Southern California water board approves funding for its share of state tunnel project

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LOS ANGELES — Southern California's largest wholesale water provider voted Tuesday to approve its $4.3 billion share of the state's $17.1 billion WaterFix project.

The MWD board's vote "shows leadership and a commitment to the region's water supply," said California Secretary for Natural Resources John Laird.

Two other major agencies are expected to vote this week on whether to approve their share of funding for the project: the Kern County Water Agency and Santa Clara Valley Water District.

Those for and against, the project have been tracking the water board votes closely, because the support, or lack of support, could either push the project forward or stop it in its tracks.

"Every generation of Southern Californians has to reinvest in our water system to ensure a reliable water future," said Metropolitan Board Chairman Randy Record. "We simply must modernize and improve the reliability of our imported supplies as well as meet the needs of growth by developing more local supplies and extending conservation."

Westlands Water District, which provides irrigation for a half-million acres of farmland in the San Joaquin Valley, voted in September not to contribute, raising questions about the viability of the WaterFix. The project, also known as the Delta tunnels project, has the backing of Gov. Jerry Brown.

About 30% of the water that flows out of taps in Southern California comes from Northern California via the Sacramento-San Joaquin Delta. The project would construct twin tunnels that would carry water under the Delta to the pumping stations that move the water to Southern California, the San Joaquin Valley and Silicon Valley via the U.S. Bureau of Reclamation’s Central Valley Project and the State Water Project.

The tunnels would combine to form the largest and most economically important water project in the U.S., Fitch Ratings wrote in a Sept. 25 report, serving more than half of the population of the largest U.S. state and the nation’s most productive farmlands.

Fitch analyst Shannon Groff said ahead of the vote even if MWD's board votes for the project, other State Water Project and Central Valley Project members have yet to weigh in.

“As we saw with Westland’s vote last month, financing the Fix is a complex process of negotiation with many stakeholders—many of whom have strong opinions about their water supply based on years of dealing with the ebbs and flows of drought," Groff said.

She added, however, that MWD plays a dominant role among state water project contractors as the water supplier serves 19 million residents across much of southern California.

“At this stage, the risks around the Fix have an interesting dichotomy: most of the state’s water users are affected by the ecologically troubled Delta, but moving ahead with the Fix as proposed might not be financially viable for all participants," Groff said.

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Infrastructure Revenue bonds The Metropolitan Water District of Southern California California Department of Water Resources California