Tiered Water Ruling — Water Agencies Shouldn’t Make a Profit Off Homeowners

Last week the California Court of Appeal issued an important ruling interpreting Proposition 218, the Howard Jarvis Taxpayers Association sponsored initiative approved by voters in 1996. Proposition 218 is entitled “The Taxpayers Right to Vote Act” for a very good reason. It reflects the policy that those who pay the bills for public expenditures – taxpayers – should have the final say over how much is taken out of their wallets and pocketbooks. It subjects virtually all local taxes and fees, especially those related to property, to voter or ratepayer control.

Proposition 218 was necessary because the Legislature and the courts had created loopholes in Proposition 13, the iconic California initiative that started the modern American tax revolt in 1978. While Proposition 13 was focused on property taxes, Proposition 218 was drafted to limit the explosion in other types of government exactions burdening homeowners including so-called “benefit assessments,” fees, charges and other sorts of property related levies.

What is important to note about Proposition 218, is that it did not ban property related fees but, rather, sought to return the imposition of fees like water, sewer and trash collection rates to the traditional concept of “cost of service.” Cost of service simply means what it says: The cost to a property owner for a service should not exceed government’s cost to provide that service.

In its ruling, the Court of Appeal concluded that “tiered” water rates, without being justified under “cost of service” principals, failed to comply with the constitutional mandates of Proposition 218. The lawsuit was brought by the Capistrano Taxpayers Association against the city of San Juan Capistrano for, among other transgressions, imposing water rates that were “tiered,” meaning those who used more water would be charged a higher amount per gallon.

The court ruling was immediately condemned by water agencies, state bureaucrats and even Governor Jerry Brown who decried the decision as putting a “straightjacket” on his policies to enforce water conservation. But the ruling did nothing of the sort. First, rather than saying all tiered water rates were automatically unconstitutional, the court merely stated that, whatever the methodology used to impose water rates, they must be based on cost of service.

The sin of San Juan Capistrano was its failure to justify its rate structure at all.

Second, local governments have an array of tools available to enforce conservation to deal with California’s current water shortage. Limiting landscape watering to once or twice a week; prohibitions against hosing down driveways or automobiles; rebates to homeowners and businesses to convert landscape to drought tolerate plants; water reclamation; desalination, such as the massive new project in San Diego County; and the list goes on and on.

So if water agencies have sufficient – and legal – tools available to them to incentivize conservation and deter waste, what is the basis for the shrill, over-the-top reaction to the Court of Appeal decision?  Simple. If these agencies are permitted to impose water rates divorced from “cost of service” principles, then they can generate taxpayer funds over their costs and make a “profit” from homeowners – something Proposition 218 was specifically drafted to prevent.

And in the case of Jerry Brown, he didn’t like the ruling because he is desperately searching for a revenue source for his ill-conceived “Twin Tunnels” project which, like his High Speed Rail debacle, simply isn’t ready for prime time.

There is an object lesson here. Droughts may be caused by Mother Nature, but water shortages are created by humans. California is now paying the price for not building new storage and conveyance infrastructure over the last several decades. Rather than complaining about “cost of service” requirements that are founded in common sense and rational policy, California should immediately correct the dereliction of prior political leaders and build what we need for a California in the 21st century.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

New Desal Plant in the Works at Camp Pendleton

The dramatic announcement by Gov. Jerry Brown earlier this month of a 25 percent cut in water use across much of California triggered harsh commentary in the state and across the nation over the lack of preparation by government agencies and water districts for a long-term drought. A typical focus was incredulity over a dry coastal state’s failure to embrace desalination plants, as has been done in Israel, Saudi Arabia and other arid coastal nations.

But almost none of the coverage has reflected the fact that formal, official planning has been going on for years for one of the world’s largest desal plants along the coast of the Camp Pendleton Marine base in north San Diego County. Any construction is years off, but necessary preparatory work is well under way.

The image above of a proposed desal plant there comes from a 2010 presentation by the San Diego County Water Authority. It shows how sky-high water planners are on the potential of the 17-mile Camp Pendleton coast. Attention is now focused on a site in the southwest corner of the 125,000-acre base, just north of Oceanside and about 20 miles north of the Carlsbad desalination plant that is scheduled to open in coming months.

The Carlsbad plant will be the biggest in the Western Hemisphere and is expected to produce 50 million gallons of water a day — 7 percent of the San Diego region’s needed supply.

The Camp Pendleton project would be far bigger, with desalination experts saying 150 million gallons of water a day is realistic. That would make it one of the largest desal plants in the world.

A Saudi Arabian desalination plant will produce 264 million gallons a day when its first phase is complete, Bloomberg News reports.

A 2009 San Diego County Water Authority report didn’t take it for granted that the Pendleton project’s supplies are needed. It spoke of only expanding the project to the full 150 million gallons a day “as supply and demand conditions warranted.”

After four years of drought, there’s not much doubt that California needs far more reliable water sources — especially in the San Diego region, given that local water officials have spent 20-plus years fighting with the giant Metropolitan Water District over supply and costs.

The water mega-wholesaler has long opposed San Diego’s efforts to diversify its water supply by partnering with Poseidon, a private company, to build the Carlsbad plant and by striking a deal to shift Colorado River water from agricultural uses in Imperial County to supplies for homes and businesses in San Diego County.

Originally published by CalWatchdog.com

CARTOON: A Thirsty California

Desert ground, texture

RJ Matson

Harshest water conservation targets unveiled

As a closely-watched court ruling threw California’s tiered water pricing system into disarray, the Water Resources Control board made public its latest and harshest conservation targets for municipalities across the Golden State.

Detailing the plan, MarketWatch reported that “Angelenos must save another 16 percent for the year ahead, the water board said,” despite saving over 9 billion gallons, or 7 percent, over the previous year:

“By comparison, San Francisco lowered its water usage (22,351 gallons per resident) between June 2014 and February 2015 by more than 1.6 billion gallons, a saving of 8 percent from the same period a year earlier. As such it has just an 8 percent target water reduction for the 2015-2016 period, the state said.

“San Diego, which depends on water imported from outside of the city for 90 percent of its usage, must cut back on demand in the next year by 16 percent, the state water board said.”

Meanwhile, the 4th District Court of Appeal in Orange County sided with a challenge to the constitutionality of San Juan Capistrano’s tiered water pricing system. As the San Jose Mercury News reported, the court held that tiered rates “violated voter-approved Proposition 218, which prohibits government agencies from charging more for a service than it costs to provide it.”

A blow to Brown

For Gov. Jerry Brown, the ruling was an instant headache. He had recently issued an executive order, The Los Angeles Times noted, “directing water agencies to develop rate structures that use price signals to force conservation.”

In a prepared statement issued by the governor’s office in the wake of the ruling, Brown did not shy away from making his frustration plain. “The practical effect of the court’s decision is to put a straitjacket on local government at a time when maximum flexibility is needed,” he said, invoking a bottom-up view of political efficacy most often associated with Republicans. “My policy is and will continue to be: Employ every method possible to ensure water is conserved across California.”

Making waves

As CalWatchdog.com previously observed, the sweeping ramifications of the case put regulators and cities on edge. Providers could fall back on technicalities to make increased consumption more costly — charging more for water drawn from certain areas, for instance — the bureaucratic challenge involved in finding and implementing workarounds could be substantial. According to the Times, experts surmised that between two-thirds and four-fifths of water agencies in California charged tiered rates for usage.

Especially in Southern California, the ruling has thrown a monkeywrench into major plans for an overhaul of the tier system. “The Los Angeles Department of Water and Power currently uses a two-tier rate structure, but agency officials have said they are preparing to roll out a revised system that would employ four tiers and that would make high water use even more costly than it is now,” the Times reported.

Tim Quinn, executive director of the Association of California Water Agencies, told the Sacramento Bee that the ruling was currently under legal review by attorneys. But plaintiffs’ attorney Benjamin Benumof told the Bee that, on their view, government could effectively promote conservation by, for instance, increasing rebates for low-flow appliances and devices.

A turn to penalties

An approach utilized in Santa Cruz offered perhaps the quickest option for municipalities straining to meet new standards without tiered rate pricing. There, the Mercury News reported, the city’s recently reinstated mandatory rationing program hits high users with a flat $50 fee per “unit” of consumption in excess of 11 units:

“That fee, which sent some water guzzlers’ bills skyrocketing, will not be affected by Monday’s court ruling, however, said Rosemary Menard, Santa Cruz’s water director, because it is clearly labeled a “penalty” in the city ordinance, and is not used to pay for daily operations of the water system.” 

Originally published by CalWatchdog.com

VIDEO: California’s drought a man-made crisis?

In this appearance of Fox Business’ Varney and Co., “Taxifornia” author James Lacy argues the California drought is a man-made issue.

Water-wise in Beverly Hills

Beverly HillsWith headlines like “Big water users like Beverly Hills, Newport hit hardest by Brown order,” Beverly Hills is being portrayed in the media, including the L.A. Times, as a water hog in our drought-stricken state. Beyond such headlines, this impression is only strengthened by such false information as that Beverly Hills has “no water restrictions.”

The reality is that we have in place conservation measures which are similar to those in effect in Los Angeles – whose water conservation efforts the Times praised in the very same article.  We have tiered pricing; we don’t allow hand washing of cars; we limit watering of lawns to two days per week.

But the name of our city is “Beverly Hills,” and it’s sometimes hard to go beyond the stereotype. Despite the fact that some 60 percent of our residents are renters, we are indeed home to some large estates with a lot of grass and greenery. There is a reason that Beverly Hills is known as “the Garden City.” The beauty of our city is also most certainly one of the reasons we are able to attract tourists from around the world, who also help inject revenue into the larger Southern California economy.

But we don’t live in a bubble and in addition to the conservation measures we already have in place, we are working on a Water Master Plan which will emphasize conservation and sustainability. We’re looking to find ways to recycle gray water and to use shallow ground water. We’d like to continue our regional work to find ways to recycle storm water. And, of course, we want to continue our conservation and efficiency efforts, which include encouraging the replacement of water guzzlers with drought-resistant plants — there is now much discussion of replacing lawns with Astroturf.  (Personally, I believe that live, natural, drought-resistant ground coverings are by far the best option. In general, I oppose the replacement of turf with fake grass; I also oppose the replacement of trees with fake trees.)

We recognize that “we’re all in this together,” as we’ve so often heard from Sacramento.  But with the governor’s mandate for urban areas to cut back on water usage by 25 percent, one can really understand why L.A. Times columnist George Skelton asks, “Why do farmers get a free pass from Brown?” Good question, especially considering that agricultural use accounts for 80 percent of the state’s overall water usage.

In excluding agricultural uses from his executive order, the governor seems to have forgotten that we’re all in it together. He has suggested that an executive order which would, for example, limit ultra-thirsty crops, would be an instance of “Big Brother.” This seems to be a very selective application of the concept of “Big Brother.” Isn’t telling a homeowner what days she can water her plants also an example of “Big Brother”?

According to the governor, it would seem some of us are more in it together than others.

While I recognize that agriculture is an important part of our state’s fiscal well-being, the 80 percent water usage it accounts for corresponds to a mere 2 percent of the state’s overall economy. Let’s not forget that urban areas are also important contributors to the state’s economy, and water is important to their success and livability. However, if the governor is so concerned about urban water use, he should take pro-active steps to rein in future development, as well. Even with significantly reduced per capita water usage, even as we continue to develop further hydrological efficiencies, increased development will quite naturally result in an overall rise in demand for this limited resource in our parched state.

Instead of solely focusing on urban areas, the governor should be looking at an overall water conservation strategy which attempts to create a better balance, which adheres to the principles of fairness, and which will ensure that we actually are all in this together.

For starters, like the city of Beverly Hills has already done as the first city in the state, the governor should ban fracking in all of California. Fracking represents not only a colossal waste of water, but the high pressure pumping of water and chemicals into the ground can provide no benefits whatsoever either to our environment or to our aquifers.

We in Beverly Hills are more than prepared to come together with the rest of the region and the entire state to do our part to create sustainable long-term solutions to the challenges that our climate presents us with. After all, our city is built upon the site of the old Rancho Rodeo de las Aguas, the ranch of the “coming together of the waters.”

But if we are all in this together, then let’s really all be in it together.

John Mirisch is the Vice Mayor of the City of Beverly Hills.

Desalination Plants vs. Bullet Trains and Pensions

Current policy solutions enacted to address California’s water crisis provide an object lesson in how corruption masquerading as virtue is impoverishing the general population to enrich a handful of elites. Instead of building freeways, expanding ports, restoring bridges and aqueducts, and constructing dams, desalination plants, and power stations, California’s taxpayers are pouring tens of billions each year into public sector pension funds – who invest 90 percent of the proceeds out-of-state, and the one big construction project on the table, the $100M+ “bullet train,” fails to justify itself under virtually any credible cost/benefit analysis. Why?

The reason is because infrastructure, genuinely conceived in the public interest, lowers the cost of living. This in-turn causes artificially inflated asset values to fall, imperiling the solvency of pension funds – something that would force them to reduce benefits. Beneficial infrastructure is also a threat to crony capitalists who don’t want a business climate that attracts competitors. Affordable land, energy, and water encourage economic growth. Crony capitalists and public sector unions alike hide behind environmentalists, who oppose growth and development, all of it, everywhere – because no new developments, anywhere, suits their monopolistic interests. No wonder the only infrastructure vision still alive in California, the “bullet train,” is nothing more than a gigantic, tragic farce.

Urban Water Consumption is a Small Fraction of Total Water Use

Returning to the topic of water, a basic examination of the facts reveals the current drought to be a problem that could be easily solved, if it weren’t for powerful special interests who don’t want it to be solved, ever. Here’s a rough summary of California’s annual water use. In a dry year, around 150 million acre feet (MAF) fall onto California’s watersheds in the form of rain or snow, in a wet year, we get about twice that much. Most of that water either evaporates, percolates or eventually runs into the ocean. In terms of net water withdrawals, each year around 31 MAF are diverted for the environment, such as to guarantee fresh water inflow into the delta, 27 MAF are diverted for agriculture, and 6.6 MAF are diverted for urban use. Of the 6.6 MAF that is diverted for urban use, 3.7 MAF is used by residential customers, and the rest is used by industrial, commercial and government customers.

Put another way, we divert 65 million acre feet of water each year in California for environmental, agricultural and urban uses, and a 25 percent reduction in water usage by residential customers will save exactly 0.9 million acre feet – or 1.4 percent of our total statewide water usage. One good storm easily dumps ten times as much water onto California’s watersheds as we’ll save via a 25 percent reduction in annual residential water consumption.

California’s politicians can impose utterly draconian curbs on residential water consumption, and it won’t make more than a small dent in the problem. We have to increase the supply of water.

Desalination is An Affordable Option

water-desalinationOne way to increase California’s supply of fresh water is to build desalination plants. This technology is already in widespread use throughout the world, deployed at massive scale in Singapore, Israel, Saudi Arabia, Australia and elsewhere. One of the newest plants worldwide, the Sorek plant in Israel, cost $500 million to build and desalinates 627,000 cubic meters of water per day. That means that five of these plants, costing $2.5 billion to build, could desalinate 1.0 million acre feet per year. And since these modern plants, using 16″ diameter reverse osmosis filtration tubes, only require 5 kWh per cubic meter of desalinated water, it would only require a 700 megawatt power plant to provide sufficient energy to desalinate 1.0 million acre feet per year. Currently it takes about 300 megawatts for the Edmonston Pumping Plant to lift one MAF of water from the California aqueduct 1,926 ft (587 m) over the Tehachapi Mountains into the Los Angeles basin. And that’s just the biggest lift, the California aqueduct uses several pumping stations to transport water from north to south. So the net energy costs to desalinate water on location vs transporting it hundreds of miles are not that far apart.

The entire net urban water consumption on California’s “South Coast” (this includes all of Los Angeles and Orange County – over 13 million people) is 3.5 MAF. Desalination plants with capacity to supply 100 percent of the urban water required by Los Angeles and Orange counties would cost under $10 billion, and require 2.5 gigawatts of electric power. These power stations could also be built for under $10 billion.

Imagine that. For $20 billion in capital investment we could provide 100 percent of the fresh water required by nearly all of Southern California’s urban water users. For around $50 billion, 100 percent of California’s urban water requirements, statewide, could be financed – the desalination plants and the power stations.

California’s taxpayers are currently condemned to shell out at least 500 billion dollars over the next 20-30 years so a train that hardly anyone will ride will careen through expropriated land, and pension funds can invest 90 percent of their assets out-of-state so public sector employees can retire 10-15 years early with pensions that are 3-5 times greater than Social Security. For less than one-tenth of that amount, we can solve our water crisis by investing in desalination. Why not, environmentalists? We’re willing to carpet the land with solar farms, exterminate raptors with the blades of wind turbines, and incinerate the rain forests to grow palm oil – all financed by selling carbon emission permits. Why not disburse brine offshore, where the California current will disburse it far more efficiently than any desalination plant situated on the Mediterranean Sea?

Another way to solve California’s urban water crisis is to recycle 100% of indoor water. Quaternary treatment, where water from sewage is purified and sent back upstream for reuse, is another proven technology already in limited use throughout California. In theory, not one drop of indoor water use can be wasted, since all of it can be reused.

And, of course, imagine how quickly California’s water crisis could be solved if farmers could sell their water allotments to urban water agencies. As it is, myriad restrictions largely prevent them from exercising this option, even though many of them could profitably sell their water allotments and make more than they make farming the crop. Do we really need to grow rice in the Mojave desert to export to China?

Environmentalists alone are not powerful enough to stop Californians from acting to increase water supply. Powerful government unions, pension funds, and anti-competitive corporate interests all have a stake in perpetuating artificial scarcity and authoritarian remedies. It suits them because it consolidates their power, and ensures they get a bigger slice of a smaller pie.

*   *   *

Ed Ring is the executive director of the California Policy Center.

Water guzzlers would be punished under state proposal

As reported by the SF Chronicle:

California officials seeking to cut urban water use by 25 percent amid the punishing drought said Tuesday that the best way to get the job done is to spread the hurt unevenly, slapping the biggest guzzling communities with mandatory cuts up to 35 percent.

This means leafy towns on the Peninsula and a handful of faraway suburbs, where tall trees hover and big lawns rule, would have to make the Bay Area’s largest concessions. The plan is to go easier on places like San Francisco that already consume relatively little water on a per capita basis.

While warm Southern California enclaves such as Palm Springs and Beverly Hills, alongside Central Valley cities like Bakersfield, dominate the state’s list of heavy water users, Northern California spots such as Hillsborough, Atherton, Portola Valley, Woodside and Menlo Park also rank high in per capita water use. Consequently, they would be targeted for the strictest cuts on the state’s proposed 10- to 35-percent sliding scale of reductions.

Click here to read the full article

Jerry Brown, the Farmers’ Friend

Jerry Brown 1.0 stood up to farmers 40 years ago while Jerry Brown 2.0 is standing up for farmers during the current drought crisis. In 1975, to the consternation of many framers, Brown signed the Agricultural Labor Relations Act allowing collective bargaining by farm workers. In 2015, Brown’s mandated 25 percent cutback on water usage for most Californians that largely left the farmers alone.

On ABC’s Sunday Show, This Week, Brown responded to host Martha Raddatz’s challenge that farmers use 80 percent of the state’s water but do not have to cut back like other users.

“The farmers have fallowed hundreds of thousands of acres of land. They’re pulling up vines and trees. Farm workers who are very low end of the economic scale here are out of work. There are people in agriculture areas that are really suffering,” Brown said.

The state’s agriculture business is certainly hurting. Just last year California agriculture lost $2.2 billion from drought conditions. With the drought conditions continuing agricultural losses are expected at least the same this year.

State and federal water allocations have been cut to zero.

Brown took a broad view of California’s drought reminding Raddatz that the drought’s affect on farmers do not only touch people in the Golden State. “They’re not watering their lawn or taking longer showers. They’re providing most of the fruits and vegetables of America,” he said.

Farmers have been using water more efficiently over the last couple of decades. According to UC Davis professor Samuel Sandoval, “In the last 20 years, they’ve been increasing their efficiency between 10 and 12 percent.”

However, Brown made it clear that if the drought conditions worsen, even the farm country will be examined for ways to save water. For now the cutbacks will be aimed at coastal California and some of the state’s richer areas.

One side note that could be taken from all this, Brown clearly has a focus on the Central Valley. Whether you like it or not (and I don’t) his pet project bullet train was started in the Central Valley. And the Valley farmers will escape the initial water mandates.

Joel Fox is editor of Fox & Hounds and President of the Small Business Action Committee

Originally published by Fox and Hounds Daily

California Cannot Conserve or Over-Regulate Way out of Drought

This week Governor Jerry Brown proclaimed that “a historic drought calls for unprecedented action,” when handing down the latest executive order instating mandatory statewide water restrictions aimed at conserving 1.5 million acre feet of water over the next nine months.

This ambitious “first-time-in-state-history” action and goal is admirable, one I wish can be achieved. But do more laws or in this case, a set of 31-point executive directives, create or even free up more water?

ResevoirA suggested goal of 20 percent reduction of water use last year was never achieved, despite gallant efforts made by communities statewide.

So now, well into the fourth year of drought, the governor now ups the ante with a 25 percent statewide conservation mandate. In doing so, he has opened the door for a myriad of programs, restrictions and regulations to be administered by the bureaucratic, increasingly powerful and gubernatorial-appointed State Water Resource Control Board (SWRCB).

Heat index charts and pictures of empty reservoirs and barren Sierras emphasize the need for all of us to conserve; respecting the resource and what it does in our lives remains essential.

But the ongoing preoccupation on the rules, rule breakers and potential punishment is nothing more than a distraction. While treating the symptoms of drought are important, what must really occur is a concerted effort to cure the disease – in California this means dilapidated infrastructure, undersized reserves, ineffective water policy and dysfunctional, non-scientific environmental regulations.

What is certain is that Governor Brown’s latest executive order clearly expands the authority of the SWRCB over all surface and ground water use, health, data, movement, pricing, program enforcement and punishment. Regional and community water authorities are now left scrambling to develop as yet unknown compliant water management criteria to avoid unknown penalties. But the most powerful tool for the SWRCB lies in its authority to determine beneficial use. This means the board gets to decide what water can be used where, when and how on a case by case basis.

The order imposes requirements on farm water users; ratcheting up farm water use reporting mandates, the failure of which is punishable by the state.

Suspending reality, environmental activists issued statements slamming the order for exempting agriculture from 25 percent conservation requirements. They ignore the fact that farmers have been hit hard repeatedly over the past four years and have met their conservation requirements.

Receiving zero percent of their water right last year, on farm conservation practices implemented during this historic drought included:

  • Fallowing approximately 800,000 acres of fields
  • Downsizing 17,100 employees
  • Increasing consumer prices on domestic produce by estimated 10-25 percent, and taking a 4% loss in production value.

Asking a farmer to conserve 25 percent of zero, while you can’t figure out what day to turn your sprinklers on, , is an insult to your intelligence, not theirs.

Zero from zero is zero.

All these orders and actions are like the proverbial image of rearranging deck chairs on the Titanic. You can’t put a bandage on a gashed jugular and expect to survive. Our crisis won’t be avoided by conserving, we must tackle the problem head-on if California is to provide equitable and reliable water supplies to families, farms and fish.

The real question is “what kind of future does California want to have?” One that continues the tradition of the last century, fostering innovation and growth or one that says the Golden State’s glory days are past, so simply maintain status quo. Establishing water supply reliability provides opportunity for prosperity and growth for all.

True power doesn’t come from regulation, but from solutions and commonsense.

To provide an equitable and reliable clean water supply to all water users – farm, urban and environmental – the state and federal officials must address:

1)    California’s grossly dilapidated and inadequate water infrastructure statewide – including storage, recycling, and access,

2)    Revamp our 50-year-old water and environmental protection policies to accurately identify and address our 21st century concerns. We need to employ 21st Century science, technology and modeling tools to achieve attainable and sustainable results for the health of all California.

Conservation and regulation sound good at a press event. But the reality is those approaches are woefully inadequate at solving California’s root problems.

Aubrey Bettencourt is Executive Director, California Water Alliance

Originally published by Fox and Hounds Daily