By Lois Henry, SJV Water
The Kern County Water Agency is poised to cut off the only water source for a 600-home development in Stanislaus County as of June 30 unless residents there agree to a 200% increase in water rates, jacking up their bills to $600 a month.
Even then, the increase will only buy a bare minimum of water through Dec. 31, according to a letter from KCWA to the Western Hills Water District. The Western Hills board president Mark Korvich declined to comment, directing SJV Water to documents on the district’s website
Western Hills serves the Diablo Grande development, once planned as a sprawling 5,000-home luxury golf community in the foothills west of Patterson.
Even so, KCWA put Western Hills on notice April 2 this year that it intends to terminate the 24-year-contract under which it has been delivering water to the community.
KCWA’s stance is that Western Hills stopped paying the water delivery costs five years ago, racking up $13 million in debt, and KCWA can no longer carry that load.
Though the water Diablo Grande residents run through their taps is actually State Water Project overseen by the Department of Water Resources, that agency is staying out of the fray.
“DWR does not have a role in the negotiations of this particular issue. It is being handled by agencies at the local level,” was the state’s response to SJV Water’s inquiry.
The pending shut-off has ignited a flurry of media coverage in northern California and letters from fire departments and area legislators desperate to find a solution for Diablo Grande residents.
So far, no solutions have presented themselves.
Meanwhile, delving into the accounting of this convoluted water “exchange” – which relied on Kern River water at its core – leaves more questions than answers about how much is truly owed and the future of the Western Hills water.
Information “black box”
Even back in 2000 when this water swapping deal was conceived, it caused concern and confusion, according to a 2001 Bakersfield Californian article.
Environmentalists opposed to Diablo Grande feared the water deal would open the foothills to a flood of development. And other State Water Project contractors feared it would increase competition for already short supplies from the Sacramento-San Joaquin Delta.
But thanks to what was deemed a highly “creative” deal brokered by the late Kern County Water Agency General Manager Tom Clark, the deal went through.
There were multiple moving parts to the complicated deal.
KCWA would only answer emailed questions from SJV Water through its spokesperson, making it difficult to ask follow up questions to get a thorough understanding of how all these parts worked together.
Other Kern County water managers contacted for this story would only comment privately given the politically sensitive nature of the situation. They said they’ve also had difficulty getting answers from KCWA, including how the water and sales accounting penciled out and, especially, about the future of the Western Hills water.
That information has “always been in a black box,” one manager said.
KCWA steps in
Here’s what SJV Water could glean from documents and limited answers from KCWA.
Back in the late 1990s, Berrenda Mesa Water District in western Kern County found itself cash poor and water rich and needed to sell a portion of its State Water Project entitlement. Not a one-time sale, but the contract for that water – a permanent sale.
Western Hills needed a permanent supply to get approval for the Diablo Grande development.
In 1998 Western Hills bought Berrenda Mesa’s state contract for 8,000 acre feet a year at $1,000-per-acre-foot, or $8 million.
The state, though, didn’t want to add another contractor to the system, so it kiboshed the deal.
That’s when the Kern County Water Agency stepped in.
KCWA administers the state water contract for 13 agricultural water districts, known as “member units,” in Kern County, so it was an existing State Water Project contractor.
To get around the state’s concern about adding another straw to state supplies, KCWA took over Berrenda Mesa’s entitlement for 8,000 acre feet and said it would use a local water supply to provide water to Western Hills by “exchange.”
That local supply was high flow Kern River water, which KCWA bought in 2000 from the Nickel Family LLC. It had also recently built the Pioneer groundwater bank where the lower river water could be stored.
KCWA obviously didn’t pump Kern River water 200 miles north to the taps and toilets of Diablo Grande.
Instead, the state sent up to 8,000 acre feet south through the California Aqueduct and Western Hills took what it needed from a turnout near Patterson. KCWA would then account for that as a debit to its Lower River water supplies.
Under the agreement, Western Hills reimbursed KCWA for the DWR transportation/operations and maintenance charges attached to that 8,000 acre feet.
It’s those state charges Western Hills stopped paying in 2019, leading to the $13 million debt, according to KCWA.
Excess water
Though a bit complicated, the original deal was somewhat of a straight bucket-for-bucket exchange.
Except, Western Hills never took the full 8,000 acre feet even though it continued paying the state charges attached to that water – nearly $14 million from 2001 to 2019.
Even with SWP shortages that often mean water users receive only a fraction of contracted amounts, Western Hills didn’t need all the water it was paying for.
The housing crash of 2008 and bankruptcies meant the 5,000 Diablo Grande homes never materialized. Even the two golf courses were shuttered.
In all the financial turmoil and ensuing lawsuits, the Western Hills Water District changed hands several times. Residents are now in charge of the district, but don’t have access to historic documents detailing all the intricacies of the water deal with the Kern County Water Agency.
According to DWR and KCWA records, the Western Hills entitlement yielded 105,520 acre feet from 2001 to 2025.
But Western Hills only took 19,498 acre feet in that time frame, according to KCWA records.
That means Western Hills had excess water – up to 86,022 acre feet – that went somewhere.
What happened to that water?
Member unit sales
KCWA sold a large chunk – 61,723 acre feet – to its member units, according to its records.
KCWA staff was still researching how much those sales earned and didn’t have that figure to include in this article.
However, when KCWA sells water to its member units, it only requires reimbursement for state and conveyance charges, staff wrote in an email.
SJV Water asked what those costs would have been if Western Hills was paying the full state charges up until 2019, but did not hear back from KCWA in time for this story.
Staff did confirm the proceeds of those sales were not used to offset the state water charges being paid by Western Hills.
Westside 5
KCWA staff also stated that Western Hills sold 22,900 acre feet of its excess water to a group of Kern County agricultural water districts, collectively known as the Westside 5, between 2010 and 2020. The program was suspended in 2021.
The agreement between Western Hills and the Westside 5, made up of the Berrenda Mesa, Belridge and Lost Hills water districts and the Wheeler Ridge-Maricopa and Dudley Ridge water storage districts, shows the group paid $205,000 to Western Hills in 2010 for 2,050 acre feet.
Afterward, the Westside 5 paid the state transportation/operation and maintenance charges for any excess water the group received, according to Sheridan Nicholas, General Manager of Wheeler Ridge.
From April 2011 to July 2020, the Westside 5 paid nearly $5.1 million to Western Hills, per a Western Hills deposit record obtained through a public records request. However, there are no water amounts attached to those deposit figures.
The agreement also allowed Western Hills to store 4,600 acre feet in the Kern or Berrenda Mesa groundwater banks.
That water is still underground in Kern with Western Hills’ name on it and available to be called on, Nicholas said.
“But I don’t know how we’d return it to them if they’re not paying their bills to the agency (KCWA),” Nicholas said.
He wasn’t even sure if the water could be marketed and sold in Kern County at this point.
All State Water Project transfers into, out of, and within the county have to be approved by the Kern County Water Agency.
“It’s just, sort of, in limbo, I guess,” Nicholas said of the water.
He added that the Westside 5 group is working to figure out what will happen with that water.
Exorcising water “ghosts”
For those doing the math, the member unit sales and Westside 5 agreement add up to 89,423 acre feet, very close to what appears to be the excess water from the Western Hills swap.
But questions remain about KCWA’s sales of that excess water, even for local water managers, many of whom said their districts were never offered that water.
And now that KCWA wants to terminate its contract with Western Hills, locals are wondering what will become of that 8,000-acre-foot entitlement.
It’s been mentioned as a possible source for Kern County’s Buena Vista Aquatic Recreation Area, which currently pumps about 6,000 acre feet of groundwater a year to fill those lakes.
Others have noted KCWA has begun including the 8,000 acre feet in its payment calculations for the Delta Conveyance Project, a proposed tunnel to bring water from the Sacramento River under the Sacramento-San Joaquin Delta.
Or could a new deal be reached with the residents of Diablo Grande?
KCWA staff didn’t answer SJV Water’s questions about the future of that water.
One local manager described the Western Hills water like Ebeneezer Scrooge – haunted by the ghosts of its past, present and future.
