Colusa County is doubling down on its participation in the Sites Reservoir Project.
Already a member of the Sites Joint Powers Authority, the Colusa County Board of Supervisors — absent supervisor Kim Vann, who was out of the state — voted unanimously to sign on as a Project Agreement Committee member for Phase 1 of the Sites Reservoir Project.
So what exactly does being a PAC member entail, and why is the county signing on if they’re already a member of the Authority?
The short answer is that it will give the county greater control in how the project could potentially look and operate moving forward.
“Up until probably the end of this year, (the Sites JPA) is the governing body for the Sites Reservoir Project,” Scott Brown, a consultant for Larsen Wurzel & Associates said. “As members come in to sign up for water allocation out of the project, the governance will bifurcate.”
Brown went on to explain the difference in the roles of the two governing bodies:
“The Sites Project Authority will be an overarching governance body that will sort of direct the intent of the project. The specifics of the project – how big is the reservoir, where does the pipeline go, whose property is going to get cut in half – those sorts of discussions will be delegated down to the (PAC)… They will be governing the project development and operations.”
To become a member of the PAC, agencies are required to commit a certain amount of water (in acre-feet) that will potentially come out of the project. For the county, that commitment was for 10,000 acre-feet.
“Be careful on the term of water,” supervisor Gary Evans said. “What we’re doing is selling, essentially, stock options. You buy in, so when it does happen, you’re on a list to participate in water availability – because we don’t have water rights, yet.”
The board submitted a proposal to the Sites JPA to particpate in Phase 1, and the Sites JPA will make a decision on the proposal this month.
Construction could begin by 2021, with an estimated 8-year construction timeframe. The reservoir will take from one to two years to fill, Brown said.
PAC Governance Structure
According to their level of participation, agencies will pay a pro-rata share of the costs associated with that water supply through the various project phases. Those costs include a combination of cash contributions, near- and long-term debt service, and operations and maintenance costs.
Voting within the PAC will also be prorated accordingly.
Among the other agencies who have committed to the PAC include Glenn-Colusa Irrigation District (20,000 acre-feet), Reclamation District 108 (20,000 acre-feet), Westside Water District (25,000 acre-feet), and Colusa County Water District (33,000 acre-feet). Orland-Artois Water District and coalition of users under the umbrella of Proberta Water District have also signed on. In all, commitments thus far have amounted to 144,000 acre-feet, including the County of Colusa.
“That clearly shows the kind of leadership within the Sacramento Valley,” Sites JPA General Manager Jim Watson said on Monday, adding that proposals were still pouring in.
At each phase of the project, members have the opportunity to reevaluate their participation.
“At the end of Phase 1, if you like the way the project is going, continue on. If you don’t, or your business changes, you have the ability to say, ‘I want to reduce’ or ‘I no longer want to participate,’” Watson said at a July 20 meeting for potential investors. “You also have the ability to see if there’s additional water to be acquired.”
The goal for the PAC is to have commitments for 250,000 acre-feet, or half of the projected annual availability from the 1.8-million-acre-foot reservoir. Brown said last week that he anticipates that number will be reached quickly, and that there was already verbal interest for an additional 80,000 acre-feet.
“Part of the Prop 1 deal is that you have to show enough local interest, as opposed to statewide interest… which is how we’ve approached it,” Evans said.
Where does the 250,000 acre-foot figure come from? The maximum state cost-share for funded public benefits is 50 percent of a project’s cost, under Proposition 1. The state is being given first right of refusal for half of the projected annual water available from Sites Reservoir. If half of the project ends up being funded by Proposition 1, as hoped, the remaining 250,000 acre feet will go toward “public benefits” including ecosystem improvement, water quality improvement, and emergency response. If the state chooses to fund less than half of the project, additional PAC members will essentially be added from a waiting list, Watson said.
At the July 20 meeting, Watson said that while authority membership must be comprised of irrigation and other local water districts and local governments within the Sacramento Hydrologic Region, splitting the governance structure opened the door for participation of entities from outside the region to participate as members of the PAC.
“We’re looking for additional interest in the Sacramento Valley, as well as the rest of the state,” Watson said.
There may also be potential for mutual water companies to be involved in the PAC and procure water from the reservoir.
Although Proposition 1 contains language that precludes “any for-profit corporation or mutual water company whose shareholders and members include a for-profit corporation or any other private entity” from being a part of the JPA, Sites JPA officials believe that mutual water companies can participate within the PAC.
County signs on to Sites Reservoir Project Agreement
“We have run that by the Water Commission’s Legal (Counsel). Of course, they weren’t going to provide us with a written opinion, but they basically said yes, the model that we have does work, although it has never been tested,” Watson said.
Cost to the county
The cost per acre-foot for Phase 1 is estimated to be about $60, and the total cost of Phase 1 of the project is estimated to be $6 million. Through 2019/2020, the commitment to 10,000 acre-feet will cost the county approximately $1 million, Brown said.
Evans said that the time to jump on board was now.
“This is anticipated to be over marketed, much of it to the south,” Evans said. “If we don’t get in now, and hold it from here, they’re not going to be able to negotiate the water back up here from the south.”
“What we’re looking at it as kind of a share price,” Wastson said at the July 20 meeting for potential investors. “Right now it’s penny stock, junk stock. We get the water commission approval at the end of Phase1, now we actually have some potential value in the project. The end of Phase 2 is probably the biggest jump, because that’s… where we have a legitimate project. That’s when we’ll be able to see the value and able to answer a lot of questions.”
During last week’s board meeting, supervisor Denise Carter expressed concern over the potential for sunk costs, should the project not come to fruition.
Brown conceded that the greatest risk to the county’s coffers was if the project failed entirely.
Carter also asked what the county would do with its share of water if and when Sites is built. Brown offered up a number of possibilities, including groundwater recharge and selling it to local municipalities or citizens for consumptive uses.
“You could also sell it on the open market, but price of water in wet years will be less than the (county’s share of) the cost of operation,” Brown said.
“For our Groundwater Sustainability Agency, maybe that county groundwater plan can incorporate (the Sites) water into it” and purchase it for the purpose recharge, Carter said.
Evans said that the water simply gave the county a great deal of flexibility. <