Water District refuses City’s request to finance fee

Water District refuses City’s request to finance feeBy Pat Farris

News Review Publisher

This week’s Indian Wells Valley Water District Board meeting took on much the same tone as last week’s City Council meeting. The main topic of discussion was the recent request by the Indian Wells Valley Groundwater Authority (IWVGA) and the City Council for the District to finance their portion of the Replenishment Fee. The Council had requested that this be placed on the September 13 agenda of the Water District meeting.

To bring the District’s perspective regarding this request, Chief Financial Officer (CFO) Tyrell Staheli was asked to provide a brief overview of the potential ramifications, financial and otherwise, of the District’s financing of it’s portion of the Replenishment Fee.

It is important for District customers and Indian Wells Valley residents to understand that the District, the City, Kern County and the GA are all independent public agencies each with its own duly elected governing body. The Replenishment Fee is a GA authorized fee imposed on a portion of the District pumping and amounts to approximately $4,250,000 per year. All fees collected by the District are paid directly to the GA. The District does not receive any revenue from the Replenishment Ree.

The current outstanding long-term financing (over a period of about 30 years) is $48,826,867 (which includes interest). The proposed financing of the GA’s Replenishment Fee would require the District to finance approximately $23,000,000 in principle with an additional $10,100,000 in interest. This would amount to additional debt load of $33,100,000. It is important to note that the Groundwater Sustainability Plan and the Replenishment Fee are currently being challenged through separate lawsuits filed by Searles Valley Minerals and Mojave Pistachios.

The primary risk and uncertainty is that those lawsuits could eliminate or reduce the Replenishment Fee and impact the amount the District could charge for the fee.

The District staff recommends that their priority be to the District’s capital improvements.

Comments from the Board included Director Stan Rjatora who stated, “I think based upon the recommendation of the staff I see no need to spend more time on this topic, I think we need to move on.” President Griffin agreed with Rjatora in that ... “We do not have an approved plan by Department of Water Resources (DWR) so we have no guarantee that this is going to continue to be collected. I don’t know where the plan is, but we did receive a letter from DWR, they want us to go back to all stakeholders and meet and negotiate and try to work out a plan. I think that’s important.”

“We have no infrastructure to get imported water here. That’s going to be very expensive. How is that going to get funded? It’s my understanding they want the money upfront, $23 million or $24 million. We are currently paying them every month, now they want it all upfront to acquire water. If they do acquire it, where are they going to get it? If it is bought from up north, this year for example, the allocations were zero, so there would be no water.”

“In a recent meeting Steve Johnson, the Authority’s Resource Manager commented, ‘We need to look at the low lying fruit first, we must look at all of our local resources and water and I don’t believe we’ve done that. I believe that is the most important thing that we need to do right now.’ At this time, for these reasons I am against this request.” Griffin said.

Jim Worth, legal counsel for the District, responded to the City Council Staff Report dated September 1, 2021 which was written and presented by Keith Lemiuex legal counsel for the City. Worth criticized the report saying “The City is blaming the Water District for everything short of the pandemic. A portion of the 5 page document that Worth focused on was, “The District is entirely to blame for the overdraft.” The subject of the staff report, was a discussion of the Ridgecrest City Council to consider a request for the IWVWD to finance its Replenishment Fee, However, Worth stated, “You are aware that it largely ignores the Replenishment Fee issue. Instead, blames the Water District for the overdraft and essentially every other water related issue that is facing the Indian Wells Valley.

The most troubling aspect is that the obvious purpose is to sway public opinion against the District and force the District to finance the Replenishment Fee.

The report contains five pages of misrepresentations, half truths and omissions all to sway public opinion.

It’s important to note as a public agency, its our job to educate the public with facts, unfortunately the city staff report only adds more confusion and misunderstanding as to what’s really happening in the Indian Wells Valley Basin. This presentation by the District is an attempt to provide a full and complete picture of what has been happening in the Indian Wells Valley with respect to water resources.”

During the meeting the comment was made by President Griffin, “If our attorney would have written that letter I would have motioned for his dismissal tonight.”

A question that continues to arise is, how is the Replenishment Fee funding being spent by the GA. Also the lack of transparency and accountability is of major concern.

To date the financial records for the GA do not account for the amount of money being paid for legal fees and administrative costs. The public has not been informed as to how much each attorney is being paid. The general consensus is that the Replenishment Fee acquisition will never go to it’s designated purpose, which is to acquiring new water for importation.

Councilman Kyle Blades was given opportunity by the chair to make his official request for the District’s funding of their Replenishment Fee. It was obvious to Blades that the District had clearly defined their position, to not comply with their request. Blades said, “I didn’t come here to disparage at all any of you, any of the board or any of the staff. The City of course would like to see it financed, but you guys have already given us that answer.”

This agenda item to hear the request by the City was central to this week’s meeting. It was concluded by Blades that it was clear that the board was totally in agreement that they would not incur this kind of indebtedness on behalf of the ratepayers.

(The News Review will pickup on the Worth discussion and the explanation of the District’s filing of the Adjudication Suit next week.)

Laura Austin photo: IWVWD Board President Chuck Griffin

Story First Published: 2021-09-17