After steering their ship into unsafe bureaucratic waters, developers on the former Fort Ord in Marina desperately needed a lifeline. Last week, local water officials threw them one. On Wednesday, July 12, a divided Marina Coast Water District Board of Directors voted to lease its 10-year-old desalination plant to a team of developers charged with planning and building University Villages, Marina Heights and Cypress Knolls.

The deal is a saving grace for the developers. That’s because over the last few years, they championed construction plans that called for a total of about 3,000 new homes on the former Fort Ord—knowing that was about 600 more than they had enough potable water for under rules established by the Fort Ord Reuse Authority and the city’s General Plan. If not for this new lease, it’s likely that at least one of the projects, Cypress Knolls, would have been held up indefinitely, throwing the development of Marina’s newest neighborhoods into a circus of lawsuits and finger-pointing.

The developers pushed their ambitious plans forward even though they were warned several times by local water officials that they didn’t have enough water rights to secure final permits for their projects. Instead of redrawing their plans with fewer homes, however, the developers for the three projects teamed up and started looking for more water. They found more water on Marina State Beach, where central Marina ratepayers’ desalination plant sits.

For nearly 10 years, central Marina district ratepayers have been paying $198,000 annually to pay off the desalination plant’s mortgage. The plant cost about $3 million to build. Ratepayers have been paying for the plant—intended to be a long-term backup water source for central Marina—even though it hasn’t been running for the last couple of years due to recurring malfunctions.

The Marina developers figured that by having the rights to the desalination plant and the potable water it could potentially produce (equaling 300-acre feet, or enough to supply about 1,000 new homes) they’d have enough juice to nail down all the needed building permits. The Cypress Knolls project—the retirement community planned adjacent to Marina Heights—was in a particular bind. It didn’t have a critical environmental review permit certifying that the planned retirement community had enough water credits to build its senior homes.

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Under the terms of the lease approved at the July 12 meeting, developers agreed to pay the water district $199,000 annually, beginning Aug. 1. Because the plant is currently unused and in disrepair, developers also agreed to pay for its repair if—and only if—they ever actually need the water.

“I can’t stress the importance of this agreement to all the developers,” said Bill Jennings, CFO for Front Porch, the Burbank-based developer of Cypress Knolls, to the water district’s board of directors minutes before they voted. “Most importantly, it’s important to the seniors.”

Water board member Howard Gustafson denied that the three developers—who will make hundreds of millions of dollars in sales when they start selling their finished homes and commercial spaces—received a sweet deal. “There is no super-benefit to the developers,” Gustafson said at the board meeting. The lease “is just a way to help them along with their environmental review.”

Brown, the swing vote on the board, said that many of the people who opposed the desal water lease really opposed the new developments on the former Fort Ord.

“We are not the Marina City Council,” Brown said. “I’m not thrilled either by the Marina Heights and University Villages developments and the impact they’ll have on traffic and water. But we’re not a land jurisdiction agency. The voters of Marina elected the City Council and the mayor. They did it.”

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Despite several months of urgent pleas from the three developers, the water board’s vote was close. Two of the five water district directors voted against the lease.

Tom Moore, a board member who favored construction of the desalination plant back in the mid-1990s, was one of them.

While acknowledging that leasing the desalination plant to the developers makes sense on some levels, Moore says the district sold itself out too cheaply.

“The bottom line is I didn’t feel that the compensation was high enough,” says Moore, a professor at Naval Postgraduate School. “The developers are only paying the mortgage on the desal plant, but it’s conceivable that they will hand it back to us at the end of the lease period without having repaired it. In addition, they should have also paid some depreciation costs, which they aren’t under the lease.”

Quinton Roland, a Marina-based redevelopment consultant, favors central Marina redevelopment and argues that the loss of water credits in downtown Marina translates into the loss of millions of dollars of potential building opportunities. No other Peninsula city “would give up one acre foot of their water rights to another service area,” Roland says.

In addition, Roland says central Marina water ratepayers have already paid the bulk of the cost for the desalination plant. Under the lease, they won’t get any of that money back. They won’t even get a break on their water bills.

“Developers are getting 100 percent of the benefit while only having to pay a fraction of cost [for the desalination plant],” Roland says. “Meanwhile, ratepayers get zero benefits while paying a majority of the costs to create this water supply [outside of the central Marina water district].”

In fact, central Marina customers will see not see any reduction to their water bills. When asked why not, David Brown, water district board president, says the answer is complex. “Rates are not that easy to calculate,” says Brown, offering his personal assessment. After doing some quick math, Brown calculated that ratepayers could conceivably save about 3 percent on their water bills if $198,000 in annual savings were passed on to them.

“Would ratepayers even notice a 3 percent reduction on their water bills?” Brown asked rhetorically.

Perhaps they would. According to Marc Lucca, water district general manager, an average central Marina ratepayer would save about $52 per year on his water bills if he didn’t have to pay for the desalination plant’s mortgage.