Colusa County looking at costly second phase of Sites project

The Colusa County Board of Supervisors have just a few short months to decide if they will be able to remain a paying partner in the construction of Sites Reservoir, the proposed water storage project in the Western foothills that promises to deliver enough water every year, on average, to protect endangered fish, provide summer irrigation to farmers, and satisfy water-thirsty California residents during periods of drought.

The second phase of the project is expected to cost Colusa County $10 million to $14 million over the next few years – and more than $300 million total – if the county remains committed to securing 10,000 acre-feet of water each year for local use or sale, if the off-stream water storage facility is built and becomes fully operable by 2030 as planned.

“We have been involved with this since the beginning, and we would like to remain involved, but we can’t afford the moon,” said Board Chairman Gary Evans, during a workshop on Oct. 16.

California recently committed $816 million from Proposition 1, which voters approved in 2014, to help with construction of the project, which will be located in the Antelope Valley, about 10 miles west of Maxwell.

Last week, Sites JPA General Manager Jim Watson said another $1.1 billion could come from the federal government under the Water Infrastructure Improvements for the Nation (WIIN) Act, especially if the Sites JPA can meet the pretty aggressive schedule the authority has set for completing the project.

The Sites JPA in September also applied for a $435 million USDA low interest construction loan, which, if awarded, would be the largest in history for a project that benefits agriculture and rural communities, although those funds would not be available until the project is actually in construction, approximately in 2026, Watson said.

So that leaves Colusa County and about two dozen other participants – some very small water districts – left trying to figure out how to make the payments on the $350 million loan they need now just to get the project through the next steps of acquiring state and federal permits and water rights, while paying consultants to advance the environmental documents.
Municipal water and irrigation districts in the Bay Area and Southern California are expected to pony up the largest percentage of the planning and construction costs in exchange for the bulk of the water to protect their residents and farms during dry spells.

But some districts, like Cortina Water District in Colusa, are looking to just invest in as little as 300 acre-feet of surplus water.

“Some participants have the ability to pay upfront,” Watson said. “Others won’t have a revenue source until they have the water.”

Colusa County Chief Administrator Officer Wendy Tyler said the county has paid just under $580,000 to the Sites JPA for the county’s administrative fees and reservoir committee participation since it was formed in 2010, and the county has budgeted another $677,000 this year. But she and Colusa County Auditor Controller Peggy Scroggins said they don’t see how the county, alone, can take such a big hit on the General Fund going forward, and both fear the risk might be too high, especially if it turns out the county won’t need or can’t sell the surplus water once it is available.

“We’re talking about $300 million to $400 million over 30 years,” Scroggins said. “It kind of boggles the mind.”

Sites Reservoir is the largest water storage proposal for California, and upon completion would be filled during wet years by pumping surplus water from the Sacramento River, 14 miles away.

As proposed, the reservoir could store up to 1.8 million acre-feet of water, with about 500,000 acre-feet of water available annually for delivery to wildlife refuges, cities, and farms.

Current estimates have the cost of constructing the reservoir at $6.4 billion, which includes a bridge across its expanse so as not to cut off residents living in the Stonyford area, although that option could change to a road route around the reservoir as the project progresses, officials said. In terms of water, the cost to build and operate the reservoir in today’s dollars is about $722 an acre-foot, or around $1,257 an acre-foot adjusted to inflation in 2032 dollars, Watson said.

After joining the Sites JPA eight years ago, the Colusa County Board of Supervisors, after enduring a drought that left part of the county with drasticly reduced groundwater, estimated they would need about 10,000 acre-feet of the surplus water annually to support agriculture if the state takes added control over groundwater and water diversion from rivers and tributaries in order to protect endangered fish.

The board anticipated that what surplus water they don’t need or can’t sell locally would be sold to support agriculture and municipal water districts downriver to protect California’s farms and growing human population, which is expected to increase to 46 million people by 2025, with 60 percent remaining in the southern and coastal regions of California where water is the most scarce.

Eight of the Sites Reservoir investors are in Southern California, three are in the Bay Area, and the rest largely represent Sacramento Valley and San Joaquin Valley agriculture interests, all of which are not optimistic that ocean water desalinization and recycling efforts, currently estimated to cost about $2,000 an acre-foot in today’s dollars, will ever be a viable alternative to collecting surplus flow during wet years and storing it in reservoirs for dry years.

Watson said investors have until Jan. 11, 2019 to sign their participation agreements with the Sites JPA in order for the second phase of the project to begin by March. By then, Colusa County and other investors will need to decide whether to stay in, get out completely, or reduce the amount of water they want to secure.

“We broke the project into essentially three phases that will allow participation to change as we got new information,” Watson said. “This project won’t be operable until about 2030, and that is a long way from today to try and acquire people to make commitments that far in the future.”

Investors can also decide to increase the amount of water they want from the project, and new investors can opt in. Anticipating water to become scarcer in California, the U.S. Bureau of Reclamation recently increased their participation from 15 percent of the water to 25 percent for added fish and wildlife protections.

“That means about a $1.1 billion federal investment, with about $93 million available in the next three years to work on construction activities,” Watson said. “That is a significant role. Essentially, Reclamation stepped up in acquiring water for salmon, something the state decided was too risky to acquire.”

The Colusa County Board of Supervisors could decide as early as January that they have to reduce the amount of water investment. The board, which by then will include incoming Supervisor Merced Corona, whose district suffered the greatest groundwater shortage during the last drought, could also consider looking at alternative funding sources to protect thier water investment, such as the formation of a special district, officials said. ■