CHICAGO — Once considered primarily for drought-plagued regions in the Middle East, water desalination plants are closer to becoming a reality in some western regions of the United States, and tentative plans for a new plant in Northern California’s Marin Municipal Water District could involve the sale of up to $140 million of certificates of participation.
The facility to be built in Marin County would desalinate and treat saltwater taken from the San Francisco Bay, said Marin Water finance manager Terry Stigall.
Water district officials originally considered borrowing $110 million for a five-million-gallon-per-day facility that would not have room for expansion, but will likely settle on a 15-million-gallon-per-day facility for closer to $140 million, according to Stigall. No financing decisions will be made until after the results of an environmental impact report are revealed this summer or fall.
“Certificates of participation would be the easier route,” said Stigall, pointing to a $55 million limit on the amount of revenue bonds the district can sell.
“With the certificates of participation, we can phase the borrowing and see how the construction would be laid out and how it’s going to be built,” he said. The desalination plant construction, if approved, would likely involve two separate borrowings, roughly $60 million the first year and the rest a year later.
The water district initially built a desalination pilot plant in 2005 to test desalinated bay water as a potential water supply source. The environmental impact report is required before the water district’s board can approve the proposed plant that would be built in San Rafael on MMWD-owned property on San Francisco Bay.“Our board of directors will vote after holding a public hearing sometime in September or thereabouts,” Stigall said. “We are in the process of holding a series of public meetings right now to answer questions and to provide information about the project.”
The worst drought on record for Marin County occurred in 1976-77, according to the district’s Web site. A similar drought today could require water district customers to reduce their water consumption by roughly 65% during the second year of the drought.
“As a small water district, MMWD has limited capacity to store water from year to year,” according to the district. “We can get through one or possibly two dry years, but we would not be able to adequately supply our community in a longer drought. Although Marin’s population is growing slowly … projections show we will require additional water supplies over time.”
The county had a population of 249,000 as of 2006, according to the U.S. Census Bureau.
Marin Water is rated AA by Standard & Poor’s, while neither Moody’s Investors Service nor Fitch Ratings has an uninsured rating for the credit.
District experts say that climate change will deplete the current water supply, which could fail to meet projected demand, and that any shortage would become severe in the event of a serious drought, Stigall added.
Plans for a larger desalination plant at Carlsbad in San Diego County have faced at least one lawsuit challenging the project’s permit and regulation.
Officials at the Poseidon Resources Corp., which manages the Carlsbad project, said in a news release that the plant “will inevitably be built because it is environmentally sound and absolutely necessary to our region’s water supply ... project construction is anticipated to begin by the end of 2008 and the lawsuit will not significantly disrupt this timeframe.”
The facility would produce roughly 50 million gallons of drinking water a day. The private firm plans to sell the water it produces to at least eight local water districts.
Poseidon officials did not return calls for comment.
The California projects are part of a widening search for potable water sources in the country’s most arid climates. In southern Texas, a pilot desalination plant located in Brownsville is expected to cost $150 million if it is to become a fully operational treatment plant, and is still awaiting legislative approval for its funding. A plant in El Paso opened in late summer with a 27.5-million gallon per day capacity and cost roughly $87 million. A proposed desalination plant in San Antonio is still in the initial planning stage.
The largest currently operational desalination plant, in Tampa Bay, Fla., initially ran into financial problems and was ultimately bought by Tampa Bay Water, which issued $110 million in private activity bonds in 2002 to buy the plant from the bankrupt original owners, said Koni Cassini, director of finance and administration.
Those bonds were rated A-plus by Standard & Poor’s, Aa3 by Moody’s Investors Service, and AA by Fitch Ratings, but the plant shut down for remediation three years later and just recently passed acceptance testing and has been placed into regular service.
The facility now has capacity for 28.75-million gallons per day and was designed to accommodate a 10 million gallon per day expansion in the future, but Cassini said she does not anticipate further borrowing associated with the plant any time soon,
“At the current time, our board has selected other projects to meet our coming needs,” she said. “So any current funding that I have planned would not be associated with seawater [desalination].”
