Auditor rips governor’s $17B Delta tunnels project
Report says proposal costs too much, does not demonstrate prudence
On the eve of key votes in San Jose and Los Angeles, Gov. Jerry Brown’s $17 billion proposal to build two massive tunnels through the Delta to make it easier to move water from north to south was hit with another setback Thursday as a state audit found it was suffering from “significant cost increases and delays.”
The 91-page report from California’s state auditor, Elaine Howle, also said the state Department of
Water Resources “has not completed either an economic or financial analysis to demonstrate the financial viability” of the project, which the Brown administration calls the California WaterFix.
Also, the Brown administration has not put in place a proper system of governance for the project, and has failed to keep important documents, the audit found.
The audit further concluded that the state Department of Water Resources “did not follow state law” when it replaced a key program manager on the project with a company that it hired without a competitive bidding process and which was run by somebody without an engineering degree.
State officials disputed that they violated the law, and said the project is on track.
“The department has already taken action based on the auditor’s feedback and will take their recommendations under advisement as it moves forward with WaterFix,” said Erin Mellon, a spokeswoman for the state Department of Water Resources.
Mellon said the audit “validates the unprecedented and exhaustive work the department has done to propose the best project for the state of California.”
Environmental groups had a different view.
“California WaterFix is in complete disarray,” said Barbara Barrigan-Parilla, executive director of Restore the Delta, a Stockton organization that opposes the tunnels. “We cannot see how any public water agency can vote to support any percentage of this project.”
The audit noted that the Brown administration hired the Hallmark Group, a Sacramento consulting firm, to run a key part of the planning and oversight for the project. The company, which was recommended by Metropolitan Water District of Southern California, had managed projects at UC Merced, but had no experience managing large water projects. Its president, Chuck Gardner, has a bachelor’s degree in economics. The company was given a no-bid contract that has tripled in cost from $4 million to $13 million.
Thursday’s audit comes at a critical time for the plan, which is one of Brown’s two giant legacy construction proposals, the other being his high-speed rail project.
Last month, the tunnels plan took a significant hit when the board of Westlands Water District in Fresno, the nation’s largest agricultural irrigation district, voted 7-1 not to participate in its funding. Westlands had been expected to contribute roughly $3 billion toward the cost. That means that other water agencies — including Silicon Valley’s largest water supplier — that are trying to decide whether to help fund the project would have to pay more and raise customers’ water rates and property taxes higher than expected to cover the costs, along with any cost overruns.
On Tuesday, the board of the Metropolitan Water District of Southern California, a supporter of the project that provides water to 19 million people, is scheduled to vote on whether to help pay at least $4 billion fund it. Thursday, Brown met personally with 17 of the district’s 38 board members in Granada Hills to urge them for a yes vote.
Then on Oct. 17, the Santa Clara Valley Water District, whose costs could range from $600 million to $1 billion, is set to vote. But the agency’s chairman said Thursday that it may now delay that vote.
“The audit raises questions that our board needs to evaluate,” John Varela, chairman of the Santa Clara Valley Water District.
“We represent 2 million people,” Varela said. “We want to be certain that what we do as a board is not going to have amajor financial impact on our ratepayers. We want to be fair to them. That is our biggest concern.”
The Santa Clara Valley Water District, which is based in San Jose, is the wholesale water provider for a dozen agencies, including cities like Santa Clara and private companies like San Jose Water Company. The district is also considering plans to build a new reservoir near Pacheco Pass, expand the use of recycled water, form a partnership with other agencies to expand Los Vaqueros Reservoir in Contra Costa County and continue to expand its conservation efforts.
“We have to look at all of our options moving forward to provide an adequate water supply as our county continues to grow,” Varela said.
Other big Bay Area water districts, like East Bay Municipal Utility District and the Contra Costa Water District, are not part of the project.
The Delta tunnels plan, begun under former Gov. Arnold Schwarzenegger, would build two tunnels, each 35 miles long and 40 feet high, under the Delta, the vast system of channels and sloughs between the Bay Area and Sacramento where the state’s two largest rivers, the Sacramento and the San Joaquin, meet.
In 2009, the Department of Water Resources announced the project would cost $140 million to plan, design and permit. So far, it has cost twice that, $280 million, Thursday’s audit reported. That cost has come from water districts around the state, and the federal Bureau of Reclamation.
The idea is that the tunnels would take water from the Sacramento River, south of Sacramento near the town of Courtland, and move it to the huge pumps near Tracy that are part of the StateWater Project and Central Valley Project. That, supporters say, would reduce reliance on the pumps and make water deliveries more reliable by protecting endangered salmon, smelt and other fish, which can be killed by the pumps. Pro- tecting the fish leads to reduced pumping.
But critics call the tunnels a huge boondoggle that will eventually allow large agribusiness interests in the San Joaquin Valley, as well as urban users in Los Angeles, to takemore water out of the Delta, regardless of what promises are made now.
Complicating Brown’s plans, his administration has not been able to guarantee that the tunnels will allow any more water to be pumped out of the Delta than is being pumped out now — roughly 50 percent of all its fresh water inmost years.
Farm districts and city water agencies have looked at the costs and dozens of lawsuits already filed against the project, and calculated howmuch debt they would incur. Some wonder if they can spend the money more efficiently, or support a smaller project, even as they face increasing pressure from Brown and his staff to approve the plan as the governor’s final 15 months in office wind down.