Governor’s tunnels get a new price tag –From $17 Billion to $41 Billion–and Counting

We were told the original cost of the Delta Tunnel was at least $68 billion.  Of course there was no money for this—but the confused Guv Brown really wanted it.  So he went to his Ouija Board and came up with the cost being $17 billion.  Out of thin air.  Plus, even at that amount, he had no way of financing it.  So, he was going to raise the water rates to the Districts and then have them raise their rates to customers—an indirect tax that no politician had to vote on.

“How much will Californians pay, one way or the other, if Gov. Edmund Gerald Brown Jr. succeeds in getting his underground Peripheral Canal built?

Not the $17 billion that his Department of Water Resources has said.

Nor, perhaps, the educated estimate of $67 billion from an outside economist.

But a new estimate, from a would-be customer of the tunnel water puts the price tag at between $32.1 billion and $41.4 billion, according to a draft analysis dated September 15 by the Kern County Water Agency, posted at the Wheeler Ridge-Maricopa Water Storage District, and put out for the public to see by Restore the Delta, a Stockton-based environmental group opposed to the project.”

That is 2.4 times the Brown estimate—but like the choo choo to nowhere the costs will continue to rise.  Happily the largest water district in the State said NO—and now YOUR water rates will have to go even higher, if this payoff to unions and crony capitalists get built.  Feel good—you can still move to a Free State.

Delta Tunnels

Governor’s tunnels get a new price tag

Central Valley Business Times,  9/29/17

 

•  Would-be customer says it could be double or more what tunnel backers have claimed

•  “It is feasible that the real end-goal is for urban ratepayers … to subsidize the project”
How much will Californians pay, one way or the other, if Gov. Edmund Gerald Brown Jr. succeeds in getting his underground Peripheral Canal built?

Not the $17 billion that his Department of Water Resources has said.

Nor, perhaps, the educated estimate of $67 billion from an outside economist.

But a new estimate, from a would-be customer of the tunnel water puts the price tag at between $32.1 billion and $41.4 billion, according to a draft analysis dated September 15 by the Kern County Water Agency, posted at the Wheeler Ridge-Maricopa Water Storage District, and put out for the public to see by Restore the Delta, a Stockton-based environmental group opposed to the project.

Kern County Water Agency based its estimates on the project getting an interest rate of 3.55 percent or 3.88 percent. “Higher interest rates would result in significantly higher total costs. These costs do not include potential cost overruns,” notes Restore the Delta.

Restore the Delta says that dividing the maximum capital costs by the average water supply yield results in an estimated cost range of $888 per acre-foot of water to $1,427 per acre-foot of water for Kern County Water Agency water users in 2033 dollars, the year the vast twin tunnels project might be finished. Using 2017 dollars, the price is discounted to $553 to $889 per acre-foot, it says.

“Water this costly would cut deeply into profit margins for smaller farms within the Kern County Water Agency service area, and even the profits of big industrial farms like Stewart Resnick’s Paramount Farms,” says Restore the Delta executive director Barbara Barrigan-Parrilla.

“It is feasible that the real end-goal is for urban ratepayers within the Kern service area and Metropolitan Water District to subsidize the project, or that Kern County Water Agency could resell a portion of water back to Metropolitan Water District to make enough revenue to cover bond repayment,” she says.

If built, the twin tunnels, each wide enough to house a three-lane highway, would suck comparatively clean water out of the Sacramento River before it could flow into the California Delta and pipe it 35-40 miles to the State Water Project and federal Central Valley Project.

The costs would be repaid by the water contractors who buy water and resell it to farmers and cities south of the Delta. The contractors would pass along the cost to their customers.

Unlike Mr. Brown’s Peripheral Canal scheme of the 1980s, which would have done much the same as the tunnels, the tunnels would be financed by revenue bonds. The canal would have been financed by general obligation bonds and needed a vote of the people. It went before Californians and was roundly rejected.

 

 

 

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·  gn

About Stephen Frank

Stephen Frank is the publisher and editor of California Political News and Views. He speaks all over California and appears as a guest on several radio shows each week. He has also served as a guest host on radio talk shows. He is a fulltime political consultant.