"Peninsula Mayors Push Public Financing for Desal Project" by News Blog

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Peninsula Mayors Push Public Financing for Desal Project

December 28, 2012

The newest addition to the Monterey Peninsula's long list of water-related acronyms moved one step closer to jostling for a serious position as a public player in the water supply future of the region last night.

The Monterey Peninsula Regional Water Authority, a joint powers authority comprising the mayors of six cities facing the state's cease-and-desist order to cut back on their water supply from the Carmel River, voted unanimously to split the cost of a $25,000 financial consultant with the Monterey Peninsula Water Management District to analyze the cost structure of water projects before the California Public Utilities Commission.

Carmel Mayor Jason Burnett and Monterey Mayor Chuck Della Sala said they'd been meeting regularly with California American Water representatives to push the value of a public financing partner for a proposed desalination plant.

"Cal Am was originally resistant to that idea, but in our discussions they’ve come around to seeing the logic in a public contribution," Burnett says.

He calculates up to a $124 million savings to ratepayers over 30 years based on lower interest rates for public entities than investor-owned Cal Am.

Sand City Mayor David Pendergrass worried that Burnett's proposed scope of services for the financial consultant was too focused on Cal Am's proposal, which is competing with others by DeepWater Desal and recently bought out and renamed People's Moss Landing Water Project. Calculations in the regional water authority's Technical Advisory Committee report found Cal Am's proposal was the most costly.

Pendergrass also argued the consultant should look at a public buy-out of the project, if the public's going to finance it. "The public is paying for this project, literally," he said, since ratepayers will foot the bill in their water costs.

As an example, Pendergrass spoke about a San Diego County desal plant Poseidon Resources is building that will be publicly owned after 30 some years. "That's a public-private partnership," he said. "I think that would be something very much worth looking at."

But Burnett demurred, and said that kind of arrangement belongs on another agenda, another day: "I think [public ownership] should be treated as a separate item, because Cal Am is looking for an excuse to avoid a public contribution."

For financial consulting contracts, the authority would typically put out a request for qualifications, panning interest from the financial consulting industry. Instead, in this instance, Burnett says they'll go ahead without that process because it would take too long.

"The issue we’re up against is we need to have someone on board right away. Doing an RFQ could take another month or so," Burnett says.

The mayors also directed Monterey City Manager Fred Meurer Thursday to negotiation with the mayors' top pick for executive director.

Of 23 applicants, the water authority interviewed three. Newly elected mayors Bill Kampe of Pacific Grove and Ralph Rubio of Seaside listened to tapes of prior closed meetings to get up to speed on the candidates.

The County Board of Supervisors also joined the authority, tentatively, but did not participate in the Dec. 27 meeting. Pending a decision from California Attorney General Kamala Harris on whether that constitutes a conflict of interest, the county seat remains empty. Residents of unincorporated areas like Carmel Valley and Carmel Highlands make up some 40 percent of affected Cal Am ratepayers.

 Back from 10 days with family for holidays. I hope this new study analyzes the cost of getting the water from Calcagno's property to the Peninsula. Pipelines are expensive.
 So the Mayors group thinks public financing will save money, Bravo, that is precisely what the Regional Project financing plan was built on. The reason they got $300M at 2.4% interest from the State was because the facilities would be owned by 2 public agencies.
 Has anyone seen the missives being sent out by Steve Collins, my son was forwarded copies, and Wow, he is hitting the County right between the eyes. About damn time, I leave for a few days and Collins wakes up, good for him.