A huge conservation project that includes building two massive tunnels to carry water to California farms and communities can only be funded if local water agencies agree to make fixed payments — even during dry periods when deliveries are reduced, state officials said Friday.
The information was provided as the state treasurer's office released a financing plan for the proposed Bay Delta Conservation Project. The treasurer's independent study offered no opinion on whether the project should be built but said the tunnels would only be feasible if water agencies adopted set annual payments.
The $15 billion tunnels are at the heart of the contested project that would bypass the Sacramento-San Joaquin Delta while delivering water to Central Valley farms and Southern California cities. A pair of 40-foot-wide tunnels would reach depths of 150 feet below ground and run for 30 miles.
Other parts of the plan include restoring delta habitat for wildlife. The entire cost of the plan is pegged at $25 billion. However, water districts would only help cover the $15 billion spent on the tunnels.
The two-year study considered a variety of factors, including decades of rain and snowfall levels, typical delta flows, crop prices, variable construction costs and the project's inherent risks.
"We believe this report is a very positive assessment of the affordability of the proposal," said Karla Nemeth, deputy director of the California Natural Resources Agency, which requested the study.
Pivotal to the state economy, the delta carries Sierra Nevada snowmelt into the largest estuary on the West Coast and on into San Francisco Bay. The delta provides 3 million acres of farmland with irrigation water and 25 million Californians with drinking water.
Water districts in Central and Southern California — such as the Metropolitan Water District, Westlands Water District and Kern Water District — have paid for much of the planning so far. Those agencies and their customers would be responsible for billions of dollars in debt over 50 years, the study says.
The fixed payments plan would mean that even in future drought years, water agencies would pay while receiving little or no water. The study says the payment strategy is necessary to sell revenue bonds at reasonable rates.
The study also notes risks, saying such massive projects often run over budget and can be subject to unexpected regulatory and environmental changes.
Environmentalists, delta farmers and the fishing industry want to block the project, saying the tunnels would further harm the delta's water quality. They said the study reveals a 34 percent construction cost overrun, while failing to say if the tunnels are a good investment for California.
San Joaquin County farmer Mike Robinson, who grows alfalfa, melons and corn on the delta, said the tunnels would siphon off freshwater and draw in salty sea water, eventually turning the delta into a saltwater marsh.
"It would be disastrous for the delta and our farming operation," he said. "It would put us out of business."
Gayle Holman, spokeswoman for Westlands, a major supplier of irrigation water to Central Valley farmers, was not immediately available for comment on the affordability study.
The funding proposal was an encouraging development, Metropolitan Water District General Manager Jeffrey Kightlinger said in a statement. His district provides water to 19 million people in six Southern Californian counties, partly from the delta.
"Whether we pay now or in the future, it is important to remember that California faces unacceptable risks to our water supply and the economy if we fail to take comprehensive action in the Sacramento-San Joaquin Delta," he said.