Looking to fund $429mil in infrastructure, Fresno saddles up to lucrative water market

Inside the deal inked by the City of Fresno to put its water allocations on the market.


Let’s hope the Fresno City Council someday explains how all these water deals floating around City Hall are connected.


To paraphrase Henry Kissinger, there’s some “linkage” going on here. Where is it headed? Fresnans are in the dark.

Three points are unassailable:

1.) Fresno is legally entitled to a stunning amount of river water every year.

2.) Lots of other consumers – individuals, agencies, governments – would love to get their hands on Fresno’s liquid treasure.

3.) Hard-working Fresno consumers will continue to pay more and more money while being lectured to use less and less water.

Two water deals in particular stand out. The first is a mutual assistance pact between City Hall and Fresno Irrigation District. The second is a one-time developer charge for new homes to connect to the city’s water system.

We’ll begin with the FID deal.

The City Council on Dec. 15 approved a revised conveyance agreement with FID. “Conveyance” is the art by which the district uses its physical assets (i.e. canals) to move water from nearby rivers to destinations within Fresno.

City Hall and FID signed their first conveyance deal on Aug. 12, 1970, according to city documents. The contract was amended on May 25, 1976. The amended deal sufficed for 40 years.

Last month’s revised agreement is good through June 30, 2035.

What happened to spark the new deal? A drought combined with Sacramento’s yen for regulation killed Fresno’s century-old water habits.

In a nutshell, the City Council in early 2015 ended a local water war by voting to dramatically raise water rates to pay for a $429 million upgrade to Fresno’s water system.

The result was one of the big successes of Mayor Ashley Swearengin’s eight years in office – Recharge Fresno.

“After years of uncertainty and debate, we have finally established a sustainable water program for our City and I commend our Councilmembers for their leadership and foresight,” Swearengin said after the council’s water-rate vote. “Our lives and our fortunes depend on access to a safe, reliable water supply and I am convinced we have taken a firm step forward to secure this precious resource, both now and for future generations.”

Recharge Fresno involves more than the projects being funded by the $429 million. But for this story it’s sufficient to make three points about Fresno’s new era of water.

First, Fresno has entitlements to about 180,000 acre feet of river water in a normal rain year. That’s 60,000 acre feet from the San Joaquin River (Millerton Lake) and 120,000 acre feet from the Kings River (Pine Flat Lake). The city’s Water Division delivers about 120,000 acre feet of water per year to its customers. (We’re doing much better at conservation.)

Second, Fresno for the longest time didn’t give much of a hoot about its legal hold on all that river water. That’s because we sit on an amazingly generous aquifer. We simply stuck a bunch of straws (i.e. pumps) in the ground and pulled from Mother Earth what we needed. We let most of that unused river water flow downstream to other users. Many of those users were farmers.

Third, California in 2014 was in the midst of a drought that seemed destined to last forever. Sacramento lawmakers passed the Sustainable Groundwater Management Act. This law did more than impose strict regulations on every aquifer from San Diego to Crescent City. The act essentially authorized the regulation of every drop of water that comes in contact in any way, shape or form with California’s 163,696 square miles of territory.

Fresno City Hall (in particular Public Utilities Director Tommy Esqueda and his team) immediately went to work trying to make sense of all these facts, desires and mandates. One of the moving pieces is Fresno Irrigation District.

You see, FID is pretty much King of the Hill in these parts when it comes to moving water from one place to another. Canals are amazingly successful civilization builders, and FID operates many miles of canals.

Simply put, Fresno would need FID’s help as the city transitioned from groundwater to surface water while diverting excess water (180,000 acre feet at the delivery end is a lot more than 120,000 acre feet at the consumption end, and we haven’t even touched on the city’s growing “purple pipe” recycled water system) to basins designed to replenish the aquifer.

City Hall and FID would have to strike a new deal. FID’s leverage in negotiations took many forms, but its canals (which are capable of operating year around, but usually see action only during the irrigation season) are a big one.

The elephant in the room was all that water in Fresno’s possession during a normal rain season. Income inequality is a hot-button political issue in America. Water-control inequality is just as volatile in the San Joaquin Valley.

The new conveyance agreement runs to 20 pages. Public Utilities Director Esqueda gave the Council a five-page, single-spaced summary that is almost as packed with detail as the agreement itself.

“City staff and District staff have undertaken extensive negotiations to present the proposed Agreement, which reflects necessary changes in how the District provides water to the City by ensuring year-round delivery of surface water for the City’s surface water treatment facilities,” Esqueda wrote.

The words “extensive negotiations” caught my eye. Why did they have to be “extensive” since the two parties have been teammates for decades? Esqueda didn’t go there.

The city’s Water Division has about 130,000 ratepayers, Esqueda reported. The city delivered 47.8 billion gallons in 2013. That dropped to 42.5 billion in 2014, and to 36.4 billion in 2015. That last figure – 36.4 billion gallons – is about 112,000 acre feet. Each industrial customer, on average, uses a lot more water than the typical suburban homeowner. Bottom line: Fresnans are doing a superb job of conserving water at the same time the Water Division needs to sell water to generate enough money to pay for a half-billion dollars of construction bonds (including the purple pipe system).

You might think that water conservation would become less of an issue now that Fresnans have dramatically changed their consumption habits at the same time they’re paying significantly higher fees to fund an immense system designed to deliver 180,000 acre feet to their doorsteps. Think again.

Esqueda wrote in a section headed “Change in Water Supply” that restrictions “on south-of-delta pumping to protect endangered fish species and reductions in north-of-delta water delivered to Exchange Contractors from the San Joaquin/Sacramento River Delta increase the likelihood the Bureau (of Reclamation, my parenthetical comment) will release water from Millerton Lake to compensate for lower flows. In turn, the reliability of the City’s Millerton Lake allocation (60,000 acre-feet per year, Esqueda’s parenthetical comment) is reduced, and the City must anticipate increasing competition and costs for surface water both regionally and statewide.”

The 60,000 acre feet at Millerton per year may not be such a rock-solid commitment after all, even though that promise was pitched hard and heavy to Fresnans during debate on the $429 million system upgrade.

In light of continuing water challenges, Esqueda wrote, “the City must focus on improving its long term surface water availability, reliability, and drought resiliency…”

Among Esqueda’s recommendations: Water conservation, new water storage sites, replenishing the aquifer and the purple pipe system.

Did I mention water conservation?

There’s plenty more to Esqueda’s report, but I conclude with this nugget: “The City Authorizes the District to serve as the City’s exclusive agent for the management of the City’s San Joaquin River and Kings River water supply entitlements, subject to the terms of the revised Agreement. As exclusive agent, the District shall be authorized to … optimize the reasonable and beneficial use of the City’s surface water supplies and other available water supplies, and pursue and implement water sales, transfers and exchanges using the City’s surface water supplies.”

I read that to mean City Hall and FID plan to periodically sell excess surface water generated by ever-stricter water conservations mandates placed on the Fresno ratepayers who are funding a new production/delivery system designed (in theory) to provide them with more water for things like irrigating the front lawn.

If I’m any indication, the new City Hall-Fresno Irrigation District contract itself is tough to decipher for average Fresnan.

The document begins with three pages of context, each paragraph preceded with “WHEREAS.”

For example, the contract states: “WHEREAS under the 1976 Agreement, Kings River water was available to City once lands within District boundaries with surface water allotments were annexed into City and were covered by the 1976 Agreement’s contract rate for surface water delivery to City by District for those lands; and

“WHEREAS, City and District now wish to limit the amount of Kings River water available to City to provide more certainty regarding water supply availability and to address City’s current and anticipated needs and circumstances;….”

Does that say what I think it says – city officials want to take less of Fresno’s annual 120,000 acre-foot entitlement from the Kings River because that’s the best way to meet the city’s water needs?

Once the “WHEREAS” paragraphs are done, the contract gets into the meaty parts. I give you two examples of the many intriguing but confusing (to a layman like me) deal points.

1.) “Included as part of the management of City’s Surface Water as described above, District shall diligently pursue Transfers of any City’s Friant Supply that City advises District that City will not require during a particular Water Year.”

2.) “All Transfers of Temporarily Unused Friant Water pursued by District shall be in full conformance with City’s water supply goals as described in Section 4(f) or otherwise agreed by City and District, and shall be limited to supporting Agricultural Use rather than urban growth or development in other jurisdictions.”

The fight over the $429 million water-system upgrade divided much of Fresno. City officials ultimately carried the day over critics (the most eloquent being former Fresno County Supervisor Doug Vagim) by hammering Fresnans that the time had come to “make every drop count.”

Count for whom?

City Council members on Dec. 15 had the perfect opportunity to explore that pivotal question. It turned into a missed opportunity.

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Posts