7:00, Council Chambers. I regret that I was traveling Thursday and Friday and wasn’t in a position to get this Q&A started earlier.
[quote]… 10,000 acre feet is relatively small compared to Davis’ total water usage. [/quote] The rule of thumb has been, for domestic use, 1 AcFt is sufficient to provide for a single family residence with 5 people living there, for a year. This is a significant contribution to the city’s demand, particularly as that rule of thumb was prior to use-based rate structures, and conservation including low-flow shower heads and toilets which are now required by building codes.
David,
I may be wrong about this, but I believe that most folks who are screaming for more time and transparency, are generally not in favor of pursuing this path of obtaining clean water for Davis, in large part because of the cost. For me, all I’d really like to understand is that knowledgeable experts in the field are assisting our city council in negotiating and identifying critical issues that keep the cost as low as possible while ensuring the success of the program.
Davis has to do something about water quality and quantity for the future. The fact that the state and federal governments have mandated water quality levels for the discharge of water have set this in motion. Ignoring this reality now will likely have much greater cost in the future.
In my view, there is no more valuable resource in CA than clean water, bar none.
“I may be wrong about this, but I believe that most folks who are screaming for more time and transparency, are generally not in favor of pursuing this path of obtaining clean water for Davis, in large part because of the cost.”
That tends to be the case. It’s that I’m not in favor of obtaining another source that would produce compliant discharge, it’s I wonder if we have exhausted all other possible roads for mitigating costs and alternatives to this plan which in the long run I’m not sure will gain us what we think it will.
I am in general agreement with Adam Smith on this. I don’t mind paying more if we are getting a good deal, but we’ve seen a number of rush to judgements this fall on smaller issues. This one matters. Surely UC Davis has people with expertise on water. What are they saying?
And I would like to see some effort at conservation as well written into this.
I believe the answer to why this deal is being rushed through before Jan 1, 2011 can be found in the Davis Enterprise article from Sunday:
“Under an agreement with the current owners, Tsakopoulos must buy the sprawling Conaway Ranch between Davis and Woodland by Dec. 31, lawyer Taron said. If he does not, he forfeits any deposits he’s made….Tsakopoulos asked Conaway Conservation Group for an extension, Taron added, saying the current owners “put everybody under a great deal of pressure…The developer is juggling several aspects of the Conaway deal. Tsakopoulos wanted to lock in an approval from the county, McGowan said, so he could take that approval to the city councils of Davis and Woodland, who are trying to buy summer water rights from Conaway. The councils are scheduled to meet separately Tuesday night to examine the deal, which was reached through the Woodland-Davis Clean Water Agency, a body made up of two city council members from each city. Provenza’s effort to delay the vote until Jan. 11, the next regular board meeting, failed. A follow-up motion to approve the deal passed 3-2 with Supervisors Helen Thompson, McGowan and Matt Rexroad voting in favor. Provenza and Chamberlain voted no. McGowan said he voted for the deal and against delay because he was worried about “deal fatigue”, he said after the meeting…Thompson said she didn’t feel rushed.”
Joe Krovoza: “I hope to see folks tonight at 7:00, Council Chambers. I regret that I was traveling Thursday and Friday and wasn’t in a position to get this Q&A started earlier.”
With all due respect, I regret that I will be on travel so won’t be able to make the Q&A, which is the case for many citizens. It does not give me much comfort to think that the issue is being rushed (meaningful public process be damned) by the county and two cities just to make sure the developer does not forfeit his deposits on Conaway Ranch…
“I would feel better about all of this if I knew that we have appropriate help for our council.”
Adam Smith’s point is well-taken. This is a major and complex agreement and the record of our current city staff does not engender a great deal of trust. Don Saylor is the classic political apparachnik with a long public record representing the interests of the politically and economically powerful rather than the majority of Davis voters. We all remember how the State’s side was completely outgunned by PG&E’s(et al) hired guns in the State’s energy deregulation negotiations and the disastrous consequences. A go-slow approach with ample time to delve deeply into the fine print coupled with a dose of healthy skepticism should be the mantra of our Council representatives in protecting our interests.
“The rule of thumb has been, for domestic use, 1 AcFt is sufficient to provide for a single family residence with 5 people living there, for a year. This is a significant contribution to the city’s demand, particularly as that rule of thumb was prior to use-based rate structures, and conservation including low-flow shower heads and toilets which are now required by building codes.”
But this will be summer only water when allocations are tight so this really adds a much larger year around supply filling the gap when water is scarce and providing stability to the supply.
We still need to be careful that the bond guys on wall street don’t bury us in debt taking a pound of flesh with each transaction.
“Tsakopoulos asked Conaway Conservation Group for an extension…”
This statement by TSK’s lawyer, interestingly,does not say whether the extension was denied, only that it had been requested. If this was a major factor,it is surprising that did not mention it in defending his decision.
davisite2: “This statement by TSK’s lawyer, interestingly,does not say whether the extension was denied, only that it had been requested.”
I wondered about that too…whether the extension was denied…
Here is a list of the primary negotiators from WDCWA and the Cities of Woodland and Davis. Many of these people and some others not listed began this complex negotiation over 16 months ago. At the bottom of this post are links to the Summary of Alternatives, independent studies by UC Davis professors Schroeder and Tchobanoglous and National Water Research Institute (NWRI).
Dr. Eric Mische-General Manager WDCWA
http://www.wdcwa.com/detail/news/general_manager_tapped_for_regional_water_supply_project
Richard Shanahan-General Counsel WDCWA
http://www.bkslawfirm.com/atty_shanahan.aspx
Alan Lilly-Water Law WDCWA
http://www.bkslawfirm.com/atty_lilly.aspx
Jim Yost-Program Engineer WDCWA
http://www.westyost.com/staff_detail.cfm?id=2
Paul Navazio-Interim City Manager
Bob Clarke-Interim Public Works Director
Jacques DeBra-Public Works Utility Program Specialist City of Davis
Mark Deven-City Manager City of Woodland
http://www.cityofwoodland.org/gov/cityhall/city_manager/default.asp
Greg Meyer-Public Works Director City of Woodland
http://www.cityofwoodland.org/gov/depts/pw/director.asp
Doug Baxter-City of Woodland Utilities Infrastructure Engineering Program Manager
Dick Donnelly-WDCWA Manager from City of Woodland
Diane Phillips-WDCWA Manager from City of Davis
Summary of Alternatives
http://www.wdcwa.com/images/uploadsdoc/Summary_of_Alts_for_DWWSP_051310_with_Cover.pdf
Independent Studies
http://www.wdcwa.com/docs/Schroeder-Tchobanoglous-study.pdf
http://www.wdcwa.com/docs/NWRI-Final-Panel-Report-on-the-Davis-Project-20080718.pdf
Thanks, Stephen.
Here are the links active:
Summary of Alternatives:
[url]http://www.wdcwa.com/images/uploadsdoc/Summary_of_Alts_for_DWWSP_051310_with_Cover.pdf[/url]
Independent Studies:
[url]http://www.wdcwa.com/docs/Schroeder-Tchobanoglous-study.pdf
[/url]
[url]http://www.wdcwa.com/docs/NWRI-Final-Panel-Report-on-the-Davis-Project-20080718.pdf [/url]
Will this meeting be televised via live-streaming? ([url]http://cityofdavis.org/media/[/url])
[i]”Many of these people and some others not listed began this complex negotiation over 16 months ago.”[/i]
So they had, in private, 16 months to hammer out the details. But the public plus elected officials who were not in that group get a weekend to give this deal some thought? That makes no sense.
I’m sure what Elaine posted about about the Tsakopoulos timeline is what is driving the rush job. Regardless, it is a rush job–when we have no chance to digest this information.
How many commissions for the City of Davis had a chance to review the deal before the City will vote on it? None. Why do we even have a Natural Resources Commission if our City Council does not want them to review a water contract and give input and probably sign off on the deal? Why do we have a Budget & Finance Commission if they are not going to be trusted to review in advance the financial arrangement this deal is going to bring about for ratepayers?
In principle, I should say, I am in favor of the move toward surface water. I am aware of the problems well water causes now and will cause going forward. I probably would favor the deal being considered. But I am sick and tired of the arrogance of finalizing public deals which we the taxpayers will have to pay for and then giving the taxpayers no time to comment on the deals. It’s terribly undemocratic. And moreover, it does not serve the best interest of our community.
Think of all the mistakes our “negotiators” made in the Zipcar deal. That was a very simple contract. This one is complex and puts at risk the finances of many Davis homeowners and possibly some Davis companies. If the public had a chance to read and digetst Zipcar, we would have spotted the mistakes the city staff and the city council had made BEFORE they agreed to it. That’s why the city council should not act so fast on the water deal. We don’t yet know what mistakes our negotiators made. If we had a month or two, those could be uncovered.
Rich summed up the (lack of) process issue nicely. It takes time for all of us to process this material and some of us have small children–its the week before Christmas! Folks are busy or away.
Will the joint water system be using chlorination or ultraviolet to disinfect the water?
“I’m sure what Elaine posted about about the Tsakopoulos timeline is what is driving the rush job.”
Rich Rifkin’s certainty of the above is hard to understand as we are all well aware of city staff’s(along with the recent Council Majority) attempts to stifle citizen input and scrutiny. Joe Krovoza ran for our City Council on the core principle of MORE citizen and Davis Commission input. Abandonment of this principle seriously erodes the trust that the Davis voters placed in him and makes a successful tenure as our Mayor Pro Tem/Mayor much more problematic.
Here is a summary, created by excerpting key sentences from the staff report (WDCWA staff, not City of Davis staff report):
The following are the principal deal points in the agreement:
CPG would sell to the Agency 10,000 acre-feet/year of its senior water rights (“Agency” = Davis – 46.1%; Woodland – 53.9%).
Of this amount, 7,500 acre-feet/year could be used during July through September and the other 2,500 acre-feet/year could be used during April through June and October.
This 10,000 acre-feet amount would be reduced to 7,500 acre-feet in critical dry years. During the 47-year period from 1964 through 2010, four years (1977, 1991, 1992 and 1994) or 8.5% of the years were critical years.
The effective date of these transfers would be January 1, 2016. Under the current schedule, the Project would be completed in 2015 and water delivery to the cities would begin in 2016.
The Agency would commit to make annual payments for 24 years.
The 2016 payment would be $2,600,000. The annual amount would increase 2% each year after 2016. The total of all payments would be $79,096,842. Davis would be responsible for 46.1% of these payments, a total of $36,463,644, and Woodland would be responsible for 53.9% of these payments, a total of $42,633,198.
After the 24-year payment period, the Agency would own the water rights and base supply free and clear with no further payment obligation.
If the joint intake is not constructed, then the Agency may divert this water at a new intake location.
The Agency still would have to make the payments, but the Agency could try to transfer the water that it otherwise would have diverted and receive the revenues of such transfers.
As additional security to ensure the annual water payments, CPG is requesting that each city acknowledge and commit to payment from the city water enterprise revenue. As part of this transaction, the cities therefore are being asked to approve a separate agreement to secure payment of the amounts due under the Water Agreement.
Installment Purchase Agreements (one for each city; identical)
Davis – 46.1%; Woodland – 53.9%
The city’s obligation to pay would be a special and limited obligation of the city water enterprise fund and revenue.
Payment obligation would be secured by a pledge of city water enterprise revenue. The city would agree to set its water rates and charges in an amount sufficient to pay the installment payments and other water enterprise obligations.
The agreement would allow the city to later issue bonds or approve other debt payable from water enterprise revenue subject to certain limitations.
If the Project is not constructed, then the cities still would be obligated to make the payments, but the Agency could try to transfer the water that it otherwise would have diverted and receive the revenues of such transfers.
Agreement for Conveyance of Real Property and Easements:
For no additional payment, CPG would agree to convey certain Project-related and other lands and easements.
Land on the river for the joint intake/diversion facility.
Many sections of the planned transmission and delivery pipelines.
A temporary easement to allow for disposal of construction water.
Conservation easements to mitigate the wetland impacts associated with Project construction.
The City of Woodland and other agencies may pursue a flood protection improvement project to increase the capacity of Cache Creek; CPG would agree to cooperate with Woodland to implement this project.
City of Davis: a pipeline easement … to convey liquids relating to wastewater treatment.
The City of Woodland: easements for … relocated railroad tracks over CPG land in Yolo County.
Rec District 2035: cooperate and collaborate on the development and operation of a joint intake, diversion and fish screen facility.
A question I would have for city staff relates to the fee structure that has been developed for this.
City of Davis share is $1.2 million ($2.6 million @ 46% share) beginning in 2016, increasing by 2% per year. Shared by 23,000 households (2000 census), that works out to a cost of $53/year per household.
How is that spread between rental housing, single-family homes, and businesses?
How has that been factored into current water rates, and is the funding being accounted for separately to guarantee that the payments can be met?
http://www.waterboards.ca.gov/waterrights/water_issues/programs/water_transfers/docs/watertransferguide.pdf
Should the City pursue this contract before it knows the outcome of the Water Resources hearing?
WDCWA is using two distinct routes to obtain Sac River surface water from upstream. One is the deal being made through the Yolo-Tsakapolis/Conway-WDCWA as a contract whereby the owner sells water for use elsewhere. The other is the application to get the state to approve the transfer for the stated use. The State will not necessarily consider a business deal as binding its decision. Further, the State doesn’t issue a water transfer “in perpetuity” as the contract stipulates, nor will it recognize a water right as having been “sold.” WDCWA has had to petition the State for permission to transfer water and that’s why it is to go to a hearing January 18 with the Water Resources Board, CSPA and several other interested downstream parties. The approval of the petition to transfer water is being challenged. The challenges won’t necessarily stop with the conclusion of the Board either. CEQA review may become the next hurdle AND the parties challenging WDCWA will have the right to file lawsuits if they don’t like the direction the Board decision takes this.
Table 1 found at the above website as well as a flow chart of water transfers at Figure 1 illustrates the steps that need to be taken and the requirements satisfied to complete an application to the state for a water transfer from one entity to another where there is also change of use i.e. Conway to Davis/Woodland/UCDavis: consumptive use is different than habitat or ag use, partly because water isn’t mostly returned to the river but diverted (diluting waste water in this case). Change of use complicates the transfer of water in the eyes of the Water Board as well as CEQA. While WDCWA have a contract in the making to take surface water from Conway for a fee, the hearing at the State Water Resources Board on January 18 is to establish whether doing so would harm downstream users and even if so, would the State grant a transfer or permit it anyway. Several groups have attached themselves to CSPA’s complaint to stop WDCWA alleging harm to fish and wildlife, Delta issues, inadequate supply for Stockton and so forth. Then there are the issues of seasonality — low summer flows coupled with high summer needs, inflow and outflow requirements to gradually restore Delta health, and so forth.
The 88 page water agreement:
Gives the details of the water right licenses.
provides the dates by which various agreements must be in place.
requires that the seller pump groundwater onto their land to mitigate the impact of lost surface water use.
describes how the agency and the seller will share water rights during the purchase period.
provides for default remedies, escrow terms, dispute resolution.
describes what happens if the project isn’t constructed.
describes liability, indemnity, etc.
pages 18 through 88 are the grant deeds, payment schedule amounts, promissory notes, etc.
The next two twenty page (each) documents are simply the separate installment purchase agreements for Davis and Woodland.
The 55 page document following that describes the easements described earlier.
The final 31 page document describes the agreement between the agency and the reclamation district (RD 2035) for an intake facility.
Time is a huge issue.
The contract was not posted on Wednesday as promised; it wasn’t posted until Thursday afternoon, giving us only three business days (during Christmas vacation) during which the public could scrutinize the contract, and during which I could legally consult with outside experts on it. I have been scrambling for the last few days, and what I have learned has not reassured me. On the contrary, the information I have gained has raised more questions, which can only be resolved with more time.
Tonight’s meeting is, in my opinion, a disaster since according to the Brown act, neither Rochelle nor I can really participate since the meeting was not noticed.
This gives two project advocates a monopoly on answering questions. I, for one, have many unanswered questions.
While pursuing my Ph.D. at UCD, I had lead responsibility for completing a major study of water quality within the Sacramento river at Knight’s Landing, California (citation below*). The Glenn Colusa Irrigation District (GCID)extends through portions of Glenn, Colusa, and Yolo Counties, and is one of the largest irrigation districts within the State. My colleages and I found that the irrigation return water discharged from the District through the Colusa Basin Drainage Canal at Knights Landing had significant impacts on the water quality and algal productivity of the Sacramento River in the Knights Landing area, and these impacts extended for a considerable distance downriver. Since the study area is not far north north of the proposed Woodland water intake, perhaps this dated study might be still relevant and the results still worthy of concern.
Stephen P. Hayes, Ph.D.
_____
Hayes, S.P., A.W. Knight, D.E. Bayer, and G.R. Sanford. 1978. The effects of irrigation return water from the Glenn-Colusa Irrigation District on the water quality and attached algae (periphyton) in the Sacramento River at Knights Landing, California. California Water Resources Center Contribution No. 167. University of California, Davis, California. 75p.
Don Shor, I have a couple of questions you probably have some insight on. I am looking at page 21 of 88 of the water agreement. First, the document states that the Woodland-Davis Clean Water Agency will pay $18,587,479.55 to Conaway Preservation Group. Is that the amount we are paying for Conaway’s permanent water rights, but not the water itself? [quote] For value received, WOODLAND-DAVIS CLEAN WATER AGENCY, a joint powers authority (“Maker”), pursuant to the provisions of this Promissory Note (“Note”), promises to pay to CONAWAY PRESERVATION GROUP, LLC, … the amount of Eighteen Million Five Hundred Eighty Seven Thousand Four Hundred Seventy Nine Dollars and Fifty Five Cents ($18,587,479.55), in accordance with the terms of this Note. [/quote] The agreement explains that we are not paying the $18,587,479.55 up front. That number is the sum of principal payments made over 25 years, beginning in 2015. But what strikes me as odd is that the interest rate on this note is 6% per annum compounded. So over the 25 years we will end up paying $17.9 million in interest. [quote] Interest. The principal balance of this Note, outstanding from time to time, shall bear at the rate of six percent (6%) per annum, commencing on July 15, 2015. [/quote] Don, doesn’t 6% interest for a government agency seem too high? You can get a 30-year home mortgage now for 4.83% ([url]http://www.biggerpockets.com/renewsblog/2010/12/20/interest-rates-surge-housing-starts-up-mortgage-activity-home-prices-dip/[/url]). Most Muni Bond issues are paying around 4-5% ([url]https://trading.fast-trade.com/fmsbonds/bondsearch.do[/url]). I wonder why the WDCWA would not instead just issue bonds to pay off this $18.6 million debt?
Another aspect of this agreement which strikes me as strange is the prepayment language. This gives all the power to the Holder (Conaway) to reject any prepayment by the WDCWA. So, for example, if the WDCWA (the Maker) decided it could issue bonds at 4% per annum, it would be better off just prepaying its debt to Conaway. But Conaway has the right to reject any prepayment and it does not have to give any reason for that rejection: [quote] In the event that Maker has an interest in issuing bonds, notes, certificates of participation or other obligations in order to prepay and defease payments payable hereunder, then Maker shall provide notice to Holder within 30-days of its receipt of notice from Holder and shall negotiate the terms and timing of such prepayment to Holder within 90-days of Holder’s original notice. [b]Holder shall have the right to either accept or reject the terms of Maker’s prepayment proposal in Holder’s sole and absolute discretion.[/b][/quote] That strikes me as total nonsense. Why would our esteemed negotiators, who have been working on this deal for 16 months, agree to that provision? Could Joe Krovoza or Stephen Souza explain why this is in our best interests?
[i]”First, the document states that the Woodland-Davis Clean Water Agency will pay $18,587,479.55 to Conaway Preservation Group.”[/i]
Correction: “First, the document states that [s]the Woodland-Davis Clean Water Agency[/s] [b]Davis[/b] will pay $18,587,479.55 to Conaway Preservation Group.” Woodland* will pay an even larger amount.
*I asked Councilman Souza why Woodland’s share is larger, despite the fact that Woodland is smaller than Davis. Stephen explained that because Woodland has more industrial water users, their demand and use of water is larger than ours in Davis.
I assume that the seller wants a guaranteed yield. Municipal bonds over the last couple of decades have been higher than 6%; right now they are lower. There is a specific provision in the agreement that the cities can issue bonds. The finance folks involved in these negotiations presumably felt that this was a reasonable gamble. I think they probably know better than you or me. More to the point, it seems the seller preferred not to gamble.
Is that the amount we are paying for Conaway’s permanent water rights, but not the water itself?
Water has no intrinsic cost in California, as I understand it (feel free to correct me; it is a complicated subject). It is the rights and the conveyance that make up the cost.