A veiled threat of litigation from desal partner Cal Am.
Thursday, August 18, 2011
When we last left our little buddy the Desal Hydra (also known as California American Water, the Marina Coast Water District and the Monterey County Water Resources Agency – the hapless partners in the $400 million-plus Regional Desalination Project currently gasping its last breaths), things were looking a little grim.
The county had sent a series of letters to Marina Coast, saying it was initiating a formal dispute resolution process because it considered the agreements about who runs the project, and who pays for it, invalid. And it was invalid, the county said, because one of its own directors, Steve Collins, tried to play both ends up the middle by representing the interests of the county while also consulting (at the behest of Marina Coast General Manager Jim Heitzman) to the tune of $160,000 to help a Walnut Creek engineering firm win a $28 million project management gig.
Marina Coast, in turn, says county water head Curtis Weeks, along with County Supervisors Lou Calcagno and Dave Potter, are to blame for Collins’ alleged conflict of interest. Weeks and the two supes, Marina Coast claims, not only knew about Collins’ side work, they also gave him their tacit approval. Nothing in writing, Marina Coast claims, but they knew about it.
But that was two weeks ago.
Since then, the California Coastal Commission, fresh off being sued by U2 guitarist The Edge and a few of The Edge’s would-be neighbors for denying their applications to build homes along a Malibu ridgeline, was asked to consider allowing the Hydra to construct a test well, a first-phase demonstration to show how slant wells could provide a brackish water source for the desal plant.
Now imagine the Coastal Commission members – guys and girls like Steve Blank, a Silicon Valley alpha geek turned tech investor; Mark Stone, attorney and Santa Cruz County Supervisor; and Dayna Bochco, environmentalist, television producer and wife of very famous producer Steven Bochco – all folding their arms and slowly shaking their heads back and forth while saying, “No way, no how, not until this Steve Collins thing and the Ag Land Trust lawsuit over water rights are all resolved.” The commission heard more than an hour of testimony (the real estate community and representatives of the hospitality industry turned out en masse) about the importance of the desal plant and how industry on the Peninsula will grind to a halt without it; the commission decided they didn’t want to touch the mess with a 10-foot pole.
But that was last week.
This week, Cal Am Water released a letter from President Robert MacLean to Heitzman and Weeks (sent, it appears, shortly after the Coastal Commission meeting ended on Friday), in which MacLean shook his finger and essentially said, “Your agencies both are in default of covenants, agreements and obligations set forth in the Water Purchase Agreement.” Cal Am, MacLean said, was invoking the dispute resolution process (nice try, Bob, but the county pulled that trigger two weeks ago) and asking that the parties enter into good-faith negotiations immediately.
At issue for Cal Am: not the Collins’ alleged conflict of interest; not the possible involvement of Weeks, Heitzman, Calcagno and Potter; and not even the wholesale bizarre behavior of the Marina Coast Water District board. At issue is the fact that under the agreement, Marina Coast and the County were required to obtain, subject to market conditions, all or a portion of the project’s financing by May 11. While the agencies have been working on a conceptual financing plan, a Marina Coast consultant told the California Public Utilities Commission in May of last year that bond financing would be available at 4.75 percent. That hasn’t happened either.
Following the Coastal Commission meeting, Potter told Weekly reporter Sara Rubin that the project could maybe benefit from a “time out.” He added, “I don’t think [the project] is dead, but it’s in a deep coma.”
But consider this. If Marina Coast is refusing to believe the Water Purchase Agreement has been nullified, and the county says it might have to wait and see the final version of the report it commissioned on Collins – and for District Attorney Dean Flippo to either act or say he isn’t going to act in the Collins matter – where does it leave Cal Am?
MacLean wrote his agency had been cooperative in talks with the partner agencies “to reduce costs of potential litigation.”
And that, gentle reader, is one huge clue. If the county and Marina Coast can’t proceed in a cooperative fashion, maybe that litigation is about to go from potential to real.
Mary Duan is the Weekly’s editor. Reach her at firstname.lastname@example.org