Au­di­tor rips gov­er­nor’s $17B Delta tun­nels project

Re­port says pro­posal costs too much, does not demon­strate pru­dence

The Mercury News Weekend - - LOCAL NEWS - By Paul Rogers progers@ba­yare­anews­

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.


Brown’s pro­posal to build tun­nels through the Delta was hit with an­other set­back as an au­dit found it is suf­fer­ing from “sig­nif­i­cant cost in­creases and de­lays.”

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