California's $17 billion WaterFix project gaining steam

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LOS ANGELES — California's $17 billion WaterFix project garnered support from two large water agencies last week, making the project appear more viable.

When Westlands Water District voted against throwing financial support behind WaterFix project a few weeks ago, it raised fears that the project could be in jeopardy.

The project, which would build tunnels to move fresh water around the San Joaquin-Sacramento River Delta, is designed to prevent salt water from entering the state's system that moves water from the rainier northern regions to its agricultural and urban users to the south.

Santa Clara Valley Water board, which would contribute 5% to the project, is slated to vote Tuesday.

So far, Westlands has been the only water agency that has failed to approve funding for its share.

Water agencies in eastern Alameda County, the Metropolitan Water District of Southern California, Kern County Water Agency, and six others have voted in favor.

If all of the water agencies don’t decide to participate, the project could be scaled to the needs of agencies that decide to participate, California Secretary for Natural Resources John Laird wrote in an op-ed piece published this month in the San Francisco Chronicle.

When Kern County's water board voted favorably last week, Laird said, the vote showed “a strong commitment to protect water supplies for agriculture in their region.”

California WaterFix would upgrade the state’s outdated water system and maintain a reliable source of water for 25 million Californians and more than 3 million acres of farmland in the Bay Area, Central Valley and Southern California, Laird said.

Fitch Ratings analyst Andrew Ward has been tracking progress on the project.

He said Kern and MWD, which both voted to support the project, are big players, but given the size of the project uncertainty remains.

“We understand that the policymaking process in a democracy is complex and can be iterative and that’s not inconsistent with high credit quality of any members,” Ward said.

“There are a lot of different interests here and they are not particularly aligned between members, between agencies, and other folks look aspects of policy making, the environment,” Ward said. “It takes a lot of back and forth and negotiation. I don’t think that is a credit negative.”

One of the hallmarks of California water agencies – and what kept their ratings intact throughout the drought – is that they think down the line about issues like the salinity of the Delta, Ward said.

He pointed to MWD building water storage facilities to lessen its dependence on imported water from up north and San Diego County Water Authority’s decision to build a desalination plant in Carlsbad.

“It is hard to get consensus with such a diverse group of users,” Ward said. “I would still say the projects are very uncertain, just less uncertain when you start seeing some big players start putting money on the table.”

Santa Clara Valley would be the next to weigh in.

“I will be very interested to see how Santa Clara Valley decides; and interested to see if the project organizers come to Westlands and other Central Valley contractors with any adjustments in what they are asking for,” Ward said.

He called Santa Clara Valley the most important of the northern California participants in the state water project.

“Once you have MWD, Santa Clara and a few others on board, you have the big urban systems,” Ward said. “And, whether they think they can afford it.”

Westlands provided a different response from the agricultural users side, but Kern, also primarily an agricultural user, voted to support.

“Having clarity from the urban water user side, gets us closer to knowing this project might actually be done – even if in a scaled back version,” Ward said.

There was some discussion at the MWD board meeting last Monday about scaling the project down from two tunnels to one if the state can't get full support from all water agencies.

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Infrastructure California