LOS ANGELES — If California voters approve Proposition 53 next week it would likely slow or prevent a $17.1 billion water project known as the California Water Fix, Fitch Ratings said in a comment.
The ballot measure, funded by Stockton agriculture magnate Dean Cortopassi, would require statewide voter approval before the state can sell revenue bonds in excess of $2 billion for a project.
State general obligation bonds already require voter approval, but revenue bonds that are repaid with user fees do not.
Even if Proposition 53 is not approved, the long-term plan for the project will remain controversial, Fitch Ratings says.
The Delta "Water Fix" projects are intended to increase the reliability of water supplies through the Bay Delta by constructing two 45-mile long tunnels and three intakes on the Sacramento River that could produce an average annual yield of 4.9 million acre-feet, Fitch wrote.
"This project's timing is important to California's water and sewer utilities as they will likely pay for it and pass those costs on to end users," Fitch wrote. "Many of them are already passing on other costs due to drought-related conservation and other regulatory changes."
The statewide mandate of 25% water-use reduction in place because of the four-year drought resulted in weaker metrics and many water issuers sought rate increases or alternate rate structures, Fitch wrote.
The estimated cost of $17.1 billion includes mitigation, operations and maintenance and would be paid by the public water agencies that use the water it supplies, Fitch wrote. The cost to end users is anticipated at approximately $5 per month.
A water delivery system that replaces the current dirt levee system with modern water pipes is supposed to protect the state's water supplies from earthquakes, floods and other natural disasters.
"Experts have warned that without the needed fixes, a moderate sized earthquake in the Delta region could collapse the water system and leave millions without water for weeks, months or even years," according to Californians for Water Security.
