Maureen Stapleton of the San Diego County Water Authority (SDCWA) spoke to the City Council Wednesday, updating members on the California “drought,” on a lawsuit between SDCWA and the Metropolitan Water District —and alerted them to what the Authority considers questionable financial practices by the Met.
Mayor Sam Abed called Stapleton, who has been general manager of SDCWA since 1996, “the Energizer Bunny of the Water Authority.”
The Authority sells 90% of the water consumed in San Diego County. It, in turn, buys a percentage of its imported water from The Metropolitan Water District of Southern California “The Met”—an agency Stapleton spent a significant part of her presentation talking about, and bashing.
Stapleton described her job as, “The regional wholesaler and planner, so that when you decide to develop the water will be there for you.”
Stapleton described the Authority’s “twenty-year effort to diversify our water supply. In 1991 we had a 31 percent cut to our water and lost 52,000 jobs in our region and it was devastating to our economy and quality of life. You came to us and said ‘You need to diversify.’”
In answer to that demand, the Authority diversified its portfolio. “Our reliance on a single supplier from the Met by 2020 will have gone from 95 percent to 20 percent,” she said. The Authority did this through a deal with the Imperial Irrigation District of the Central Valley, through developing local surface and ground water, recycling programs, and, as of last year, the desalination plant in Carlsbad.
“We didn’t just stop with supplies,” said Stapleton. “We also improved our facilities.” The Authority built two dams, one at Olivenhain and the other an improvement of an existing dam, San Vicente, near Lakeside. That raised the San Vicente dam 117 feet, more than doubling its capacity. They also did “pump energy storage” at Hodges, which allows hydroelectric power to be stored and released by letting water flow downhill from Olivenhain to Hodges.
Stapleton took a bow for the district—which last week received the American Society of Civil Engineers’ OPAL Award, the Outstanding Civil Engineering Achievement Award for SDCWA’s Emergency and Carryover Storage Project, a series of large dams, reservoirs, pump stations, pipelines, and tunnels—designed to protect the region from a catastrophic disruption of its supply.
The OPAL (Outstanding Projects and Leaders) award was presented at a gala in Arlington, Virginia. The project beat out the Chhatrapati Shivaji International Airport, Terminal 2, in Mumbai, India; One World Trade Center in New York City; Pearl Harbor Memorial Bridge, in New Haven, Connecticut; and the Union Station to Oak Cliff Dallas Streetcar Project, in Texas.
Stapleton was deeply critical of the state of California for refusing to declare an end to the drought. Referring to a chart showing rainfall going back to 1906, she observed, “We have feast and famine. We have to plan for those drought periods. That’s why we did the Carlsbad desalination plant. Having wet and dry years is no surprise, but unfortunately it’s a surprise to the state of California.”
Stapleton called 2016-2017 the “best of hydrogeological times and the worst of times. In February, the State Board [of Water Resources] voted to continue drought emergency regulations for all fifty-eight of California counties. We asked them to focus solely on the counties that needed their assistance. They refused.”
This action was taken “at the same time that fifty of fifty-eight counties were in flood emergencies.”
The Authority chief introduced charts showing that precipitation in the Northern Sierras was 188% of normal, and over 200% in Oroville, where residents have been threatened with flooding.
“Sacramento is still getting rain. The question is, where do they put the water? We’re at a point in California where we have more water than we have places to put it. We need to move forward on statewide storage to take advantage of climate changes and statewide water,” she said.
She showed before and after slides of various state rivers bulging at their banks, and a slide indicating that the Upper Colorado River basin (another source of water for California) is at 138% percent of normal precipitation and snow water at 152% as of February 21 & 20.
“The Water Authority last month adopted a resolution declaring the drought in San Diego county over. Despite the state we felt we strongly we needed to be honest with our communities and not pretend there was an emergency when there wasn’t. We want you to be water efficient, we want you always to conserve water but we don’t want to say the sky is falling when it isn’t.”
The second part of Stapleton’s presentation was an update on the ongoing saga of the lawsuit the Authority has pursued against the Met over rates it charges for moving water.
“In the eight years of the lawsuit a half a billion dollars has come from our ratepayers and gone to Los Angeles, Riverside and San Bernardino to subsidize other agencies’ water purchases. Over 45 years that we need transportation from the Met we estimate it will cost us $7.4 billion,” she said.
MWD’s rates were “ruled illegal and unconstitutional” on November 18, 2015 by Superior Court Judge Curtis E.A. Karnow— who wrote that the 2011-2015 rates violated the California Constitution, specifically Proposition 26.
“The most important thing,” she said, “Is that MWD [the Met] continues to use the same formula ruled illegal by the court.” It continues to use the same rates while it appeals.
Karnow awarded $244 million (and growing) for damages for four years of mischarging, at 7% interest per year. The Met has filed an appeal. The appeals court has reviewed briefs and heard oral arguments. If the decision goes against the Met, it could appeal to the California Supreme Court.
Stapleton explained, “For the city of Escondido your share of first four years is $10.392,151. If it goes for the whole eight years, it would be $21.415 million.” If the award is upheld on appeal SDCWA plans to return the award proportionally to each member agency. “You can invest in infrastructure, or soften rate increase—that will be up to you. I guarantee, mayor, that I will be here with a big check!”
If SDCWA loses, the region will pay an annual amount of $81 million, she said.
Met Financial Practices
The third part of Stapleton’s presentation was to alert the council to what she called the Met’s “unusual financial practices,” which she called “a risk to ratepayers,” and concluded, “They are on a path that as a public service for my entire career is scaring me to death.”
The Met has operated without a long-term financing plan since 2004, she said, and in the last decade increased rates by 100%. “The bulk of the costs we pass onto our members is from MWD,” she said.
“During 2012-1015 they charged more for water than was necessary to cover their services, by $847 million over four years,” she said. Escondido’s share was $7.5 million “So what did they do with the extra money? Did they reduce rates? No. They spent $1.2 billion off budget above and beyond their approved budget,” she said.
The Met bought five islands in the Sacramento River Bay Delta for $175 million, “which they bought without an appraisal, and when questioned about it said it was an opportunity purchase but they weren’t sure what they were going to do with it,” she said.
They also spent $400 million on a turf replacement program that saved 15,000 acre feet of water, she said. The cost of an AF of water varies widely in the Golden State, with $1,000 being a good benchmark. So, 15,000 AF at $1,000 apiece would be $15 million.
Finally, she said, “They did $900 million last year of unplanned borrowing. “This is a public agency, what’s going on? That’s what we are trying to figure out.”
The Met put $300 million into its operating reserve to bring it up to $900 million, but that $300 million came from bond money.
“All of these figures these figures come from the Met, which has never told us our numbers are wrong,” she said.
Stapleton is on a campaign to raise public awareness about this issue. “I want to engage everyone on this travesty. This is our community that is being negatively impacted. We are demanding that our questions be answered,” she said.
When they demanded to see bank records on the Met’s loan done in 2015-2016, “the records came to us fully redacted, including the name of the bank and the signatures for who approved it,” she said.
She concluded, “We want to bring changes and fiscal responsibility to the Met and resolve our disputes. We want you to support our efforts. We think it’s going to heat up as the appeals process gets closer.” She asked the council to share this information with other public officials. “We need more than just San Diego to care because we are outvoted at the Met day in and day out.” She asked the council to consider a resolution of support and concern. “These numbers are out of hand.”
Mayor Sam Abed called Stapleton’s revelations “very alarming,” although he seemed to attribute the Met’s problems to “crisis after crisis coming out of Sacramento.” He added, “I did not know that this was that serious. I hope we can get the check, but there seems to be no solution right now.”
Council member Mike Morasco asked Stapleton who has jurisdiction over the Met. She answered, “They report to no one. The only changes that can be made is by the legislature or their own board. We’ve tried to make some changes but we are outvoted.” The Met board is not elected. Members are appointed by member cities and agencies.
“It’s got to be external pressure that will make the change,” said Stapleton.
“It’s criminal!” declared Deputy Mayor John Masson. “These people should be locked up and put in jail. I will be in full support of doing a resolution,” he said.
Councilman Ed Gallo quipped, “If you think this is a pretty raucous issue, you should attend one of our meetings. There are a lot of hostile water people out there.”
Councilmember Olga Diaz added, “I’m now mad about something I was not aware of. I’ve never heard it quite the way you have presented. I have an indignation I never had before this morning. But have you reported any of this as criminal behavior? The activities you have talked about should be reported. It’s not political, it’s criminal.”
Stapleton conceded, “There are some questionable activities happening that perhaps need more scrutiny from a legal standpoint.”
Stapleton noted that San Diego represents 18% of the vote on the board, or four seats. “The 1928 act [that created the Met] needs to be refreshed.”
A council member suggested that former city councilwoman, current Assemblywoman Marie Waldron ought to take up this cause in Sacramento.
“She tried,” said Abed, “and because it’s a one party system nothing happened.”
“I’m of that party and I would be outraged,” declared Diaz.
“This is relatively new information and we took a lot of time and effort to make sure this is accurate,” said Stapleton.
Abed, said, “I think all five of us on this council are interested in taking action. I’m of the view that we should consider a class action suit. I think the state is going to collapse. They are just ignoring these issues.”