IWVGA still juggling finances

Pending claims could further drive up costs

IWVGA still juggling financesBy BRIAN COSNER

News Review Staff Writer

The Indian Wells Valley Groundwater Authority had multiple financial items on the agenda for its meeting last week. But the absence of a consolidated budget is leaving members of the public – and GA boardmembers – with a difficult time following the authority’s financial standing.

Acting General Manager Don Zdeba delivered the monthly financial reports showing an ending positive balance of $119,983 – not accounting for about $210,000 in unpaid invoices.

“We do have enough in our account to pay all those invoices with the exception of a $102,000 invoice from Stetson [Engineers] that was deferred last month,” said Zdeba. Stetson is the engineering firm acting as water resource manager for the authority.

He also reminded the board that the report did not include repayments of $500,000 to Kern County and $210,000 to the city of Ridgecrest, as well as a $500,000 pumping credit owed the IWV Water District.

Zdeba followed up with a draft proposal for a 2020 administrative budget if the authority were to fund an independent staff for its organization rather than rely on member-agency staff for support. But the attached $2.4-million price tag is something the authority is in no position to fund.

“I think, obviously from this cost, becoming an independent, stand-alone agency at this particular time is not reachable,” said AG Chair Ron Kicinski. He insisted that the authority figure out how to finish paying for the Groundwater Sustainability Plan – which is due in January – before discussing future expenditures.

But Boardmember Mick Gleason, representative for Kern County, stressed the importance of our GA becoming an independent organization.

As administrative responsibilities rotate among the “Big Three” agencies – Ridgecrest, Kern County and the IWV Water District – Gleason said he doesn’t want there to be any conflicting loyalties.

He used Zdeba as an example and said he didn’t want to force the general manager to have to chose between serving the water district or the groundwater authority.

The board next reviewed the IWVGA 2020 budget, which included four different scenarios regarding the groundwater pumping fee. Options included leaving the pumping fee at $30 per acre-foot or increasing it to $60, $75 or $90.

According to Zdeba’s report, leaving the pumping fee as is would result in a negative balance of approximately $465,000 by the end of the year. Increasing the fee fee to $60 would still result in a negative balance to the tune of $16,000. Further increasing the fee to $75 per acre-foot would result in a $209,000 surplus and increasing to $90 would leave the authority with about $435,000 by the year’s end.

Zdeba announced that the authority did not qualify for the $395,000 Bureau of Reclamation grant for which it applied. Another revenue option the board had discussed was increasing contributions from each of the member agencies, but the board had decided against it.

The majority of these funds would be to pay Stetson for its GSP development work and to provide matching funds for a Severely Disadvantaged Communities grant.

Staff recommended increasing the fee to $75 per acre-foot. Zdeba said the $209,000 surplus would act as a “cushion” if the fees result in less revenue than projected.

Zdeba said the current fee costs the average water district user between 62 cents and $1.19 per month. The proposed rate would grow that monthly charge to between $1.54 and $2.97.

Member of the public Mike Neel pointed out that while the monthly charge may be a nominal amount, it’s still a 150-percent increase.

Hoffman added that the proposed fee would be higher than the $55-per-acre-foot pumping fee the state would impose if the state’s Water Resources Control Board considered it necessary to take over management of the basin.

“The GSP as it’s prepared would effectively drive agriculture out of the basin, and yet the fees would be borne on the backs of many of those agricultural interests,” said Hoffman. “Mr. Zdeba talked about the proportional increase to ratepayers as a dollar and change, but we’re talking about hundreds of thousands of dollars on the agricultural community per year.”

Mojave Pistachios and a coalition of local farmers recently filed a complaint with the Kern County Superior Court requesting a solution to protect not only the groundwater supply but also agricultural investments and the valley’s economy.

“While the region will benefit from the successful implementation of the proposed physical solution, the farmers are not seeking a comprehensive adjudication or quantification of all rights to groundwater in the basin,” said the complaint, dated Nov. 19.

“They are seeking a focused cooperative approach among groundwater users to avoid harm. Additionally, they are seeking a court declaration that they individually possess overlying rights to groundwater sufficient for existing and expected future use.”

Mojave Pistachios said it has invested more than $25 million in local agricultural operations, and other family outfits like Sierra Shadows Ranch and Nugent Farms have invested millions more.

Growers have said they would “rather cooperate than litigate” in the past, but according to the authority’s special counsel, Jim Markman, the GA has received as many as 10 threats of litigation over water rights.

Gleason has said he expects that the authority will need a “war chest” in the coming years because of anticipated litigation. He added at the most recent meeting that as fees increase, agriculture will be using less and less — ultimately reducing anticipated revenue for the GA.

The 2020 nudget also didn’t include any of the previously discussed options for administrative costs, which resulted in some “having a hard time following where the numbers are going,” as Derek Hoffman, legal counsel for Meadowbrook Dairy, put it.

“The point was made that this isn’t really an operating budget for the Groundwater Authority next year, which we still need to get to. So I agree with those comments. This is very limited and isn’t really a budget,” said Boardmember Bob Page, who represents San Bernardino County.

He asked if staff had a plan on how to outline costs for next year, but Zdeba said that was difficult since “so many things [are] up in the air. … I think to give you a firm budget number we can hang our hat on with confidence is not realistic.

“There are going to be costs,” said Page. “I just want to make sure we’re being as transparent as possible.”

The board ultimately decided to move forward with staff’s recommendation to increase the fee to $75 per acre-foot. Gleason objected to the idea of raising the fee while the board already has more post-GSP mitigation fees in the works for this summer (see future editions for more on future fees).

The current pumping fee is designed to pay only for development of the GSP; implementation of the plan itself will require significantly more funding.

According to Stetson’s Jeff Helsley, the projects laid out in the plan is likely to be impossible unless the authority can obtain more public funding.

“I would personally rather not raise the pumping fee,” said Gleason.

“Keep it at $30 and take an extra year to pay that plan off and work diligently to get the [other] fees passed. I think those are infinitely more important.”

But Boardmember John Vallejo of Inyo County suggested that the board move forward with the increase. He said he understands Gleason’s concerns, but wants to move forward with a change to the ordinance and let the Policy Advisory Committee discuss it.

The authority will have the opportunity next month to decide on the increase.

“It wouldn’t unduly delay us if it is the right decision,” said Vallejo. “I would really like the PAC to weigh in on that decision.”

The Policy Advisory and Technical Advisory committees meet on the first Thursday of each month in the council chambers at City Hall.

For agendas and more information, see iwvga.org.

Pictured: Meadowbrook Dairy attorney Derek Hoffman raises concerns of how an increase to the groundwater pumping fee will impact agricultural investments. — Photo by Laura Austin

Story First Published: 2019-11-27